3.1.2 Business Ownership

Which of the following best describes the term limited liability? If the business fails:

• Personal possessions of the owner can be taken to pay any debts

• The owner is personally liable for all the debts of the business

• There is no limit on the amount the owner has to pay to settle debts

• The owner only loses the amount invested in the business

Which type of legal structure is used when two or more people join together to start a business and have unlimited liability?

• Sole trader

• Partnership

• Private limited company

• Public limited company

What are the owners of private and public limited companies called?

• Stakeholders

• Managers

• Board of directors

• Shareholders

Which of the following is an advantage of operating a large established business as a public limited company?

• Shares can be sold to the public to raise additional finance

• Financial accounts are published

• Shares can only be sold to invited investors to raise finance

• Owners have unlimited liability

Which of the following is a drawback for an entrepreneur setting up a business as a sole trader?

• Profit is shared

• Financial accounts are kept private

• Limited liability

• Unlimited liability

Which of the following is a disadvantage of setting up a business as a partnership?

• Shared losses

• Shared workload

• Shared profit

• More ideas generated

Which of the following types of business can advertise shares for sale to the general public?

• Sole trader

• Partnership

• Private limited company

• Public limited company

A private limited company may change into a public limited company because it wants:

• Limited liability

• To raise additional finance

• Unlimited liability

• To avoid takeover

Which of the following would be classed as a not-for-profit organisation?

• H & M

• EE

• Oxfam

• M & S

Which of the following is a disadvantage of being a private limited company?

• It has a separate legal identity and therefore continuity

• Control is kept over who buys shares in the company

• Shareholders’ personal possessions cannot be taken to pay any debts

• A summary of the business’s accounts can be viewed by the public