Unit 1: Business and its Environment
Types of Business Organisation
Free topical past paper practice on sole traders, partnerships, private and public limited companies, franchises, licensing and joint ventures.
For 6-mark questions, give a clear advantage and disadvantage, then explain the effect on the named business. Use terms like limited liability, unlimited liability, share capital, control, risk and access to finance accurately.
Key Concepts to Revise
Sole Trader
Owned and run by one person.
Unlimited liability means the owner’s personal assets are at risk.
Partnership
Owned by two or more people.
Partners share skills, capital, workload, profit and responsibility for debts.
Private Limited Company
An incorporated business owned by shareholders.
Shares are sold privately, not on the stock exchange.
Public Limited Company
Can sell shares to the public on a stock exchange.
Can raise large amounts of capital, but faces takeover risk and public reporting requirements.
Licensing
Permission for another business to use a product, brand, idea or technology.
Can help a business enter overseas markets.
Joint Venture
Two businesses work together on a project.
They share costs, risks, skills and profits.
Past Paper Questions
8 papers| Extract from Jonathon’s cash flow forecast July – September 2025 ($000) | |||
|---|---|---|---|
| July | August | September | |
| Cash inflow | 60 | 80 | Y |
| Cash outflow | 90 | 95 | 70 |
| Net cash flow | (30) | X | 20 |
| Opening balance | 20 | (10) | (25) |
| Closing balance | (10) | (25) | (5) |
Table 2.1
Do you think the advantages of operating as a sole trader business are greater than the disadvantages? Justify your answer.
[6]Define ‘business partnership’.
[2]Define ‘sole trader’.
[2]Define ‘licensing’.
[2]Explain one advantage and one disadvantage to SNT of forming a joint venture when entering new markets in other countries.
[6]| Extract from JTA’s financial statements for 2023 ($ million) | ||
|---|---|---|
| Revenue | Profit | Capital employed |
| 900 | 100 | 800 |
Table 3.1
Explain one advantage and one disadvantage of JTA being a public limited company.
[6]| Extract from Suliman’s data for his existing business | |||
|---|---|---|---|
| Break-even output | Current sales | Selling price per t-shirt | Variable cost per t-shirt |
| 500 t-shirts | 550 t-shirts | $3.99 | $1.99 |
Table 4.1
Do you think operating as a sole trader is the best type of organisation for a small business? Justify your answer.
[6]Explain one advantage and one disadvantage to Meena of operating as a sole trader rather than being in a partnership.
[6]Outline two characteristics Meena will need to become a successful entrepreneur.
[4]| Extract from CTF’s output data (children’s beds per month) | ||
|---|---|---|
| Break-even output | Current level of output | Maximum factory output |
| 14 000 | 18 000 | 25 000 |
Table 2.1
Define ‘public limited company’.
[2]