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Accounting: All Topics
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What are the two main sectors used to classify organisations?
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Edexcel IGCSE Accounting
Accounting: All TopicsComplete deck
01·1.1 Types of business organisation
What are the two main sectors used to classify organisations?
Answer
The private sector and the public sector.
02·1.1 Types of business organisation
What is a private-sector organisation?
Answer
An organisation owned or operated by private individuals or businesses rather than the government.
03·1.1 Types of business organisation
What is a public-sector organisation?
Answer
An organisation owned or operated by the government to provide goods or services to the public.
04·1.1 Types of business organisation
What is the usual main aim of a private-sector business?
Answer
To earn profit for its owner or owners.
05·1.1 Types of business organisation
What is the usual main aim of a public-sector organisation?
Answer
To provide services to the public rather than primarily to earn profit.
06·1.1 Types of business organisation
What is a common source of finance for public-sector organisations?
Answer
Government funds raised through taxation, although some services may also charge fees.
07·1.1 Types of business organisation
What are two examples of typical private-sector organisations?
Answer
A privately owned shop and a privately owned restaurant.
08·1.1 Types of business organisation
What are two examples of typical public-sector organisations?
Answer
A state school and a government-operated hospital.
09·1.1 Types of business organisation
How does ownership distinguish private-sector and public-sector organisations?
Answer
Private-sector organisations are privately owned or operated; public-sector organisations are owned or operated by government.
10·1.1 Types of business organisation
How do their usual objectives differ between private and public sectors?
Answer
Private-sector businesses generally aim to make profit; public-sector organisations generally aim to provide public services.
11·1.1 Types of business organisation
How do typical sources of finance differ between private and public sectors?
Answer
Private businesses use owners' capital, profits or borrowing; public organisations generally use government funding, often supported by taxes and sometimes fees.
12·1.1 Types of business organisation
Why can a public-sector service still charge users?
Answer
Providing a public service does not always mean it is free; charges can help fund the service without making profit the primary aim.
13·1.1 Types of business organisation
Why is a public limited company not necessarily a public-sector organisation?
Answer
No. “Public limited” describes a company form whose shares may be offered to the public; it does not mean the government owns or runs it.
14·1.1 Types of business organisation
A privately owned bus company charges fares. Which sector is it in, and why?
Answer
Private sector: private ownership determines the sector, even though it provides public transport.
15·1.1 Types of business organisation
A government-run museum charges an entry fee. Which sector is it in, and why?
Answer
Public sector: the government runs it; charging fees does not make it a private-sector business.
16·1.1 Types of business organisation
A government hospital and a privately owned clinic both provide healthcare. How do their sectors differ?
Answer
The hospital is public sector because it is government-run; the clinic is private sector because it is privately owned, regardless of their shared service.
17·1.1 Types of business organisation
A company sells shares to the general public but has no government ownership. Is it in the public sector?
Answer
No. It is a private-sector business; a public share offering is not the same as public-sector ownership.
18·1.1 Types of business organisation
What is a sole trader?
Answer
A business owned and controlled by one individual.
19·1.1 Types of business organisation
What is another term for sole trader?
Answer
Sole proprietor.
20·1.1 Types of business organisation
Can a sole trader employ staff?
Answer
Yes. The business may employ staff, but it still has only one owner.
21·1.1 Types of business organisation
What does unlimited liability mean for a sole trader?
Answer
The owner is personally responsible for business debts and may have to use personal assets to pay them.
22·1.1 Types of business organisation
Who is entitled to the profit of a sole-trader business?
Answer
The sole trader, as the only owner.
23·1.1 Types of business organisation
Who normally makes the final business decisions in a sole tradership?
Answer
The sole trader.
24·1.1 Types of business organisation
What is capital or equity in a sole-trader business?
Answer
The owner's investment or financial interest in the business.
25·1.1 Types of business organisation
Why is a sole-trader business usually straightforward to establish?
Answer
It has one owner and generally fewer formation formalities and costs than an incorporated company.
26·1.1 Types of business organisation
Why can a sole trader make decisions quickly?
Answer
There are no co-owners whose agreement must first be obtained.
27·1.1 Types of business organisation
Why might a sole trader struggle to raise funds for expansion?
Answer
Funding often depends on one owner's savings and borrowing capacity, limiting the capital available.
28·1.1 Types of business organisation
Why is unlimited liability a disadvantage for a sole trader?
Answer
If the business cannot repay its debts, the owner's personal possessions or savings may be at risk.
29·1.1 Types of business organisation
Why can the absence of co-owners increase a sole trader's workload?
Answer
The owner carries ultimate responsibility for managing the business and cannot automatically share decisions or duties with partners.
30·1.1 Types of business organisation
Why is continuity a potential weakness of sole tradership?
Answer
The business is closely tied to its single owner, so illness, retirement or death can interrupt or end operations.