Types of Business Organisation Quiz

The best definition of a sole trader is a business that

• is a single firm in the industry

• has a single customer

• only employs one person

• is owned by one person

One of the advantages of a sole trader business is that

• shares can be sold to raise capital

• the owner has complete control over decision making

• decisions and responsibilities can be shared

• owners have limited liability

One disadvantage of a sole trader business is that

• owners may disagree

• capital is limited to the owner's savings and bank loans

• decisions take too long to make

One of the advantages of a partnership is that

• all partners have limited liability

• the business has access to more capital than a sole trader

• the business can survive the death of the partners

• shares can be sold on the Stock Exchange

Which of the following is not a feature of a private limited company?

• Shares can be issued to raise capital

• All owners of the business have limited liability

• The business continues after the death of a shareholder

• Shares can be bought and sold on the Stock Exchange

The main reason why an entrepreneur will convert an LTD into a PLC is

• they want to gain the benefits of limited liability

• they want to raise additional capital to expand the business

• they want to keep the annual accounts secret

• they don't want to remain in the private sector

One of the main disadvantages of a PLC is the

• loss of control by the owners as additional shares are sold

• possibility that if a company fails owners might lose assets

• firms in the public sector are often less efficient

Which of the following statements about PLCs is most true

• The firm is owned and controlled by the workers

• The firm is owned and controlled by the government

• The firm is owned by the directors but run by shareholders

• The firm is owned by shareholders and run by directors

One of the reasons an entrepreneur might buy a franchise is

• there is complete control over important decisions

• it is cheaper than setting up a new business venture

• the risk of failure is lower

What is the advantage to a business of selling a franchise license to franchisee?

• The business can expand more quickly

• The franchisor owns all of the shops

• The business buying the franchise is likely to be successful