Forms Of Business Organization Quiz

The best definition of a sole trader form of business organization is:

• The business only employs one person

• The business is owned by one person

• The firm has a single customer

• There is a single firm in the industry.

One of the claimed advantages of a sole trader business is that:

• The owner has independence

• The owner has limited liability

• The owner can raise capital easily

• The owner can share responsibilities.

One of the disadvantages of a sole trader business is that:

• Capital is limited to the owner’s savings and bank loans

• Decisions take too long to make

• As they are government-owned there is no profit motive

• The owners may disagree.

One of the advantages of a partnership form of business organization is that:

• All partners always have limited liability

• Shares can be sold on the Stock Exchange

• The business survives the death of the partners

• The business has access to more capital than a sole trader.

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

• Shares can be issued to raise capital.

• Shares can be bought and sold on the Stock Exchange.

• All owners of the business have limited liability.

• The business continues after the death of shareholders.

Which of the following statements best applies to a public limited company (PLC)?

• It is owned by the government and is in the public sector.

• It is owned by shareholders who can sell their shares on the Stock Exchange.

• It is quick and easy to set up with few legal formalities.

• Its accounts can be kept private, and it receives little coverage in the business.

The main reason why the owners of many private limited companies convert into public limited companies is that:

• They want to raise additional capital to expand the business.

• They want to reduce their liabilities.

• They want to increase their market share.

• They want to improve their public image.

Private limited companies may choose to convert into public limited companies in order to raise additional capital to expand their business. By becoming a public limited company, they can offer shares to the public and raise funds through the sale of these shares. This can provide the company with a significant injection of capital, which can be used to invest in new projects, expand operations, or enter new markets. This move allows the company to access a larger pool of potential investors and tap into the financial resources of the public.

• They do not want to remain in the private sector

• They want to gain the benefits of limited liability

• They want to keep the annual accounts secret

• They want to raise additional capital to expand the business.

One of the main drawbacks of many public limited companies is that:

• There can be a loss of control by the original owners as additional shares are sold

• Firms in the public sector are often less efficient

• If the company were to fail, the shareholders could lose all of their assets

• Workers have to be asked for their opinions before major decisions are taken.

Which of the following statements about most public limited companies is true?

• They are owned and controlled by the workers.

• They are owned by the directors but controlled by the shareholders.

• They are owned by shareholders but controlled by directors.

• They are owned and controlled by the government.