Flashcards on Forms of Business Ownership
Forms of Business Ownership: A Student's Guide
Tap to flip · Swipe to navigate
Forms of Business Ownership
20 cards
Card 1
Question: What are two advantages of a sole trader business?
Answer: Easy and inexpensive to start; quick decision making. (Also: all profits belong to the owner; requires little capital to start.)
Card 2
Question: What are two disadvantages of a sole trader?
Answer: Unlimited liability; not a legal entity so no continuity. (Also: limited capital; owner takes all the risks.)
Card 3
Question: Give two advantages of a partnership.
Answer: Easy and inexpensive to start; workload and responsibilities are shared. (Also: more capital than a sole trader and easier to obtain credit; partners
Card 4
Question: Give two disadvantages of a partnership.
Answer: Unlimited liability and one partner’s dishonesty can affect the business; has no continuity. (Also: limited capital to partners' contributions; decisi
Card 5
Question: What is one advantage of a close corporation (CC)?
Answer: Regarded as a legal entity and has continuity. (Also: easy and inexpensive to start; members have limited liability; not required to audit financial s
Card 6
Question: What is one disadvantage of a close corporation (CC)?
Answer: Capital is limited to contributions of up to 10 members. (Also: decision making can be time consuming/conflict; audited statements may be required for
Card 7
Question: Name two advantages of a cooperative.
Answer: Higher production because members are loyal and dedicated; has unlimited continuity. (Also: members have limited liability; access to resources and fu
Card 8
Question: Name two disadvantages of a cooperative.
Answer: Complicated establishment procedure; success depends on members' support and loyalty. (Also: shares are not freely transferable; auditing of financial
Card 9
Question: What are two general advantages of a company (Inc)?
Answer: Has unlimited continuity; no maximum number of members. (Also: can obtain a large amount of capital as there is no limit to members.)
Card 10
Question: What are two disadvantages of a company (Inc)?
Answer: Complicated establishment procedure; directors are liable for the debts of the business. (Also: must pay company tax and tax on dividends—double taxat