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WorksheetsDifferences between Public vs. Private Sector Firms
Total questions: 85
Worksheet time: 43mins
Fill in the blank: The portions of the economy that are owned or controlled by the government are called the _________.
public sector
private sector
informal sector
nonprofit sector
Fill in the blank: The portions of the economy that are not owned or controlled by the government are called the _________.
private sector
public sector
government sector
nonprofit sector
Which of the following is an example of the public sector?
Government services
Public schools
State-owned corporations
All of the above
Which statement is true?
Most private sector businesses are for-profit
Most public sector businesses are for-profit
Which of the following is a type of legal organization in profit-based (commercial) organizations?
Sole traders
Non-profit organizations
Government agencies
Charities
Which of the following is NOT a type of legal organization in profit-based (commercial) organizations?
Partnerships
Privately held companies or corporations
Publicly held companies or corporations
Non-profit organizations
Fill in the blank: Profits = _______ - Total Costs.
Total Revenues
Total Assets
Total Liabilities
Total Expenses
Which of the following is a type of legal organization in profit-based (commercial) organizations?
Partnerships
Government agencies
Charities
Clubs
Which of the following is a type of legal organization in profit-based (commercial) organizations?
Privately held companies or corporations
Non-profit organizations
Clubs
Charities
Which of the following is a type of legal organization in profit-based (commercial) organizations?
Publicly held companies or corporations
Non-profit organizations
Clubs
Charities
A sole trader is a business owned and operated by how many people?
One person
Two people
Three people
A group of people
There is a legal distinction between the business and the owner in a sole trader business.
True
False
In a sole trader business, who is the business?
The owner
The manager
The employees
The customers
What happens to a sole trader business when the owner dies?
The business stops existing.
The business is automatically taken over by the government.
The business continues under the same name indefinitely.
The business is transferred to a public company.
Fill in the blank: The finance for sole traders is usually ______, and other financial institutions may be reluctant to invest due to high failure rate of start-ups.
limited
abundant
guaranteed
unrestricted
Fill in the blank: The business of a sole trader is usually geographically close to the ______, allowing for personal interaction and opportunities for personalized service.
customer
supplier
government
competitor
Fill in the blank: The sole trader has privacy and limited accountability, and financial data (profit) need to be declared only to the ______ authorities for tax purposes or to lenders (for example in case of a leasing contract).
tax
medical
educational
transport
Fill in the blank: Registering the business as a sole trader is usually easy, inexpensive, and quick compared to other types of business because the sole trader makes all the ______, with no need to achieve consensus.
decisions
profits
losses
investments
Fill in the blank: One advantage of sole traders is that all profits belong to the _____
sole trader
government
shareholders
partners
Fill in the blank: Sole traders have complete control over all the important _____
decisions
locations
employees
products
Fill in the blank: Sole traders have flexibility in terms of working hours, products and services, and _____.
changes
employees
tax rates
shareholders
Fill in the blank: One advantage of sole traders is privacy, meaning there is no need to share _____
information
profits
products
employees
Fill in the blank: Sole traders benefit from minimal legal _____
formalities
taxes
profits
debts
Fill in the blank: Sole traders have close ties to customers, which can be a potential competitive _____
advantage
disadvantage
obstacle
liability
Fill in the blank: One disadvantage of sole traders is that success depends on the ______, enthusiasm and health of the sole trader (may falter).
drive
location
salary
equipment
Fill in the blank: Competing against ______ businesses all by yourself can be challenging for sole traders.
established
tiny
new
foreign
Fill in the blank: Stress and potential ineffectiveness can occur due to decision-making focused on the sole trader, such as limited time to make decisions and limited opportunity to seek ______ from others.
advice
punishment
competition
funding
Fill in the blank: Sole traders face a lack of ______ in case of a serious accident or the owner's death.
continuity
profit
competition
capital
Fill in the blank: Sole traders have limited scope for ______ because the owner runs the business and has no time for further exploration.
expansion
competition
advertising
partnership
Fill in the blank: Sole traders often have limited ______, focusing on day-to-day operations rather than the future.
capital
employees
products
locations
Fill in the blank: Sole traders have unlimited ______ of the owner for any faults, debts, or mistakes made.
liability
ownership
profit
control
Sometimes sole traders want to stay small to make a decent living and avoid the complexities of a _________.
larger scale business
family business
part-time job
government job
Often, sole traders have a ________ in the market, so there may be no need to expand.
niche
deficit
surplus
obstacle
Profits for sole traders are often not large enough to support ________, and the risks of growth are too great.
growth
competition
taxation
advertising
What is a partnership?
