It measures the likelihood that a particular outcome may or may not occur
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What is liability?
It means responsibility for the financial debts of the business - a legal claim for payment
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What type of liability do sole traders and partnerships have?
Unlimited liability
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What is unlimited liability?
An individual have no legal separation from the business so all their collateral can be used to pay debts
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What are the advantages of being a sole trader?
You have full control over the business and the owner receives all the profit
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What are the disadvantages of being a sole trader?
Unlimited liability for all debts and it can be hard to raise finance
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What type of liability do private and public companies have?
Limited liability
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What is limited liability?
It protects shareholders as they are legally separate from the business. The most that shareholders have to contribute towards business debts is the amount of capital originally invested
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What are the advantages of being a private limited company?
Limited liability for business debts and easier to get bank loans
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What are the disadvantages of being a private limited company?
More regulation, sharing the profits and shareholder involvement
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What is a private limited company?
The shares are not available to the general public and are generally smaller companies
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What is a public limited company?
They are owned by shareholders and they can raise funds by selling shares to the general public
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Other cards in this set
Card 2
Front
What is liability?
Back
It means responsibility for the financial debts of the business - a legal claim for payment
Card 3
Front
What type of liability do sole traders and partnerships have?
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