iGCSE Business Studies Questions and Answers 100% Solved| Latest Update Graded A+
Public Corporations Firms wholly owned and run by the state/central government.
Often obtained as businesses that have been nationalised.
Unlimited Liability Business doesn't exist as a separate legal entity from owner. Therefore,
the owner can have their personal property seized if the company goes bankrupt.
Sole Trader
+Advantages
+Disadvantages A businesses owned by one person. Unlimited liability.
Owner has complete control over business decisions and normally retains all profits.
The owner may not be skilled in many different areas which means they cannot handle
accounts etc.
Sole Trader (issues with finance) Few sources of finance as there is a high risk of failure.
Partnership
+Advantages
+Disadvantages A business owned and operated by 2 - 20 people. Unlimited liability.
More people to discuss business matters with. Greater amount of finance.
Less control as it is split between more people. If 1 partner is inefficient, the others will lose
money. Arguments may arise. Finance is limited to the amount 20 people can afford to invest.
Deed of Partnership A legal document drawn up between business partners. It is not
necessary but is recommended to resolve disputes.
Partnerships (sources of finance) Greater amount than sole traders as more people can
invest. Larger business means banks are more likely to invest. However, limited to the amount
20 people can invest.
, Private Limited Company (Ltd)
+Advantages
+Disadvantages A company which sells shares, but only if agreed between shareholders.
Limited liability. Can maintain control of the firm (directors will probably retain 50%) Finance
figures can be kept secret.
Not as much finance can be raised (vs Plcs).
It is time consuming and costly to set up an Ltd. (vs sole traders & partnerships)
Legal documents must be prepared.
Ltd (legal documents) Memorandum of Association (firm's details e.g. Address)
Articles of Association (rules for how the firm will be run)
Public Limited Company (Plc) A company which sells shares to the general public.
Plc (advantages) Greater source of finance. Millions of shares can be sold.
Plc (disadvantages) Control over the business is lost if others buy over 50% of shares.
Profit figures must be made public.
Must print prospectuses for potential shareholders.
Must pay stock market for listing and banks to sell shares.
How are shares distributed? Shares are either sold by the company to selected people (Ltd)
or on the stock market to the general public (Plc)
Joint Venture When 2 or more businesses agree to start a project together, sharing capital,
risks and profit.
Public Corporations Firms wholly owned and run by the state/central government.
Often obtained as businesses that have been nationalised.
Unlimited Liability Business doesn't exist as a separate legal entity from owner. Therefore,
the owner can have their personal property seized if the company goes bankrupt.
Sole Trader
+Advantages
+Disadvantages A businesses owned by one person. Unlimited liability.
Owner has complete control over business decisions and normally retains all profits.
The owner may not be skilled in many different areas which means they cannot handle
accounts etc.
Sole Trader (issues with finance) Few sources of finance as there is a high risk of failure.
Partnership
+Advantages
+Disadvantages A business owned and operated by 2 - 20 people. Unlimited liability.
More people to discuss business matters with. Greater amount of finance.
Less control as it is split between more people. If 1 partner is inefficient, the others will lose
money. Arguments may arise. Finance is limited to the amount 20 people can afford to invest.
Deed of Partnership A legal document drawn up between business partners. It is not
necessary but is recommended to resolve disputes.
Partnerships (sources of finance) Greater amount than sole traders as more people can
invest. Larger business means banks are more likely to invest. However, limited to the amount
20 people can invest.
, Private Limited Company (Ltd)
+Advantages
+Disadvantages A company which sells shares, but only if agreed between shareholders.
Limited liability. Can maintain control of the firm (directors will probably retain 50%) Finance
figures can be kept secret.
Not as much finance can be raised (vs Plcs).
It is time consuming and costly to set up an Ltd. (vs sole traders & partnerships)
Legal documents must be prepared.
Ltd (legal documents) Memorandum of Association (firm's details e.g. Address)
Articles of Association (rules for how the firm will be run)
Public Limited Company (Plc) A company which sells shares to the general public.
Plc (advantages) Greater source of finance. Millions of shares can be sold.
Plc (disadvantages) Control over the business is lost if others buy over 50% of shares.
Profit figures must be made public.
Must print prospectuses for potential shareholders.
Must pay stock market for listing and banks to sell shares.
How are shares distributed? Shares are either sold by the company to selected people (Ltd)
or on the stock market to the general public (Plc)
Joint Venture When 2 or more businesses agree to start a project together, sharing capital,
risks and profit.
