Business Studies Multiple Choice Question – 4 January 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which ONE of the following is a reason why a sole trader would become a private limited company?

Select ONE answer:

  1. The business will have unlimited liability
  2. The risk of losing personal assets is reduced
  3. The business can keep financial records confidential
  4. Shareholders are liable for all debts

 

Show the workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Business Studies KS4 & KS3 classes

The answer is 2:

  1. The business will have unlimited liability – is not correct because a Ltd company does have limited liability.
  2. The risk of losing personal assets is reduced – is correct because for a Ltd company the risks are lower than a sole trader due to limited liability.
  3. Can keep financial records confidential – is not correct because a Ltd company has to publish accounts.
  4. Shareholders are liable for all debts – is not correct because shareholders are only liable for the amount they invest.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.