Tag: Non-Profit

Alex is a sole trader who currently employs one person.

His business, Stafford Research, performs analysis for marketing and market research companies.

The workload is increasing rapidly, and Alex has realised that he now needs to employ three additional people.

This will mean that new office premises have to be found and new furniture and equipment purchased.

The business operates in a highly competitive sector within the Staffordshire business community.

Identify which TWO of the following factors are disadvantages of his current business structure of being a sole trader in this context:

A A floating charge cannot be uses to secure borrowing
B The Business’s liability is unlimited
C Alex’s liability is unlimited
D Financial statements do not have to be filed at Companies House
E The stringent legal rules that apply to the business’s constitution and the way it operates.

Select ONE answer:

1. AB
2. AC
3. AD
4. AE

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 2

1. Notcorrect
2. Correct  –>  A floating charge (which gives lenders security for their loan) cannot be created over the business of a sole trader (A), but it can be over the assets of a limited company. This could hinder his ability to raise finance. Currently, Angela has unlimited liability (C) and with the increasing financial commitments of the business it might be better for him personally to seek limited liability, though the business will still have unlimited liability for its own debts (B) – as a sole trader, the business’s liability is not distinct from his own.
3. Not correct
4. Not correct

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

Which of the following business structures necessarily has a legal identity that is separate from that of its owners or owners?

Select ONE answer:

1. A joint venture between two separate limited liability companies
2. A general partnership
3. A limited liability partnership
4. A strategic alliance

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 3

1. Not correct
2. Not correct
3. Correct –> Only the limited liability partnership necessarily exists as an entity separate from its owners. A general partnership is not a separate legal entity from the partners. A joint venture between two limited liability companies is usually another limited company with 50/50 ownership but does not necessarily have to be established in that way. A strategic alliance is an informal contractual or minority cross shareholding arrangement and normally no separate company is formed.
4. Not correct

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

Alex plc wishes to expand abroad.

It has decided to agree with a foreign manufacturer of a complementary product to market both products jointly in both countries.

What method of expansion has the company decided on?

Select ONE answer:

1. A group structure
2. A joint venture
3. A strategic alliance
4. A licensing agreement

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 3

1. Not correct
2. Not correct
3. Correct –> A group structure (A) implies one company owning one or more subsidiaries. A joint venture (B) implies that a third-party business is set up and owned by the joint venturers. A strategic alliance (C) is ”informal” co-operation, while a licensing agreement (D) involves giving permission to another company to manufacture or sell a product, or to use a brand name. In this circumstance, there is no new separate legal company, as would be expected for a joint venture, and no evidence of a licensing agreement. The two companies have instead agreed to enter into a loose and probably short-term strategic alliance.
4. Not correct

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

Alex Ltd is facing a period of rapid change and innovation in its operating markets.

According to Tom Burns and G M Stalker, which THREE of the following should the company seek to adopt in order to be effective in its business environment?

A A Theory X management style
B A Theory Y management style
C A wide, flat organisational structure
D A tall, narrow organisational structure
E Extensive use of delegation
F Limited use of delegation

Select ONE answer:

1. ABC
2. CDF
3. BCE
4. DAE

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 3

1. Not correct
2. Not correct
3. Correct –> In times of change, the Theory Y manager (B) recognises that the employees’ objectives will complement those of the organisation and commitment is a function of the ‘intrinsic’ rewards associated with their achievement (rather than just extrinsic rewards/punishments). The capacity to exercise imagination, ingenuity and creativity in the solution of organisational problems needs to be widely rather than narrowly distributed in the workforce. Wide, flat organisations (C) tend to be flexible, and employees are willing to form teams to tackle issues. Wide, flat organisations also imply a large amount of delegation (E) is needed.
   
4. Not correct

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