Accounting Multiple Choice Question – 23 April 2020

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

One disadvantage of a limited company, relative to other forms of business organisation is . . .?

Select ONE answer:

  1. greater regulation.
  2. the fact that the company’s liability is limited.
  3. the fact that the company is a legal entity separate and distinct from its owner(s).
  4. None of the above.

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

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct
  2. Not correct – The liability of a limited company (to pay debts) is not limited – it is the liability of shareholders in such a company which is limited (to any amount unpaid on their shares).
  3. Not correct – The fact that the company is a legal entity separate and distinct from its owner(s) is considered to be an advantage of a limited company, relative to other forms of business organisation because it is this feature which allows shareholders’ liability to be limited.
  4. Not correct

 

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