Types of business entity：練習題

A business owner wants to expand their small retail shop and is considering changing the legal structure from a sole trader to a partnership.
What is a significant disadvantage of forming a partnership compared to remaining a sole trader?

A business chooses to lease a piece of machinery rather than purchasing it using a bank loan. What is a possible reason for this decision?

A fast-growing manufacturing partnership is planning to convert into a private limited company. The partners are evaluating the financial and governance implications of this transition.

Which of the following represents a correct evaluation of this change from the perspective of the owners?

Which business entity is owned by shareholders but managed by a board of directors?

When comparing a partnership to a sole trader, which of the following is usually considered a drawback of the partnership structure?

State one disadvantage of a partnership business structure regarding the decision-making process.

Explain one reason why a business might choose leasing a non-current asset rather than purchasing it through a bank loan.

A business currently operates as a partnership without a formal agreement. Partner A has provided a loan of \(£100,000\) to the business. The partners are considering converting the business into a public limited company (plc) and replacing the loan with \(4\%\) debentures.

Calculate the change in Partner A's annual interest income and state her new legal status as a provider of finance.

An entrepreneur is deciding between setting up as a sole trader or forming a partnership with a colleague.

(a) State two advantages of operating as a sole trader compared to a partnership.
(b) Explain one disadvantage that a partnership has regarding the decision-making process.

A sole trader is considering taking on a partner to expand the business.

(a) Explain how the introduction of a partner could affect the management and control of the business.
(b) Discuss one financial benefit and one financial risk the sole trader faces when moving to a partnership structure.