Sole trader, partnership, LLC
AQA GCSE Business Studies revision on Sole trader, partnership, LLC. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
Which of the following is a key characteristic of a sole trader business?
- A) Limited liability for the owner
- B) Unlimited liability for the owner
- C) Separate legal identity from the owner
- D) Must publish annual financial reports
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Answer: Unlimited liability for the owner
Unlimited liability means that if the business fails, the owner's personal assets can be seized to pay off business debts. Unlike a limited company, there is no legal distinction between the individual and the business entity.
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Question 2
What is the term for a legal document that outlines how a partnership is managed and how profits are shared?
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Answer: Deed of partnership
A deed of partnership is a legally binding document that outlines the responsibilities of each partner, their capital contributions, and the profit-sharing ratios. It helps prevent disputes by clearly defining the rules of the business relationship.
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Question 3
Which feature distinguishes a Private Limited Company (Ltd) from a sole trader?
- A) Higher tax rates on all profits
- B) The ability to sell shares on the stock exchange
- C) Limited liability for shareholders
- D) The requirement to have at least 50 employees
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Answer: Limited liability for shareholders
Limited liability ensures that shareholders are only liable for the amount they invested in the company. This separates the business's legal identity from its owners, protecting their personal wealth from business insolvency.
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7 more questions on Sole trader, partnership, LLC — plus mistakes tracking and spaced repetition across the whole Business Studies spec.