A business owned and operated by one person
A business owned and operated by two or more people, each partner has a % of ownership
A business owned by the government
A business with no owners
In a partnership, who is legally responsible for the liabilities of the partnership?
Only the main partner
Each partner is legally responsible for 100% of the liabilities of the partnership
Only the partner with the most shares
The government
Partnerships are popular with professional people with related qualifications.
True
False
Decisions in a partnership are made jointly by the partners, who own and run the business together.
True
False
Partners do not necessarily share all profits equally in a partnership. Usually, profits are shared according to each partner's _______ of ownership of the business.
%
location
age
experience
Fill in the blank: Finance is usually more available for a ________ than for a sole trader business because all partners contribute some capital, and banks and financial institutions are more willing to support as it is considered more stable than the sole trader.
partnership
corporation
franchise
cooperative
Who is a 'sleeping partner' in a partnership?
A sleeping partner is one who contributes capital and takes a share of the profit but performs no other role in the business.
A sleeping partner is one who manages the day-to-day operations of the business.
A sleeping partner is one who only provides loans to the business without any share in profit.
A sleeping partner is one who is responsible for all the debts of the business.
Partnerships can offer a more varied service than a sole trader due to the combination of expertise.
True
False
What is the purpose of a deed of partnership in a partnership business?
A deed of partnership is a legally binding document stating the rights and duties of the partners, including responsibilities, financing, division of profits, liabilities, and procedures for changing circumstances. It decreases the likelihood of a major disagreement.
A deed of partnership is a document that only records the names of the partners without specifying any rights or duties.
A deed of partnership is a certificate required for tax registration of the business only.
A deed of partnership is a document that is used solely for marketing purposes to attract new partners.
Partnerships are more stable than sole traders and have a higher likelihood of continuity in the long term.
True
False
Fill in the blank: One advantage of partnerships compared to sole traders is that partners bring different skills and qualities, leading to more efficient production due to ________ and division of labour.
specialization
competition
advertising
automation
Fill in the blank: Partnerships bring more ________ than one person can.
expertise
conflict
money
problems
Fill in the blank: Partnerships are perceived as more stable and less risky, and have access to more ________.
finance
customers
products
employees
Fill in the blank: Partners can help in emergencies, ________, or holiday.
illness
shopping
cooking
exercise
Fill in the blank: Partnerships have more chance of ________ compared to sole traders.
continuity
failure
conflict
instability
What is one disadvantage of partnerships compared to sole traders that involves liability?
Unlimited liability (at least one partner)
Limited liability for all partners
No liability for any partner
Liability only applies to customers
What is one disadvantage of partnerships compared to sole traders regarding access to financial resources?
Less access to loans from banks and other financial institutions
Easier decision-making process
Lower risk of disagreements
Complete control over business decisions
What is one disadvantage of partnerships compared to sole traders in terms of business growth?
More difficult to expand.
Easier to raise capital.
Less sharing of responsibilities.
Greater control over decisions.
What is one disadvantage of partnerships compared to sole traders regarding control over the business?
An individual partner does not have complete control over the business – relies on work/goodwill of others
Partnerships have unlimited liability for only one partner
Partners cannot share profits or losses
Partnerships are not allowed to hire employees
What is one disadvantage of partnerships compared to sole traders regarding profit distribution?
Profits must be shared among the partners
Partners receive all profits individually
Profits are not distributed at all
Only one partner receives all the profits
What is one disadvantage of partnerships compared to sole traders that can lead to the break-up of the partnership?
Partners may disagree – worst case: break-up of the partnership
Partnerships have unlimited liability for only one partner
Partnerships are not allowed to hire employees
Partnerships cannot raise capital from banks
Partnerships are safer than sole traders but more complex.
