Question 1: Define a sole trader and explain one advantage and one disadvantage of this type of ownership.

Answer: A sole trader is a business owned and operated by one individual. An advantage is that the owner has full control over decisions; a disadvantage is that they bear all the financial risks alone.

Question 2: Describe what a partnership is and identify two key features of this ownership type.

Answer: A partnership is a business owned by two or more people who share profits and responsibilities. Key features include shared decision-making and joint liability.

Question 3: List three differences between a private limited company (Ltd) and a public limited company (PLC).

Answer: 1. A Ltd cannot sell shares to the public, while a PLC can. 2. A PLC can raise more capital through share sales. 3. The ownership of an Ltd is limited to a few shareholders, whereas a PLC's shares are traded on the stock market.

Question 4: Explain why a franchise might choose to operate as a franchise rather than starting a new business from scratch.

Answer: A franchise benefits from an established brand, proven business model, and ongoing support, which reduces the risk compared to starting a new business from scratch.

Question 5: Sketch a simple diagram to illustrate the difference between a sole trader and a partnership. Label the key features.

Answer: A correct sketch would show two separate categories with key features such as 'Owner: One person' for sole trader, and 'Owners: Two or more' for partnership, with arrows pointing to characteristics such as 'Unlimited liability' and 'Shared responsibilities'.

Question 6: Identify and explain one advantage and one disadvantage of a public limited company (PLC).

Answer: An advantage is that a PLC can raise large amounts of capital through the stock market. A disadvantage is that it is subject to strict regulations and public scrutiny.

Question 7: Imagine you are starting a new business and want to keep control over decision-making. Which ownership type would you choose and why?

Answer: I would choose to be a sole trader because it allows me to make all decisions independently and quickly.

Question 8: Describe what unlimited liability means and give an example of a type of business where this applies.

Answer: Unlimited liability means that the owner is personally responsible for all the debts of the business. This applies in sole traders and partnerships.

Question 9: Sketch a flowchart showing the different ownership types discussed and their main characteristics.

Answer: A correct flowchart would branch into Sole Trader, Partnership, Ltd, and PLC, with key features listed under each, such as 'Number of owners', 'Ability to sell shares', and 'Liability type'.

Question 10: Explain the concept of limited liability and why it might be attractive to business owners.

Answer: Limited liability means that owners' personal assets are protected and only the money invested in the business is at risk. It makes business ownership less risky.