A sole trader is a person who

Has exclusive responsibility for running the business

Sets up the safest form of business organisation

Has exclusive responsibility for running the business

Is legally liable for any debts of the business

Forms a business with another single person

In comparison to other forms of businesses, sole proprieters face the problem of

Administration set up procedures

Advantages of sole traders do not include

The various sources of finance available

Flexibility and freedom in decision making

Profits not having to be shared with others

A high degree of confidentiality in administration and financial reporting

The various sources of finance available

Disadvantages of sole traders exclude

The demands of having to be multi-skilled

A reliance on the efforts and liability of just one person

Constraint of lack of time and specialisation

Which of the following is not a necesary condition for an ordinary partnership

Signing the contents of a partnership deed

Having at least one partner with unlimited liability

Shares cannot be issued by the business

Which statement does not apply to charities

They are registered as having limited liability

They are not-for-profit organisations

They promote and raise money for good causes

They are private sector businesses

They are registered as having limited liability

Which of the statements are false?

The Board of Directors of a private limited company own the business

A private limited company cannot sell its shares on a stock exchange

Second-hand shares of public companies can be traded on a stock exchange

Public limited companies operate in the private sector

The Board of Directors of a private limited company own the business

Which of the following statements about shareholders is correct?

An advantage of shareholders is having limited liability

As co-owners of a corporation, they have equal voting rights

An advantage of shareholders is having limited liability

They own and control private and public limited companies

They are always given dividends twice a year as their return for investing in a company

Identify the incorrect statement below

Public companies operate in the public sector

Silent partner is another name for sleeping partner

A Deed of Partnership is advised as it helps to resolve disagreements

Shareholders are not personally liable for the debts of their business

The shareholders of a company

Are legally entitled to a share of the company's profits

Are wealthier than sole traders or partners

Are legally entitled to a share of the company's profits

Control the running of the business

Unincorporated means that a business

Has unlimited liability for its debts

Is a separate legal entity from its owners

Incorporated means that a business

Has limited liability for its debts

Has unlimited liability for its debts

Has limited liability for its debts

It is owned by at least two individuals

Practice Test: IB Business And Management- Business Organisation & Environment #1.2

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Practice Test: IB Business And Management- Business Organisation & Environment #1.2 - Quiz

Questions and Answers

1.

A public limited company can advertise its shares and have them quoted on the stock exchange
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A public limited company is a type of company that is allowed to sell its shares to the general public. By advertising its shares, the company can attract potential investors and increase the visibility of its stock. Having its shares quoted on the stock exchange means that the company's shares can be bought and sold by investors on the open market, providing liquidity and potentially increasing the company's valuation. Therefore, it is true that a public limited company can advertise its shares and have them quoted on the stock exchange.

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2.

The liability of shareholders is limited to the amount of their invetsment
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true because in a limited liability company, shareholders are only responsible for the amount they have invested in the company. This means that if the company incurs debts or legal liabilities, shareholders' personal assets are not at risk beyond their initial investment. This limited liability protection is one of the key advantages of this type of business structure, as it helps to protect shareholders from excessive financial risk.

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3.

All businesses have an aim to make profit for their owners
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement "All businesses have an aim to make profit for their owners" is false. While it is true that many businesses aim to make a profit, not all businesses have this as their sole objective. Some businesses may prioritize other goals such as providing a service to the community, promoting social or environmental causes, or simply breaking even to sustain their operations. Profit maximization is just one possible objective for businesses, but it is not a universal aim for all of them.

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4.

Survival is the main aim of businesses in the long run
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement "Survival is the main aim of businesses in the long run" is false. While survival is important for businesses, it is not the main aim in the long run. Businesses aim to not only survive but also thrive and grow in the long term. They strive to increase market share, generate profits, expand their customer base, and innovate. Simply surviving is not enough for businesses to remain competitive and successful in the long run.

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5.

Public corporations are also known as public companies
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Public corporations and public companies are not the same thing. Public corporations refer to government-owned entities that provide public services, while public companies are privately owned businesses that offer shares to the public. Therefore, the statement that public corporations are also known as public companies is false.

