Types Of Business Organisation
Bayani Gaba-gaba
Before a single transaction is recorded, an accountant needs to know one thing: what kind of organisation is this? A hospital run by the government, a market trader working alone, and two friends who open a bakery together are all organisations, but the rules that govern their money, their liability and their financial statements are very different.
In this lesson you will learn how public sector and private sector organisations differ, how sole traders and partnerships are structured and financed, and who the many groups of people are that rely on a business's financial statements, and why each of them reads those statements differently.
Manufura
- Explain the characteristics of public sector organisations, private sector organisations, sole traders and partnerships
- Explain the connection between stakeholders and a business, identifying the stakeholders' use of the business's financial statements
Takardar Darasi
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- Which of the following is funded mainly through taxation and aims to provide a public service rather than a profit? A) A partnership B) A sole trader C) A public sector organisation D) A private limited company Answer: C
- Which feature is shared by both sole traders and partnerships? A) Owners normally have unlimited liability B) There must always be at least two owners C) Legal registration of the business is compulsory D) Profit is always shared equally Answer: A
- A partnership agreement most commonly sets out which of the following? A) The government's tax rate B) The profit-sharing ratio between partners C) The rate of value added tax charged to customers D) The public sector's annual budget Answer: B
- Which stakeholder is most likely to use the financial statements to decide whether to extend trade credit? A) A competitor B) A supplier C) An employee D) The government Answer: B
- What is the main disadvantage of being a sole trader compared with a partnership? A) Profit must be shared with others B) Decisions take longer to make C) Capital available is usually more limited D) The business requires formal legal registration Answer: C
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