Accounting 20/11/24

A business entity where ownership is divided into shares that can be freely traded on the stock market is known as:

• Sole trader

• Partnership

• Private limited company

• Public limited company

Which of the following is an advantage of being a sole trader?

• Access to large amounts of capital

• Simple tax filing requirements

• Limited liability

• Ease of transferring ownership

Which source of finance is typically only available to limited companies?

• Bank overdrafts

• Issuing shares

• Trade credit

• Rental/leasing

If a partnership wishes to protect the personal assets of its partners, it may choose to become:

• A public limited company

• A limited liability partnership

• A sole trader

• A cooperative

Which of these is NOT a feature of a partnership?

• Unlimited liability for partners

• Shared ownership

• Issue of public shares

• Shared decision-making

A company that needs flexibility in accessing funds for short-term needs might choose:

• A bank overdraft

• Secured loan

• Issuing shares

• Leasing

Which of the following is an advantage of leasing rather than purchasing equipment?

• Increased ownership equity

• Reduced interest expense

• Lower initial cash outlay

• Ownership of the asset at the end of the lease

Trade credit is commonly used because it allows businesses to:

• Access cash for long-term investments

• Delay payment to suppliers

• Reduce tax liability

• Avoid paying for assets

What is one disadvantage of being a sole trader?

• Complexity of forming the business

• Limited access to capital

• Limited liability

• Access to external investors

Public limited companies (plc) are required to:

• Keep financial information private

• Issue only a limited number of shares

• Disclose financial information publicly

• Limit shareholders to a maximum of 50