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6.

Public corporations operate in the public sector
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Public corporations do not necessarily operate in the public sector. While some public corporations may be owned and controlled by the government, there are also public corporations that operate in the private sector. Therefore, the statement that public corporations operate in the public sector is false.

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7.

Public limited companies (PLCs) are an example of public sector organisations, and private limited companies are an example of private sector organisations
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement is false because public limited companies (PLCs) are actually an example of private sector organizations, not public sector organizations. PLCs are privately owned companies whose shares are publicly traded on the stock exchange. On the other hand, public sector organizations are owned and operated by the government. Private limited companies, on the other hand, are also privately owned companies, but their shares are not publicly traded.

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8.

A not for profit organisation is any organisation that does not primarily aim to make a profit
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true because a not-for-profit organization is defined as an organization that does not have the primary objective of making a profit. Instead, these organizations aim to serve a specific cause or mission, such as charitable, educational, or social purposes. They typically reinvest any surplus funds back into their programs or services to further their mission rather than distributing profits to owners or shareholders.

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9.

All non-governmental organisations (NGOs) operate in the private sector
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
NGOs are non-governmental organizations that are independent of any government control or influence. They are typically established by individuals or groups with a specific social or environmental goal in mind. Since NGOs are not part of the government, they operate in the private sector. This means that they are not owned or controlled by the government and are funded through private donations, grants, or other sources of non-governmental funding. Therefore, the statement "All non-governmental organizations (NGOs) operate in the private sector" is true.

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1
0
10.

'Limited liability' means that if a firm is unable to pay back its debts, the owners of the business can lose everything, including their personal possessions
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement is false. Limited liability means that the owners of a business are not personally responsible for the debts and obligations of the business. Their personal possessions are protected, and they are only liable for the amount they have invested in the business. This concept provides a level of financial protection for business owners and encourages entrepreneurship.

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11.

Presssure groups can constrain as well as foster business activity
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Pressure groups have the ability to both constrain and foster business activity. On one hand, pressure groups can impose regulations and restrictions on businesses, limiting their activities and forcing them to comply with certain standards. This can constrain business activity by increasing costs and hindering growth. On the other hand, pressure groups can also advocate for policies and practices that benefit businesses, such as tax incentives or deregulation. This can foster business activity by creating a more favorable environment for growth and innovation. Therefore, it is true that pressure groups can have both constraining and fostering effects on business activity.

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12.

'Unlimited liability' means that if a firm is unable to pay back its debts, the owners of the business can lose everything, including their personal possessions
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
'Unlimited liability' refers to a legal concept in which the owners of a business are personally responsible for all the debts and obligations of the business. This means that if the firm is unable to repay its debts, the owners can be held personally liable and may have to use their personal possessions to settle the outstanding debts. Therefore, the statement that 'Unlimited liability' means that if a firm is unable to pay back its debts, the owners of the business can lose everything, including their personal possessions is true.

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13.

A sole trader is a person who
- A.
  
  Sets up the safest form of business organisation
- B.
  
  Has exclusive responsibility for running the business
- C.
  
  Is legally liable for any debts of the business
- D.
  
  Forms a business with another single person
Correct Answer
B. Has exclusive responsibility for running the business

Explanation
A sole trader is a person who has exclusive responsibility for running the business. This means that they are solely in charge of making decisions, managing operations, and taking on all the responsibilities and risks associated with the business. Unlike other forms of business organizations where there may be multiple owners or partners, a sole trader operates the business on their own, without sharing the decision-making or liability with anyone else.

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14.

In comparison to other forms of businesses, sole proprieters face the problem of
- A.
  
  Specialisation
- B.
  
  Continuity
- C.
  
  Administration set up procedures
- D.
  
