1.2 Forms of Business (AQA A Level Business): Flashcards

False.

Unlimited liability means personal assets are at risk — the owner is personally responsible for all debts.

Money/record-keeping skills, good customer service, simple marketing, and problem-solving/resilience (any two).

A company is an incorporated business registered at Companies House, and a separate legal entity from its owners.

It can own assets, sign contracts, and sue or be sued in its own name, separately from its owners.

Limited liability means shareholders' personal risk is limited to the amount they invested — their personal assets are protected.

A private limited company (Ltd) is owned by shareholders (often family or friends), with shares not sold to the public.

Limited liability, greater access to finance, easily transferred ownership, and business continuity (any two).

More expensive/time-consuming to set up, complex operating rules, and required annual reporting and auditing.

A PLC is a large business that sells shares publicly on the stock exchange, and carries the suffix 'PLC'.

Selling shares on the stock exchange for the first time — a complex legal process that raises large amounts of share capital.

Large capital raised, risk spread among many shareholders, shares easily traded, and high visibility (any two).

Complex regulations, expensive to set up, a short-term profit focus, and hostile-takeover risk.

Each ordinary share gives its owner a vote at the company's Annual General Meeting.

To reduce risk (limited liability), attract new capital, and provide business continuity.

To raise large amounts of share capital; original shareholders often gain significant financial rewards.

When a private limited company floats, its original owners are likely to lose some control as ownership is diluted.

False.

A private limited company (Ltd) does not sell shares to the public; a PLC does.

True.

As incorporated businesses, companies must publish annual accounts and have them independently audited.

When businesses form a separate limited company to achieve a specific objective, usually dissolved on completion.

The public sector is made up of organisations run or owned by the government or local authorities.

Healthcare, education, policing/justice, and waste collection (any two).

Mainly through taxation, though sometimes a small fee or charge is added.

It is strategically important (e.g. defence), provides essential services (e.g. water), or supplies merit goods (e.g. education).

A public corporation is government-owned but trades like a business, earning most of its money by selling goods or services.

The BBC, Network Rail, or Ordnance Survey.

To keep control of services with a clear public interest that are best run in a commercial way.

Selling a public corporation to private owners is known as privatisation.

British Airways and BT (privatised in the 1980s), or UK water companies such as Southern Water.

Public services provide merit goods, such as education or health, that private firms may not supply in sufficient quantity.

False.

A public corporation is government-owned, though it trades like a business.

True.

Public services are mainly funded through taxation, sometimes with a small additional charge.

A non-profit organisation can earn a surplus, but any surplus goes back into the cause rather than to owners.

They may have employees, but often rely on volunteers to provide services.

To meet a local need, improve lives, protect nature/history, or promote inclusion.

A social enterprise is a business whose primary purpose is social or environmental impact, in addition to making a profit.

It is reinvested into the enterprise to expand its social work.

A social enterprise owned and controlled by workers or customers, whose members elect directors and share profits.

An organisation run for the benefit of members, keeping profit inside to improve services or pay member bonuses (e.g. Nationwide).

A social enterprise's aim is to create social or environmental impact, as well as profit.

A good reputation attracts staff and customer loyalty, and deserving causes gain financial support.

Limited surpluses for reinvestment, slow decision-making, and exposure to media scrutiny.

A non-profit organisation can earn a surplus, but the money goes back into the cause.

False.

A non-profit can make a surplus — but it is reinvested into the cause, not paid to owners.

False.

Its primary purpose is social or environmental impact; profit is reinvested to expand that work.

To provide long-term capital in return for dividends, a possible rise in the share price, and a vote at the AGM.

A dividend is a cash payment from company profits to shareholders, usually issued annually.

When the share price rises, so a shareholder can sell later for more than they paid.

Cash rewards (dividends and share-price gains) and a vote at the Annual General Meeting.

The share price can fall, dividends may not be paid, and if the business fails the shares become worthless.

The share price is the current value of one ordinary share in a company.

It rises when more shares are bought than sold, and falls when more are sold than bought.

Company profits, economic conditions, industry trends, news/rumours, competitor actions, and regulation/tax (any two).

A rising share price is a vote of confidence in a company.

It needs to sell fewer new shares to raise cash, can secure loans on better terms, and keeps staff motivated (share options).

False.

A rising price signals confidence but doesn't hand the company cash unless new shares are issued.

They centre on survival, steady income and personal fulfilment; rapid expansion is rarely a priority.

A PLC is more financial and growth-driven — e.g. increasing earnings per share, paying dividends, building market share.

A private limited company's objectives often mix growth with maintaining family ownership.

True.

E.g. a sole trader reflects the owner's passion, while a PLC balances purpose with shareholder value.

A preference shareholder receives a fixed dividend and is less exposed to risk than an ordinary shareholder.