True
False
Partnerships can raise more finance than sole traders.
True
False
Partnerships have a greater chance of surviving changing market conditions due to their greater inherent _____.
stability
complexity
fragility
uncertainty
Partnerships have more chance to expand if the conditions are right.
True
False
What is the ownership structure of companies or corporations? Fill in the blank: Companies or corporations have multiple owners, each owning a % of the company in the form of ________ (shares of stock or equity shares).
shares
bonds
loans
patents
What does 'limited liability' mean in the context of companies or corporations? Fill in the blank: Limited liability means that business and owners are legally separated, and the liability of the company is ________ from the liability of those who own it.
distinct
combined
ignored
dependent
All companies are businesses but not all businesses are companies. Is this statement True or False?
True
False
Which of the following is a type of company?
Privately held
Publicly held
Both A and B
None of the above
The business has legal existence in its own right. Who does it employ to manage the business and handle day-to-day operations?
Shareholders
Executives
Customers
Suppliers
Like sole traders and partnerships, companies must obey the laws and pay ________.
taxes
fines
salaries
rents
Unlike sole traders and partnerships, companies keep their profits unless the shareholders decide to pay all or a percentage of the profits to shareholders in the form of ________.
dividends
salaries
interest
loans
In theory, individual shareholders do not control the business, unless they own a majority of the shares.
True
False
According to the passage, shareholders are rewarded for investing in a company in three ways. Which of the following is NOT one of those ways?
The price of the shares may increase in value if the company is profitable
The company issues a portion of profits as dividends
The shareholder is responsible for the company’s debts
The shareholder has limited liability
Fill in the blank: If the company fails, the shareholder loses his/her investment but no more. This is because the shareholder has ________ liability.
limited
unlimited
joint
absolute
Which of the following statements is TRUE according to the passage?
Large companies usually pay dividends regularly
Small/new companies always pay large dividends
Shareholders are the first to receive money from the sale of assets in liquidation
Shareholders are responsible for company debts
The price of the share(s) a shareholder holds may ______ in value if the company is not performing well (profitability).
decrease
increase
remain the same
double
A company may choose not to issue dividends if it does not have to, and the value of the investment is based upon the rise or fall in the stock value.
True
False
In a huge company, owning 100 shares may only represent what percentage of the company?
1%
10%
50%
0.001%
Fill in the blank: Owners want the business to have a separate legal existence from them personally (__________).
limited liability
unlimited liability
personal guarantee
joint ownership
Fill in the blank: The enhanced status of being a company is the recognition of a __________ business.
successful
small
temporary
unregistered
Fill in the blank: Selling shares is a good source of finance for a business, especially one with growing __________ requirements.
working-capital
marketing
legal
transportation
Fill in the blank: Legal existence separated from owners increases the stability of the business (__________, no dependence on one person).
continuity
liquidity
profitability
flexibility
Fill in the blank: Improved chances of gaining further finance, especially loans from __________ institutions and governments.
financial
educational
medical
cultural
What is the main difference in how shares are sold between a privately held company and a publicly held company?
Privately held companies sell shares privately to people known to the owners, while publicly held companies sell shares in a public place such as a stock exchange or online.
Privately held companies sell shares only to government agencies, while publicly held companies sell shares only to foreign investors.
Privately held companies sell shares on the stock exchange, while publicly held companies sell shares only to employees.
Privately held companies do not sell shares at all, while publicly held companies sell shares only during annual meetings.
Which type of company has a limited amount of finance available?
Privately held company
Public limited company
Government company
Multinational company
Which type of company maintains a higher level of control?
Privately held company
Publicly traded company
Non-profit organization
Government agency
Which type of company has low disclosure and reporting requirements?
Privately held company
Publicly traded company
Government-owned company
Non-profit organization
Shares sold in a public place, such as a stock exchange or online, is a characteristic of which type of company?
Publicly held company
Private company
Non-profit organization
Sole proprietorship
Which type of company has the possibility of securing large sums of capital?
Publicly held company
Sole proprietorship
Partnership firm
Private limited company
A publicly held company has no control over who buys its shares.
True
False
