Flashcards on Business Ownership Structures and Types
Business Ownership Structures and Types: A Student Guide
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Business Ownership and Liability
27 cards
Card 1
Question: What does 'liability' refer to in the context of business ownership?
Answer: Liability refers to the responsibility of the owner for the debt of the business.
Card 2
Question: What is a legal entity in business ownership?
Answer: A legal entity is a business that can enter into contracts, sue, and be sued separately from its owners.
Card 3
Question: How does limited liability protect owners?
Answer: Limited liability limits owners' responsibility for business debts to the amount they invested; the owner's personal assets are safe.
Card 4
Question: What is unlimited liability for a business owner?
Answer: Unlimited liability means the owner has full responsibility for business debts; personal assets can be seized to pay debts.
Card 5
Question: Which common business forms are legal entities and which are not, according to the content?
Answer: Companies and Close Corporations (CCs) are legal entities. Partnerships and sole proprietors are not legal entities.
Card 6
Question: If a business is not registered, under what name does it trade and what happens if ownership changes?
Answer: It trades under the owner's name (ID number). If ownership changes, the business will cease to exist and documents will show the old owner's details.
Card 7
Question: If a business is registered, under what does it trade and what is the effect of an ownership change?
Answer: It trades under the business' registration number. If ownership changes, the business can continue to trade and documents are signed under the busines
Card 8
Question: What does 'continuity' mean for a business?
Answer: Continuity is the ability of the business to continue after the death or retirement of the owner or more than one of the owners.
Card 9
Question: Which ownership forms have limited continuity and which have unlimited continuity as described?
Answer: Registered businesses (like companies/CCs) have limited liability and can have continued existence after owner changes (limited continuity). Unregiste
Card 10
Question: State one advantage and one disadvantage of limited liability mentioned in the content.
Answer: Advantage: Responsibilities are divided and owners' losses are limited to their investment; personal assets are safe. Disadvantage: (Not explicitly st