Short questions 3D Kitty Cheung 7

1(a) Adequate and stable sources of capital, better access to information

and statistical data
1(b) The HA has obtained capital and loans from the government over
the years and the HA has to repay part of it to the government.
1(c) The Water Supplies Department

2(a) Sole proprietorship

2(b) not a legal entity, unlimited liability
2(c) using his own savings or borrowingit from friends or family members

3(a) Advantage: All partners are responsible for the outcome of any
decisions made by any of the partners while the owner in sole
proprietorship bears all the responsibilities.
Disadvantage: A prior agreedment among all partners is required when it
comes to decision making in partnership. While the owner of a sole
proprietorship dos not need to get approval before making decisions.
Thus the owner engages a high degree of flexibility and autonomy.
3(b) No. When it goes bankrupt, even if the same restaurant is set up
again by another owner, it is considered a new firm. Partnership
dissolves when one partner quit. If it goes bankrupt, the person has to
pay the debt.

4) Advantages: The company does not dissolve even aftera partner dies
or quits, but a partnership does in this case. Private limited companies
are more favoring on long term planning of the the company and
business than partnership. Owners of private limited company bears
lmited liability, which means they do not have to deal with the
company’s outstanding debt. But partnership bears unlimited liability
and partners may need to use their personal asset to repay debts for the
partnership.
Disadvantages: Private limited companies are subjected to higher profit
tax than partnership. Private limited company has a more complicated
business registration procedure than partnership.

5(a) Firm A: Limited company

Firm B: Partnership
5(b) Legal status: Partnership is not a legal entity, partners are personally
liable for all charges against the firm while a limited company is a legal
entity. The company itself can own property and make contracts like a
person. Shareholders of the company do not have to bear legal
responsibility for the company.
Liability: A partnership is subjected to unlimited liability. If a owner goes
bankrupt, the firm has to be dissolved. While shareholders of a limited
company enjoy limited liability. Their liability of shareholders is confined
to the amount of their investment. If an owner goes bankrupt, the firm
can still exist.