Business Studies Multiple Choice Question – 5 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 business can keep financial records confidential
  3. Shareholders are liable for all debts
  4. Increased ability to raise finance

 

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 4:

  1. The business will have unlimited liability – is not correct because the Ltd company does have limited liability.
  2. Can keep financial records confidential – is not correct because the Ltd company has to publish accounts.
  3. Shareholders are liable for all debts – is not correct because shareholders are only liable for the amount they invest.
  4. Increased ability to raise finance – is correct because the Ltd company can sell shares to raise finance.

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