Business Types, Governance & Funding

Which of the following is a common feature of organisations regardless of their type, size, or sector in which they operate?

• Individuals working independently without cooperation

• Goal congruence achieved when individuals in an organisation have different goals

• Defined roles for everyone within an organisation

• Lack of responsibility division among individuals

What is a key consideration when deciding to set up a business organisation type?

• The colour scheme of the business logo

• The type of office furniture to be used

• The liability for debts the organisation or limited type will have

• The brand name of the products sold

What is a characteristic of sole trader businesses?

• They have limited liability for their debts

• They must share profits with partners

• They retain all the profits made but have unlimited liability for debts

• They cannot reinvest the profits

What must sole traders do if their taxable turnover exceeds the registration threshold?

• Apply for a business loan

• Register for VAT

• Share profits with employees

• Form a partnership

What happens in a partnership if there is no formal agreement and the Partnership Act 1890 does not apply?

• The rules of the Partnership Act apply by default

• The partnership is immediately dissolved

• The partners must operate as a sole trader

• The partnership is governed by the Companies Act

What is the primary difference between a sole trader business and a partnership in terms of liability?

• Partnerships have limited liability while sole traders have unlimited liability.

• Partnerships and sole traders both have limited liability.

• Partnerships have unlimited liability while sole traders have limited liability.

• Partnerships have unlimited liability, but it is jointly and severally liable among the partners.

What is considered an exception to the 'jointly and severally' aspect of a partnership?

• Sharing the same business name

• Distribution of tangible assets

• Tax due on profits

• Registration for VAT

What is goodwill in the context of a business partnership?

• The physical assets of a business

• The tangible assets of a business

• The extra value over and above the tangible assets of a business

• The annual profit made by the business

What usually happens when a new partner joins an established partnership?

• They are given a share of the profits without any investment.

• They must buy their way in, recognizing the value of existing goodwill and assets.

• They are exempt from contributing to the existing goodwill.

• They replace the leaving partner without any changes to the partnership agreement.

What is a key characteristic of Limited Liability Partnerships (LLPs)?

• They were introduced in 2001.

• They have unlimited liability for debts.

• They do not involve any form of partnership agreement.

• They require partners to be related by blood.