Forms of business ownerships: Practice Questions

Which of the following is a feature of the capital structure of a private limited company?

Which of the following is a non-accounting factor that might influence the choice of a business entity type?

A sole proprietor decides to convert his business into a private limited company. How will the transfer of profit for the year be recorded in the books of the new company compared to the old business?

What is the term for the unit of ownership in a private limited company that represents a portion of the shareholders' interest?

A business owner is concerned about the capital commitment required for initial set-up. If the owner has limited personal funds and cannot easily borrow from banks, which form of ownership would be least suitable?

Identify the form of business entity that is characterized by having at least two partners who share profits and losses, but also provides them with limited liability protection.

Identify the specific accounting theory that justifies treating a sole proprietor's personal car as separate from the business's delivery van, and explain why this theory remains applicable even though the business has no separate legal identity.

Apart from the financial situation of the owner, state two non-accounting factors an entrepreneur should consider when deciding between a sole proprietorship and a partnership.