  Privacy of account
Correct Answer
B. Continuity

Explanation
Sole proprietors face the problem of continuity. Unlike other forms of businesses, where the business can continue even if the owner leaves or dies, sole proprietorships are tied to the individual owner. If the owner is unable to continue running the business due to retirement, illness, or death, the business may cease to exist. This lack of continuity can be a challenge for sole proprietors as it can disrupt operations and potentially result in the closure of the business.

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15.

Advantages of sole traders do not include
- A.
  
  Flexibility and freedom in decision making
- B.
  
  Profits not having to be shared with others
- C.
  
  A high degree of confidentiality in administration and financial reporting
- D.
  
  The various sources of finance available
Correct Answer
D. The various sources of finance available

Explanation
Sole traders have several advantages, including flexibility and freedom in decision making, profits not having to be shared with others, and a high degree of confidentiality in administration and financial reporting. However, the various sources of finance available is not an advantage of sole traders. Sole traders typically have limited access to external sources of finance compared to larger businesses, which may hinder their ability to raise capital for growth or expansion.

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16.

Disadvantages of sole traders exclude
- A.
  
  The demands of having to be multi-skilled
- B.
  
  A reliance on the efforts and liability of just one person
- C.
  
  Constraint of lack of time and specialisation
- D.
  
  Autonomy in decision-making
Correct Answer
D. Autonomy in decision-making

Explanation
The disadvantages of sole traders listed in the question include having to be multi-skilled, relying on the efforts and liability of just one person, and facing constraints of lack of time and specialization. However, the answer, autonomy in decision-making, is not a disadvantage but rather an advantage of being a sole trader. As the sole owner and decision-maker of the business, a sole trader has the freedom to make decisions without having to consult or consider the opinions of others. This autonomy allows for quick decision-making and flexibility in running the business.

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17.

Which of the following is not a necesary condition for an ordinary partnership
- A.
  
  Signing the contents of a partnership deed
- B.
  
  Having between 2-20 partners
- C.
  
  Having at least one partner with unlimited liability
- D.
  
  Shares cannot be issued by the business
Correct Answer
A. Signing the contents of a partnership deed

Explanation
Signing the contents of a partnership deed is not a necessary condition for an ordinary partnership. While a partnership deed is a legal document that outlines the terms and conditions of the partnership, it is not a requirement for the formation of a partnership. Partnerships can be formed verbally or through an implied agreement, although it is generally recommended to have a written partnership agreement to avoid misunderstandings and conflicts. Therefore, signing a partnership deed is not essential for the existence of an ordinary partnership.

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18.

Which statement does not apply to charities
- A.
  
  They are not-for-profit organisations
- B.
  
  They promote and raise money for good causes
- C.
  
  They are private sector businesses
- D.
  
  They are registered as having limited liability
Correct Answer
D. They are registered as having limited liability

Explanation
The statement "They are registered as having limited liability" does not apply to charities. Limited liability is a legal status that protects the personal assets of owners or shareholders from being used to settle business debts. Charities, on the other hand, are typically registered as non-profit organizations and do not have owners or shareholders. They exist to promote and raise money for good causes, but they are not private sector businesses with limited liability.

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19.

Which of the statements are false?
- A.
  
  A private limited company cannot sell its shares on a stock exchange
- B.
  
  Second-hand shares of public companies can be traded on a stock exchange
- C.
  
  Public limited companies operate in the private sector
- D.
  
  The Board of Directors of a private limited company own the business
Correct Answer
D. The Board of Directors of a private limited company own the business

Explanation
The statement that the Board of Directors of a private limited company own the business is false. In a private limited company, the ownership is typically divided among multiple shareholders, and the Board of Directors is responsible for managing the company on behalf of the shareholders. The Board of Directors does not personally own the business, but rather acts in the best interest of the shareholders.

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20.

Which of the following statements about shareholders is correct?
- A.
  
  As co-owners of a corporation, they have equal voting rights
- B.
  
  An advantage of shareholders is having limited liability
- C.
  
  They own and control private and public limited companies
- D.
  
