IGCSE Chapter 4 Review

1. Which form of business is owned and run by one person?

• Sole trader
• Partnership
• Franchise
• Private limited company

Answer explanation

A sole trader is owned and operated by one individual.

2. In which type of business ownership are profits shared between two or more people?

• Sole trader
• Joint venture
• Partnership
• Public limited company

Answer explanation

Partnerships involve two or more people sharing profits and responsibilities.

3. What is a key feature of a franchise?

• No risk involved
• You own the brand name
• You use another business model
• You sell shares to the public

Answer explanation

Franchises use the business model and brand name of another established business.

4. Which business type offers limited liability to its owners?

• Sole trader
• Private limited company
• Partnership
• Joint venture

Answer explanation

Private limited companies have limited liability, protecting owners’ personal assets.

5. Which of these businesses can sell shares to the public?

• Sole trader
• Private limited company
• Public limited company
• Franchise

Answer explanation

Public limited companies (PLCs) can sell shares on the stock market to the public.

6. What is a disadvantage of a sole trader?

• Easy to raise capital
• You keep all the profit
• Unlimited liability
• Shared decision making

Answer explanation

Sole traders have unlimited liability, meaning personal assets can be used to pay off debts.

7. What is a disadvantage of partnerships?

• Profits are shared
• Unlimited liability
• Easier to raise capital
• Both 1 and 2

Answer explanation

Partnerships share both profits and have unlimited liability for all partners.

8. Which of the following is a benefit of a public limited company?

• High status
• Fewer legal requirements
• Complete control by owners
• Limited liability only for employees

Answer explanation

PLCs are viewed as high-status businesses and can attract investors.

9. What does limited liability mean for business owners?

• They can lose personal assets
• They are responsible for all debts
• They only lose what they invest
• They pay no debts if the business fails

Answer explanation

Limited liability means owners only lose the amount they invested if the business fails.

10. What is one benefit of running a sole trader business?

• Limited Liability

• Easier to gain finance

• Shared skills & knowledge

• Freedom & total control

Answer explanation

Sole traders run the business alone so have complete freedom to make all decisions and run the business as they see fit