GCSE Edexcel Business 1.4 Making Businesses effective

What is meant by "limited liability"?

• Business owners are personally responsible for all business debts.

• Business owners' personal assets are protected from business debts.

• Business owners must share all profits equally.

• Business owners must repay all business loans personally.

What is "unlimited liability"?

• Owners are liable only for the amount they invested.

• Owners' personal assets can be used to cover business debts.

• The business is separate from its owners legally.

• The business cannot be sued for its debts.

Which type of business has unlimited liability?

• Private limited company

• Franchise

• Sole trader

• Corporation

What is an advantage of being a sole trader?

• Unlimited liability

• Easier to raise finance

• Full control over decisions

• Limited liability

Which of the following is a disadvantage of a sole trader business?

• Simple and quick to set up

• Full decision-making power

• Unlimited liability

• Retains all profits

A partnership is a business owned by:

• One person

• Two or more people

• A board of directors

• The government

What is a key disadvantage of a partnership?

• Profits must be shared

• Limited liability

• Difficult to start

• Requires complex legal paperwork

Which business structure offers limited liability?

• Sole trader

• Partnership

• Private limited company

• Unlimited company

What is a major advantage of a private limited company (Ltd)?

• Owners have unlimited liability.

• Easier to raise capital by selling shares.

• Financial information must be public.

• Unlimited control for shareholders.

What is one disadvantage of running a franchise?

• The franchisee benefits from a proven business model.

• Franchisees have limited control over decisions.

• Franchisees face no start-up fees.

• Franchisees can change the branding freely.