  They are always given dividends twice a year as their return for investing in a company
Correct Answer
B. An advantage of shareholders is having limited liability

Explanation
An advantage of shareholders is having limited liability. This means that shareholders are not personally responsible for the debts and obligations of the corporation. Their liability is limited to the amount of their investment in the company. This provides protection for shareholders' personal assets in case the company faces financial difficulties or legal issues.

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21.

Identify the incorrect statement below
- A.
  
  Public companies operate in the public sector
- B.
  
  Silent partner is another name for sleeping partner
- C.
  
  A Deed of Partnership is advised as it helps to resolve disagreements
- D.
  
  Shareholders are not personally liable for the debts of their business
Correct Answer
A. Public companies operate in the public sector

Explanation
Public companies do not necessarily operate in the public sector. Public companies are privately owned companies that offer shares to the public through an initial public offering (IPO). These shares are then traded on the stock exchange. The public sector, on the other hand, refers to the part of the economy that is controlled by the government.

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22.

The shareholders of a company
- A.
  
  Are wealthier than sole traders or partners
- B.
  
  All have voting rights
- C.
  
  Are legally entitled to a share of the company's profits
- D.
  
  Control the running of the business
Correct Answer
C. Are legally entitled to a share of the company's profits

Explanation
Shareholders of a company are legally entitled to a share of the company's profits. This means that they have the right to receive a portion of the profits generated by the company in the form of dividends. Unlike sole traders or partners, who solely bear the financial risks and rewards of their businesses, shareholders have the advantage of being able to share in the profits of a company without being personally liable for its debts. While shareholders may not necessarily control the day-to-day running of the business, they do have the power to elect the board of directors who oversee the management of the company.

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23.

Which of the following is least likely to be a non-profit organisation?
- A.
  
  Museums
- B.
  
  Performance art groups
- C.
  
  Police force
- D.
  
  Public transport firms
Correct Answer
D. Public transport firms

Explanation
Public transport firms are least likely to be a non-profit organization because they are typically for-profit entities that provide transportation services to the public in exchange for fares or fees. Unlike museums, performance art groups, and police forces, public transport firms operate as businesses and aim to generate revenue and make a profit. They often receive government subsidies or contracts, but their primary objective is to provide transportation services as a commercial enterprise.

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24.

Unincorporated means that a business
- A.
  
  Has shareholders
- B.
  
  Has unlimited liability for its debts
- C.
  
  Is a separate legal entity from its owners
- D.
  
  Is owned by one person
Correct Answer
B. Has unlimited liability for its debts

Explanation
Unincorporated means that a business has unlimited liability for its debts. This means that the owners of the business are personally responsible for all debts and obligations of the business. Unlike a corporation, where the owners have limited liability and are not personally responsible for the debts of the business, in an unincorporated business structure, the owners' personal assets can be used to satisfy business debts. Therefore, the correct answer is that an unincorporated business has unlimited liability for its debts.

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25.

Incorporated means that a business
- A.
  
  Does not have shareholders
- B.
  
  Has unlimited liability for its debts
- C.
  
  Has limited liability for its debts
- D.
  
  It is owned by at least two individuals
Correct Answer
C. Has limited liability for its debts

Explanation
A business that is incorporated has limited liability for its debts. This means that the owners or shareholders of the business are not personally responsible for the debts and obligations of the company. Their liability is limited to the amount of money they have invested in the business. This is one of the main benefits of incorporating a business, as it helps protect the personal assets of the owners in case of financial difficulties or legal issues.

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26.

Which of the following is not a pressure group
- A.
  
  World Wildlife Fund
- B.
  
  Oxfam International
- C.
  
  National Union of Teachers
- D.
  
  Non-executive directors of a company
Correct Answer
D. Non-executive directors of a company

Explanation
Non-executive directors of a company are not considered a pressure group because they do not advocate for specific causes or interests. Pressure groups are typically formed by individuals or organizations to influence public policies and decisions in order to promote their own interests or agendas. Non-executive directors, on the other hand, are appointed to provide independent oversight and guidance to a company's board of directors, ensuring that the company operates in the best interests of its shareholders. While they may have influence within the company, their primary role is not to exert pressure on external entities or advocate for specific issues.

