3.1.2 - Business Ownership

• Who are considered owners in a business?

  Individuals who own the business or own a share(s) in it, in return for the right to decision making and profits, balanced with the risks involved
• What do owners receive in return for their investment in a business?

  Decision making and profits
• What is a sole trader?

  A business owned and operated by one person
• What is liability refer to?

  The extent of the owner’s/owners’ responsibility for the debts of the business
• What is limited liability?

  The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they invested.
• What is the limit of liability for owners with limited liability?

  The amount they invested in the business
• What does unlimited liability mean for business owners?

  Owners are responsible for all business debts
• What would happen if a business with unlimited liability cannot pay its debts?

  Owners use personal funds to settle debts
• What are the key differences between limited and unlimited liability?

  • Limited Liability:
  • Owners not responsible for debts
  • Liability limited to investment amount
  • Unlimited Liability:
  • Owners responsible for all debts
  • Personal funds used for business debts
• What is a partnership in business?

  A business owned by 2 or more people
• What defines a Private Limited Company (Ltd)?

  Owned by shareholders; shares not public
• What is the liability of shareholders in a Private Limited Company?

  Shareholders have limited liability
• What are shares in a business?

  Units available for sale to investors
• How does a Public Limited Company (Plc) differ from a Private Limited Company?

  Anyone can buy shares in a Plc
• What is the liability of shareholders in a Public Limited Company?

  Shareholders have limited liability
• What is a share issue?

  New shares made available for public purchase
• What are Not for Profit Organisations?

  Associations set up for non-monetary ideals
• What happens to profits or losses in Not for Profit Organisations?

  Profits/losses are retained or absorbed
• What is a dividend?

  A portion of profit paid to shareholders
• How is the dividend amount determined for shareholders?

  According to the number of shares owned