Theme 1.4 for 2025

What is the main difference between limited and unlimited liability?

• The amount of profit a business can make

• The level of risk a business is willing to take

• The number of employees a business can have

• The type of products a business can sell

In a limited liability business, what is the maximum financial loss for an owner?

• The total debt of the business

• The value of their personal assets

• The value of their financial investment in the business

• The annual profit of the business

What type of business ownership does not have its own legal identity?

• Limited liability company

• Corporation

• Unlimited liability business

• Partnership

Which of the following is an example of a sole trader?

• A large corporation with multiple shareholders

• A small online clothing brand owner

• A partnership between two friends

• A government-owned enterprise

What is one advantage of being a sole trader?

• High level of responsibility

• Quick and easy to set up

• Risk of unlimited liability

• Works long hours

What is a disadvantage of sole trading?

• Keeps the profits

• Makes own decisions

• Risk of unlimited liability

• Low set-up costs

What is a characteristic of a partnership?

• Only one owner

• Unlimited liability

• Two or more owners

• No professional services

What is a document called that outlines the rules in a partnership?

• Deed of partnership

• Articles of association

• Memorandum of understanding

• Partnership agreement

Which of the following is an advantage of partnerships?

• They are difficult to set up

• There is shared decision-making by the owners

• They have limited liability

• They require more paperwork

What is a disadvantage of partnerships?

• Limited liability

• Easy to set up

• Conflict amongst owners can occur

• Less paperwork