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27.

Which of the following is not a reason why people may choose to set up their own business?
- A.
  
  There are higher risks than working for someone else
- B.
  
  To enjoy autonomy in decision making
- C.
  
  To extend personal interests and hobbies
- D.
  
  A lack of employment opportunities
Correct Answer
A. There are higher risks than working for someone else

Explanation
Setting up a business involves higher risks than working for someone else because entrepreneurs have to invest their own capital, take on financial liabilities, and face the possibility of failure. However, this is not a reason why people may choose to set up their own business. The other options, such as enjoying autonomy in decision making, extending personal interests and hobbies, and a lack of employment opportunities, are more likely motivations for individuals to start their own business.

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28.

Which statement does not apply to sole traders?
- A.
  
  The business is owned by one person
- B.
  
  There may be more than one employee
- C.
  
  There can be more than one employer
- D.
  
  It is the most common form of ownership
Correct Answer
C. There can be more than one employer

Explanation
The statement "There can be more than one employer" does not apply to sole traders. Sole traders are businesses owned by one person, and typically, they do not have employees or employers. The owner is responsible for all aspects of the business and does not have the ability to hire other employers. Sole traders are usually self-employed individuals who work alone or with a small number of employees, if any.

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29.

Which of the following is least liely to be classed as a non-profit organisation?
- A.
  
  Private fee paying schools or colleges
- B.
  
  Charities
- C.
  
  Pressure groups
- D.
  
  Consultancy services
Correct Answer
D. Consultancy services

Explanation
Consultancy services are least likely to be classified as a non-profit organization because they are typically profit-oriented businesses that provide expert advice and services to clients in exchange for a fee. Unlike charities, pressure groups, and even private fee-paying schools or colleges, consultancy services operate with the primary goal of generating revenue and maximizing profits rather than serving a social or public interest without the intention of making a profit.

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30.

Which of the following is least likely to be a disadvantage of a partnership?
- A.
  
  Having to share profits
- B.
  
  Dealing with different sources of finance
- C.
  
  Less control of business activities
- D.
  
  Managing conflict and disagreement
Correct Answer
B. Dealing with different sources of finance

Explanation
Dealing with different sources of finance is least likely to be a disadvantage of a partnership because partnerships typically have easier access to funding than sole proprietorships. Partnerships can pool their resources and potentially have a larger capital base, making it easier to secure financing from various sources. Additionally, partners can bring in their own personal funds or assets to contribute to the business. Therefore, dealing with different sources of finance is not typically considered a disadvantage in a partnership.

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31.

Which of the following is least likely to be a disadvantage of a private limited company?
- A.
  
  Having to share profits
- B.
  
  Greater administration costs and effort
- C.
  
  Joint and several liability
- D.
  
  Loss of control
Correct Answer
C. Joint and several liability

Explanation
Joint and several liability is least likely to be a disadvantage of a private limited company. Joint and several liability means that the shareholders are personally liable for the debts and obligations of the company. However, in a private limited company, the liability of the shareholders is limited to the amount they have invested in the company. This means that they are not personally liable for the company's debts beyond their investment, making joint and several liability less likely to be a disadvantage for them.

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32.

A public sector enterprise is
- A.
  
  An organisation owned by the state or government
- B.
  
  An organisation owned by shareholders who can trade shares on the share market
- C.
  
  An organisation owned by private shareholders only
- D.
  
  Any business that carries 'Ltd' or 'Plc' after its name
Correct Answer
A. An organisation owned by the state or government

Explanation
A public sector enterprise refers to an organization that is owned and operated by the state or government. This means that the government has control over the decision-making process and holds the ownership rights of the enterprise. The government may establish public sector enterprises to provide essential services to the public, promote economic development, or regulate certain industries. These enterprises are funded by public funds and aim to serve the best interests of the society as a whole.

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33.

A non-profit organisation that operates in the private sector and runs for the benefit of others in society is known as a
- A.
  
