Key Terms (Unit 2)

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Private limited company: are small- to medium-sized businesses that are often run by a family or small group of owners who have provided share capital.

Public limited company: is a company whose shares may be purchased by the public and traded freely on the open market and whose share capital is not less than a statutory minimum.

Limited liability: The maximum amount a person participating in a business can lose or be charged in case of claims against the company or its bankruptcy. A stockholder in a corporation can only lose his/her investment.

The Memorandum of Association: The memorandum of association of a company, often simply called the memorandum, is the document that governs the relationship between the company and the outside. It is one of the documents required to incorporate a company in the United Kingdom, Ireland and India, and is also used in many of the common law jurisdictions of the Commonwealth.

The Articles of Association: These are the guidelines that explain the internal organization of the company. They are filed along with the memorandum of association when registering a company.

Fixed Assets: these are items that the business owns and will use over and over again. For Example... machinery and property.

Current Assets: these are items that the business owns but will ‘make use of’

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