Cambridge International AS and A Level Business

2  Business structure
Multiple-choice questions
1 The primary sector of the economy includes businesses engaged in which one of the following activities?

a manufacturing

b retailing

c farming

d tourism

2 Industrialisation is considered to bring many benefits to an economy. Which one of the

following is not a benefit of industrialisation?

a Value is added to the country’s output of raw materials.

b Gross domestic product (GDP) increases.

c There is an associated movement of people from the country to the towns.

d Expanding manufacturing businesses will result in more jobs being created.

3 Which one of the following is not a characteristic of a sole-trader business?

a There is a single owner of the business.

b The owner has unlimited liability.

c The owner is able to keep all of the profits.

d The business has a separate legal identity.

4 A consequence of having limited liability is that:

a owners are, financially, responsible only for the amount they have invested
in the business

b owners risk not only the money they have invested in a business, but also
their personal wealth

c investing in business is free of risk

d owners have no control over their business

5 Which one of the following is not a characteristic of a limited company?

a It is owned by shareholders.

b Owners have limited liability.

c The company has a separate legal identity.

d The death of an owner usually results in the dissolution of the business.

© Cambridge University Press 2014  Cambridge International AS and A Level Business Multiple-choice questions – Chapter 2 1
Cambridge International AS and A Level Business

 6 Which one of the following statements applies to a public limited company?

a Shareholders have unlimited liability.

b It is owned by the state.

c There is a greater risk of takeover due to the availability of its shares on the
Stock Exchange.

d It is in the public sector.

 7 Which one of the following reasons is the most likely motivation for a private limited
company converting to a plc?

a to benefit from limited liability

b to benefit from government financial support

c to raise capital

d to increase the divorce between ownership and control

 8 Which one of the following information appears in the Memorandum of Association?

(i) the maximum share capital for which the company seeks authorisation

(ii) the internal workings and control of the business

(iii) the names of directors

a point (i) only

b points (ii) and (iii) only

c points (i), (ii) and (iii)

d none of the above

 9 Which one of the following is not a form of legal structure for a business?

a partnership

b franchise

c private limited company

d public limited company

10 A franchise is defined as a business that:

a exists to promote the interests of its workers

b uses the name, logo and trading systems of an existing business

c owns and controls a number of separate businesses, but does not

unite them into a unified company

d is a joint venture between two or more businesses

© Cambridge University Press 2014  Cambridge International AS and A Level Business Multiple-choice questions – Chapter 2 2
Cambridge International AS and A Level Business

11 A joint venture is:

a a takeover of one business by another to create a much larger business

b a decision by two companies to raise prices together

c an agreement by two or more businesses to set up a new operation together

sharing profit and risks

d an agreement between two people to create a business partnership which

shares profits between them

12 A public corporation is defined as:

a an enterprise that is owned and controlled by the state

b an enterprise that sells shares on the Stock Exchange

c an enterprise that is in the private sector

d a business run by members of the public

© Cambridge University Press 2014  Cambridge International AS and A Level Business Multiple-choice questions – Chapter 2 3