  Charity
- B.
  
  Non-governmental organisation
- C.
  
  Non-profit organisation
- D.
  
  Not-for-profit organisation
Correct Answer
B. Non-governmental organisation

Explanation
A non-governmental organization (NGO) is a type of non-profit organization that operates independently from the government and is focused on addressing social or environmental issues. NGOs are typically funded by donations or grants and work to provide services or advocate for specific causes. While charities and not-for-profit organizations can also operate for the benefit of others in society, the term "non-governmental organization" specifically refers to organizations that are not affiliated with the government.

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34.

The process of selling or transferring state-owned organisations to the private sector is known as
- A.
  
  Liquidation
- B.
  
  Privatisation
- C.
  
  Transference
- D.
  
  Nationalisation
Correct Answer
B. Privatisation

Explanation
Privatisation refers to the process of selling or transferring state-owned organizations to the private sector. This involves the transfer of ownership, control, and management of these organizations from the government to private individuals or companies. Privatisation is often pursued to increase efficiency, promote competition, and attract private investment in order to improve the performance of these organizations. This can lead to increased productivity, innovation, and economic growth.

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35.

A public sector corporation is an organisation that
- A.
  
  Is owned by the government
- B.
  
  Issues shares to the general public on the stock exchange
- C.
  
  Seeks to make profit as its main objective
- D.
  
  Has limited liability
Correct Answer
A. Is owned by the government

Explanation
A public sector corporation is an organization that is owned by the government. This means that the government has control over the corporation's operations and decision-making processes. Public sector corporations are typically established to provide essential services or goods to the public, such as healthcare, transportation, or utilities. Unlike private sector corporations, their main objective is not to make a profit but to serve the public interest. Therefore, they may not issue shares to the general public on the stock exchange and may not have limited liability.

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36.

A drawback of public limited companies is that they
- A.
  
  Have limited liability
- B.
  
  Have to publish certain certain financial information to all stakeholders
- C.
  
  Rely on government funding
- D.
  
  Represent high risk to investors
Correct Answer
B. Have to publish certain certain financial information to all stakeholders

Explanation
Public limited companies have to publish certain financial information to all stakeholders. This is a drawback because it means that the company's financial information becomes public knowledge, which may not be desirable for the company. It can also be time-consuming and costly to prepare and publish these reports. Additionally, making financial information available to all stakeholders can potentially harm the company's competitive advantage or give competitors insight into its operations and strategies.

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37.

Which is an example of public sector expenditure?
- A.
  
  Investment by public limited companies
- B.
  
  Donations made to charities and non-profit organisations
- C.
  
  Spending on state education and health care
- D.
  
  Spending by the general public on company stocks and shares
Correct Answer
C. Spending on state education and health care

Explanation
Spending on state education and health care is an example of public sector expenditure because these services are provided by the government and funded through tax revenue. Public sector expenditure refers to the government's spending on goods, services, and investments to meet the needs of the public and provide essential services. In this case, the government is directly responsible for funding and providing education and healthcare services to the public, making it a clear example of public sector expenditure.

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38.

____________: Involvement of the private sector, in the form of management expertise and/or financial investment, in public sector projects aimed at benefiting the public

Correct Answer
Public-private partnership
Public private partnership
PPP

Explanation
Public-private partnership refers to the involvement of the private sector in public sector projects aimed at benefiting the public. This can include the contribution of management expertise and/or financial investment from private companies. By collaborating with the public sector, private entities can bring their resources and expertise to help deliver public services and infrastructure projects more efficiently. This partnership allows for the sharing of risks and rewards between the public and private entities involved, ultimately leading to better outcomes for the public.

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39.

_____________: The owner(s) is personally and fully responsible for all losses and debts of the business

Correct Answer
Unlimited liability

Explanation
Unlimited liability refers to a situation where the owner(s) of a business are held personally and fully responsible for all the losses and debts incurred by the business. This means that if the business fails or faces financial difficulties, the owner(s) can be held liable to cover these losses from their personal assets. Unlike limited liability, where the owner(s) are only liable for the amount they have invested in the business, unlimited liability puts the owner(s) at a greater risk as their personal assets can be used to settle the business debts.

