WorksheetsIB Business 1.2 Business Entities
Total questions: 16
Worksheet time: 8mins
Badru and Anna have three adult children. They have just moved into a new house, and are thinking about converting their antique shop from a partnership to a privately held company. Which of the following is the most likely reason why they are considering this change?
It would better secure the continuity of their business.
They will enjoy greater privacy and confidentiality when it comes to their financial accounts.
They will be protected by unlimited liability.
It will be easier for them to grow their business via mergers and acquisitions.
Report feedback or error
What is the name of the legal document signed by the owners of a partnership?
Contract Agreement
Deed of Partnership
Articles of Incorporation
Partnership Contract
Limited liability makes it difficult for companies to attract new shareholders.
True
False
Maybe
Limitiations
What might be the conflict between the management of a publicly-held company and its owners when deciding how to use the company’s profits?
Managers wish to keep profits for personal use.
Managers do not want to expand the company.
Owners are not interested in the company’s growth.
Manager wishes to reinvest profits in the business while owners aspire to earn higher returns or dividends.
Mo and Sam have made the decision to form a partnership and will be selling second-hand books. Which of the following is an advantage to Mo and Sam of setting up their business as a partnership?
Limited liability
Financial performance remains confidential
Owner has total control
Independent legal identity
Which of the following is not a feature of a sole trader?
The sole trader owns and runs the business
The sole trader and the business are not legally distinct.
Unlimited finance
The customers and the business are close to each other
Key Term: __ is an investor in a partnership but who does not get involved in the daily running and management of the organization.
Minor Partner
Limited Partner
Angel Investor
Sleeping Partner
Key Term: __ occurs when an organization sells all or part of its business to shareholders on a public stock exchange for the first time. This changes the legal status of the business to a publicly held company.
Trading Day
IPO - Initial Public Offering
PSI - Public Shareholder Investment
ISS - Initial Shareholder Share
Key Term: __ This is a business owned by shareholders with limited liability, but the shares cannot be traded on a public Stock Exchange.
Publicly Held Company
Privately Held Company
Public Sector
Private Sector
Key Term: These organizations are revenue-generating businesses with community (social) objectives at the core of their operations in order to benefit the general public, rather than private shareholders.
Sole Trader
Partnership
Social Enterprise
Corporation
TRUE OR FALSE? Having limited liability means that owners of a business can only lose the money they have invested, and no more.
True
False
TRUE OR FALSE?
The legal agreement that sets out the rules of how a partnership will operate is known as a memorandum of association.
True
False
The Mars company had sales over $37 billion dollars. It employs more than 130,000 people. It owns many brands such as Ben's Rice, Pedigree dog food and Skittles. What types of business ownership from the list below is Mars Inc. most likely to be?
Sole Trader
Partnership
Privately held company
Advocacy NGO
A group of farmers wants to form a business to sell their produce directly to consumers. They want a democratic structure where voting power is based on membership, not investment. Which business entity would be most appropriate?
Sole Proprietor
General Partnership
Corporation
Cooperative
A software developer wants to launch a new mobile app. They anticipate needing significant funding in the future but want to maintain control over the business. Which business structure would be ideal for them initially?
Sole Proprietorship
General Partnership
Privately Held Company
Joint Venture
Social Enterprises do not try to make more than their costs; their sole focus is on social objectives. True or False?
True
False
