Take this Quiz: GCSE Business: Enterprise and Ownership | Zestly

Question 1

A sole trader named Arthur runs a small repair shop that has accumulated debts of ten thousand pounds, but the business only has assets worth two thousand pounds. What does unlimited liability mean for Arthur in this situation?

Accepted Answer

Arthur is personally responsible for the remaining eight thousand pounds and may have to sell his own possessions to pay it.

Answer

Arthur can declare that the business is bankrupt, which prevents creditors from seeking any further payment from him.

Answer

Arthur is only liable for the two thousand pounds currently held in the business assets, and the remaining debt is legally cancelled.

Answer

Arthur is protected from the debt because the business is a separate legal entity from his personal finances.

Question 2

Sarah is a shareholder in a private limited company that has failed and owes money to suppliers. What is the nature of her liability?

Accepted Answer

Sarah only risks losing the money she originally invested in the company shares.

Answer

Sarah is liable for a portion of the debt proportional to the number of shares she owns.

Answer

Sarah is personally responsible for all the company's debts and must pay them from her savings.

Answer

The company's debts are automatically cancelled because the business has ceased trading.

Question 3

David runs a graphic design business on his own and has started turning work away because he cannot keep up. He is thinking of taking on a partner with the same qualifications, who could handle half the projects. What does he gain, and what does he give up?

Accepted Answer

He gains capacity, somebody to share the risk with and a second opinion on decisions; he gives up half the profit and the right to settle anything on his own, and he becomes liable for commitments the partner makes in the firm's name.

Answer

He gains limited liability, because a partnership is a separate legal person in the way a company is.

Answer

He gains a larger share of the profit, because two people bring in more work than one and each keeps what they bring in.

Answer

He gains capacity and gives up nothing of substance, since a partnership is simply two sole traders sharing an office.

Question 4

A franchisee pays a royalty of six per cent of sales. If the franchisee achieves annual sales of two hundred and fifty thousand pounds, what is the royalty payment, and what is the nature of the franchise agreement?

Answer

The royalty is fifteen thousand pounds, and the franchisee has total freedom to change the business model.

Answer

The royalty is twenty-five thousand pounds, and the franchisee receives no support from the franchisor.

Answer

The royalty is ten thousand pounds, and the franchisee owns the brand name outright.

Answer

The royalty is fifteen thousand pounds, and the franchisee receives support and a brand name but must follow strict operational rules.

Question 5

A new cafe owner states: 'I want to be the most popular shop in town' and 'I want to achieve a net profit of five thousand pounds by the end of December'. Which statement is which?

Answer

Both are objectives because they relate to business success.

Answer

Both are aims because they are future-oriented goals.

Answer

The first is an aim, and the second is an objective.

Answer

The first is an objective, and the second is an aim.