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4
40.

_______________: A limited company, often a large business, with the legal right tom sell shares to the general public. Its share price is quoted on the national stock exchange

Correct Answer
Public limited company
PLC

Explanation
A public limited company, also known as PLC, is a type of limited company that has the legal right to sell shares to the general public. It is often a large business and its share price is quoted on the national stock exchange. This means that the company's shares can be bought and sold by anyone in the public, allowing for greater liquidity and potential for investment.

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41.

______________: a corporation's first offer to sell shares to the public

Correct Answer
IPO
Initial public offering

Explanation
An initial public offering (IPO) refers to the first time a corporation offers its shares to the public for purchase. This is typically done to raise capital and allow the company to expand its operations. During an IPO, the company's shares are made available for purchase on a stock exchange, enabling individual investors to become shareholders in the company. This process allows the company to raise funds and increase its visibility in the market. Therefore, IPO or initial public offering is the correct answer for the given question.

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42.

_____________: A legal concept that makes each partner in a partnership legally liable for all the debts of the partnership.

Correct Answer
Joint and several liability

Explanation
Joint and several liability is a legal concept that holds each partner in a partnership fully responsible for all the debts and obligations of the partnership. This means that if the partnership cannot fulfill its financial obligations, each partner can be held personally liable for the entire debt, not just a portion of it. This ensures that creditors have the ability to collect the full amount owed from any individual partner, providing them with greater protection.

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43.

If one partner commits fraud and embezzles money leaving the partnership with unsustainable debts, each partner is _____________________ for that debt and is personally responsible to the creditors .

Correct Answer
jointly and severally liable

Explanation
If one partner commits fraud and embezzles money, leaving the partnership with unsustainable debts, each partner is jointly and severally liable for that debt and is personally responsible to the creditors. This means that each partner is fully responsible for the entire debt, not just their share. Creditors can pursue any partner individually for the full amount of the debt, or they can pursue all partners collectively. This ensures that the creditors have a better chance of recovering their money, even if one partner is unable to pay their share.

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44.

_____________: The only liability, or potential loss, a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder

Correct Answer
Limited liability

Explanation
Limited liability refers to the legal protection provided to shareholders of a company. It means that shareholders are not personally responsible for the debts or obligations of the company beyond the amount they have invested. In case the company fails, the shareholders' liability is limited to the amount they have put into the company, and their personal wealth is not at risk. This principle encourages investment and entrepreneurship by providing a level of security to shareholders, allowing them to take calculated risks without fear of losing their entire wealth.

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45.

________________: Someone who takes the financial risk of starting and managing a new venture

Correct Answer
Entrepreneur

Explanation
An entrepreneur is someone who takes the financial risk of starting and managing a new venture. This person is willing to invest their own money and resources into a business idea, with the hope of making a profit. They are responsible for making important decisions, organizing resources, and taking on the challenges and uncertainties that come with starting a new business. Entrepreneurs are often innovative and have a strong drive to succeed, as they must navigate the complexities of the market and competition to make their venture successful.

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46.

_____________: A business which is formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities

Correct Answer
Partnership

Explanation
A partnership is a business structure where two or more individuals come together to form a business and share the capital investment and responsibilities. In a partnership, each partner contributes to the business financially and shares in the profits and losses. This type of business structure allows for shared decision-making and shared liability among the partners.

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47.

The number of partners a partnership can legally have is between 2 and 60
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
A partnership can legally have any number of partners, not just between 2 and 60. The number of partners in a partnership can vary depending on the specific laws and regulations of the jurisdiction in which the partnership is established. Therefore, the statement that the number of partners a partnership can legally have is between 2 and 60 is incorrect.

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48.

The number of partners a partnership can legally have is between
- A.
  
  2-60
- B.
  
  2-20
- C.
  
