BESY Ch.1-3 Quiz

What does the business entity concept state about the relationship between a business and its owner(s)?

• The business and owner(s) are the same entity.

• The business is separate from the owner(s).

• The business is a part of the owner's personal affairs.

• The business and owner(s) share financial records.

Which type of business entity involves the owner having complete control over the business?

• Partnership

• Public limited company

• Sole trader

• Private limited company

What is a potential source of finance for a sole trader?

• Issuing shares

• Government grants

• Capital and profits from the business

• Venture capital

What happens to a sole trader's personal wealth if the business gets into debt?

• It remains unaffected.

• It is protected by law.

• It may be lost as they are the same legal entity.

• It is insured by the government.

What are profits taken for personal use by a sole trader called?

• Dividends

• Retained earnings

• Drawings

• Capital gains

In a partnership, how is liability typically structured?

• Limited liability for each partner

• Unlimited liability for all partners

• Liability is only for managing partners

• No liability for any partner

Who usually manages a limited company?

• Shareholders

• Directors

• Partners

• Trustees

What is a common source of finance for a not-for-profit organization?

• Issuing shares on the stock market

• Raising donations from activities

• Selling debentures

• Leasing

How is profit typically distributed in a limited company?

• Equally among all partners

• Reinvested back into the business

• As dividends to shareholders

• Retained entirely by directors

What is the liability structure for a limited company?

• Unlimited liability for all shareholders

• Limited liability to the amount invested

• No liability for directors

• Liability only for the CEO