A Memorandum of Association

States the main purpose of a company

Which statement does not apply to sole traders?

There can be more than one employer

Which of the following is least likely to be a disadvantage of a partnership?

Dealing with different sources of finance

Which of the following is not a reason why people may choose to set up their own business?

There are higher risks than working for someone else

A sole trader is a person who

Has exclusive responsibility for the running of the business

Advantages of sole traders do not include

The various sources of finance available

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Unit 1.2 Types of organizations

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Questions 15

Answers

1
A Memorandum of Association
Set out rules for the appointment & remuneration of director
Shows how profits will be distributed to its owners
States the main purpose of a company
Stipulates the internal functions & rules of an organization
2
Which statement does not apply to sole traders?
There can be more than one employer
It is the most common form of ownership
There may be more than one employee
A business that is owned by one person
3
A not-for-profit organization is any business that does not primarily aim to make a profit.
True
False
4
The legal document that sets out the constitution of a limited liability company is known as
Memorandum of Association
Certificate of Incorporation
Deed of Incorporation
Articles of Association
5
Which of the following is least likely to be a disadvantage of a partnership?
Less control of business activities
Dealing with different sources of finance
Having to share profits
Managing conflict and disagreements
6
Which of the following is not a reason why people may choose to set up their own business?
There is a lack of employment opportunities
There are higher risks than working for someone else
To enjoy autonomy in decision-making
To extend personal interests and hobbies
7
A stock exchange represents the market where secondhand shares can be bought and sold.
True
False
8
Disadvantages of sole traders do not include
A reliance on the efforts and liability of just one person
Autonomy in decision-making
The demands of having to be multiskilled
onstraint of lack of time and specialisation
9
In comparison to other forms of business, sole proprietors face the problem of
Administration and set-up procedures
Privacy of account
Continuity
Specialisation
10
A sole trader is a person who
Forms a business with another single person
Sets up the safest form of business organisation
Has exclusive responsibility for the running of the business
Is not legally liable for any debts of the business
11
Advantages of sole traders do not include
The various sources of finance available
Flexibility and freedom in decision-making
A high degree of confidentiality in financial reporting
Profits not having to be shared with others
12
Which document is issued to a limited liability company before it can start trading?
Articles of Association
Memorandum of Association
Deed of Partnership
Certificate of Incorporation
13
The liability of shareholders is limited to the amount of their investment.
True
False
14
State-owned enterprises are also known as public companies.
False
True
15
Public companies are examples of private sector businesses.
False
True

Unit 1.2 Types of organizations Flashcards | StudBud