Chapter 4

Question 1

Sole trader

Answer 1

The business is owned by one person

Question 2

Partnership

Answer 2

The business is jointly owned by two or more people.

Question 3

Limited liability

Answer 3

The liability of owners/shareholders is limited to the amount invested. Personal
possessions are not at risk.

Question 4

Incorporated business

Answer 4

A business with separate legal identity from its owners, e.g. a limited company.

Question 5

Unincorporated business

Answer 5

A business without separate legal identity from its owners, e.g. a sole trader or
partnership.

Question 6

Private limited company

Answer 6

A business owned by shareholders but it cannot sell shares to the public.

Question 7

Public limited company

Answer 7

A business owned by shareholders but it can sell shares to the public and its shares
are tradable on the Stock Exchange.

Question 8

Shareholders

Answer 8

The owners of a limited company.

Question 9

Dividends

Answer 9

Payments made to shareholders from the profits (after tax) of a company.

Question 10

Franchise

Answer 10

A business that uses, under licence, the brand name, logo and trading methods of an
existing business. The franchisor sells the licence; the franchisee buys the licence.

Question 11

Joint venture

Answer 11

Two or more business’s start a new project together sharing capital, risks and profits.

Question 12

Public corporation

Answer 12

A business, in the public sector, that is owned and controlled by the state (government).

Question 13

Unlimited liability

Answer 13

If the business goes bankrupt, only the owner is responsible

Question 14

Types of business organization

Answer 14

• sole trader
• partnership
• private limited company
• public limited company
• franchise
• join venture

Question 15

Public sector corporations

Answer 15

Businesses owned by the government, that can sell shares.