Podcast
Questions and Answers
What does surplus indicate in a financial context?
What does surplus indicate in a financial context?
- The total expenditures of a business
- The amount left after all expenses are met (correct)
- The total revenue generated before expenses
- The liabilities of a company
Which of the following correctly defines corporate income?
Which of the following correctly defines corporate income?
- The profit after expenses, taxes, and costs (correct)
- The amount spent on salaries and materials
- The legal obligations of the business
- The total revenue generated from sales
What is meant by unity of command in an organization?
What is meant by unity of command in an organization?
- Every employee should report to only one supervisor (correct)
- Supervisors must delegate authority to all employees
- Each employee may report to multiple supervisors
- Employees are allowed to choose their supervisors
Which elements are part of the business concept?
Which elements are part of the business concept?
Scarcity occurs when:
Scarcity occurs when:
What is the main purpose of measuring external efficiency?
What is the main purpose of measuring external efficiency?
Which of the following best describes real capital?
Which of the following best describes real capital?
What role does human capital play in the factors of production?
What role does human capital play in the factors of production?
What is one key advantage of operating as a sole trader?
What is one key advantage of operating as a sole trader?
Which legal form of enterprise has unlimited debt liability for its owners?
Which legal form of enterprise has unlimited debt liability for its owners?
What is a disadvantage of a partnership?
What is a disadvantage of a partnership?
Which of the following is true about limited liability partnerships?
Which of the following is true about limited liability partnerships?
What is the primary responsibility of a franchisee?
What is the primary responsibility of a franchisee?
What is generally a characteristic of a public limited company?
What is generally a characteristic of a public limited company?
Which form of business allows for shared decision-making while also limiting liabilities?
Which form of business allows for shared decision-making while also limiting liabilities?
What is a key disadvantage of being a sole trader?
What is a key disadvantage of being a sole trader?
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Study Notes
Surplus, Income, Expenditure, & Capital
- Surplus: Excess of income over expenditure.
- Income: Revenue generated before deducting expenses.
- Expenditure: Total costs (salaries, materials, overheads).
- Capital: Financial assets used for operations and growth (cash, machinery, buildings).
- Corporate income: Profit after deducting expenses and taxes.
- Revenue: Total income from sales before expenses (also called "top line").
- Liability: Legal responsibility for debts or obligations.
Efficiency and Control
- Control span: Number of employees a manager supervises.
- Unity of command: Each employee reports to only one supervisor.
- External efficiency: How well a company meets customer needs and competes.
- Internal efficiency: Effective resource use within the company.
Business Concept and Entrepreneurship
- Elements of a business concept: Customer need, customer group, product idea, and resources.
- Factors of production: Human capital (abilities), natural resources (raw materials), real capital (created assets), economic capital (money), and enterprises (entrepreneurs).
- Scarcity: Demand exceeding supply (e.g., fossil fuels).
- Successful external business idea: Efficiently and cheaply produces a product demanded by the target audience.
Starting a Business: Forms of Business
- Manufacturing companies: Process raw materials into goods.
- Service companies: Sell services.
- Trading companies: Sell other companies' goods.
Legal Forms of Enterprise
- Sole trader: One owner with unlimited liability. No minimum capital needed. No legal person. Income taxed as personal income.
- Partnership: Shared ownership, shared unlimited liability (solidarity). No minimum capital needed. No legal person. Income taxed as personal income.
- Limited liability partnership (LLP): Limited liability for partners. No minimum capital needed. No legal person.
- Limited company (public): Limited liability for shareholders. Minimum 500k SEK startup capital. Is a legal person. Income distributed as dividends.
- Limited company (private): Limited liability for shareholders. Minimum 25k SEK startup capital. Is a legal person. Income distributed as dividends.
- Co-operative/economic association: Collective ownership, shared profits based on contribution. Startup capital varies depending on structure. Not a legal person.
- Franchise: Franchisee owns individual location, shares profits with franchisor. Startup capital defined by franchisor. Not a legal person.
Legal Forms: Advantages and Disadvantages
- Sole trader: Advantages – simple to set up, full control, keeps all profits, low startup costs. Disadvantages – unlimited liability, limited capital raising, taxed as personal income, business continuity issues.
- Partnership: Advantages – relatively easy to form, shared responsibility & expertise. Disadvantages – unlimited and joint liability, potential for conflict, difficult to exit, taxed as personal income.
- Limited liability partnership: Advantages – limited partners have limited liability. Disadvantages - (Information incomplete in provided text).
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