  2-50
- D.
  
  2-100
Correct Answer
B. 2-20

Explanation
A partnership is a business structure where two or more individuals come together to carry out a business venture. The number of partners that a partnership can legally have depends on the jurisdiction and the specific partnership agreement. In this case, the correct answer is 2-20, indicating that a partnership can legally have a minimum of 2 partners and a maximum of 20 partners.

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49.

_____________: The business sector that is comprised of businesses owned and controlled by individuals or groups of individuals

Correct Answer
Private Sector
The private sector

Explanation
The private sector refers to the business sector that is owned and controlled by individuals or groups of individuals, rather than by the government or public sector. This sector includes privately owned businesses, corporations, partnerships, and sole proprietorships. Private sector businesses operate with the primary goal of generating profit and are subject to market forces and competition. They play a significant role in driving economic growth and providing employment opportunities.

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50.

_____________: The business sector that is comprised of businesses owned and controlled by governments or the state

Correct Answer
Public sector
State sector

Explanation
The correct answer is "Public sector, State sector". The question is asking for the term that refers to businesses owned and controlled by governments or the state. Both "public sector" and "state sector" are commonly used to describe this type of business sector.

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Practice Test: IB Business And Management- Business Organisation & Environment #1.2

A public limited company can advertise its shares and have them quoted on the stock exchange

The liability of shareholders is limited to the amount of their invetsment

All businesses have an aim to make profit for their owners

Survival is the main aim of businesses in the long run

Public corporations are also known as public companies

Public corporations operate in the public sector

Public limited companies (PLCs) are an example of public sector organisations, and private limited companies are an example of private sector organisations

A not for profit organisation is any organisation that does not primarily aim to make a profit

All non-governmental organisations (NGOs) operate in the private sector

'Limited liability' means that if a firm is unable to pay back its debts, the owners of the business can lose everything, including their personal possessions

Presssure groups can constrain as well as foster business activity

'Unlimited liability' means that if a firm is unable to pay back its debts, the owners of the business can lose everything, including their personal possessions

A sole trader is a person who

In comparison to other forms of businesses, sole proprieters face the problem of

Advantages of sole traders do not include

Disadvantages of sole traders exclude

Which of the following is not a necesary condition for an ordinary partnership

Which statement does not apply to charities

Which of the statements are false?

Which of the following statements about shareholders is correct?

Identify the incorrect statement below

The shareholders of a company

Which of the following is least likely to be a non-profit organisation?

Unincorporated means that a business

Incorporated means that a business

Which of the following is not a pressure group

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

Which statement does not apply to sole traders?

Which of the following is least liely to be classed as a non-profit organisation?

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

Which of the following is least likely to be a disadvantage of a private limited company?

A public sector enterprise is

A non-profit organisation that operates in the private sector and runs for the benefit of others in society is known as a

The process of selling or transferring state-owned organisations to the private sector is known as

A public sector corporation is an organisation that

A drawback of public limited companies is that they

Which is an example of public sector expenditure?

____________: Involvement of the private sector, in the form of management expertise and/or financial investment, in public sector projects aimed at benefiting the public

_____________: The owner(s) is personally and fully responsible for all losses and debts of the business

_______________: A limited company, often a large business, with the legal right tom sell shares to the general public. Its share price is quoted on the national stock exchange

______________: a corporation's first offer to sell shares to the public

_____________: A legal concept that makes each partner in a partnership legally liable for all the debts of the partnership.

If one partner commits fraud and embezzles money leaving the partnership with unsustainable debts, each partner is _____________________ for that debt and is personally responsible to the creditors .

_____________: The only liability, or potential loss, a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder

________________: Someone who takes the financial risk of starting and managing a new venture

_____________: A business which is formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities

The number of partners a partnership can legally have is between 2 and 60

The number of partners a partnership can legally have is between

_____________: The business sector that is comprised of businesses owned and controlled by individuals or groups of individuals

_____________: The business sector that is comprised of businesses owned and controlled by governments or the state