A Level Business - Legal Structure Revision

Which of the following best describes the term limited liability? If the business fails:

• Personal possessions of the owner can be taken to pay any debts

• The owner is personally liable for all the debts of the business

• There is no limit on the amount the owner has to pay to settle debts

• The owner only loses the amount invested in the business

Which type of legal structure is used when two or more people join together to start a business and have unlimited liability?

• Sole trader

• Partnership

• LTD

• PLC

What are the owners of private and public limited companies called?

• Stakeholders

• Managers

• Board of directors

• Shareholders

Which of the following is a drawback for an entrepreneur setting up a business as a sole trader?

• Profit is shared

• Financial accounts are kept private

• Limited liability

• Unlimited liability

Which of the following is an advantage of operating a large established business as a public limited company?

• Shares can be sold to the public to raise additional finance

• Financial accounts are published

• Shares can only be sold to invited investors to raise finance

• Owners have unlimited liability

A private limited company may change into a public limited company because it wants:

• Limited liability

• To raise additional finance

• Unlimited liability

• To avoid takeover

Which of the following statements is always true of a public limited company?

• Shareholders have day to day control of the company

• Liability is limited

• The ability to expand is limited

• Board of directors own the business

Which legal structure would an individual wishing to start-up a small business choose because it is quick, easy and inexpensive to set up?

• Sole trader

• Partnership

• LTD

• PLC

Which of the following is a disadvantage of setting up a business as a partnership?

• Shared losses

• Shared workload

• Shared profit

• More ideas generated

Owners are not personally liable for the firm's debts, only for the amount of contributed capital, this is...

• unlimited liability

• limited liability

• franchising