PART A

CHAPTER 1: THE PURPOSE AND TYPES OF BUSINESS ORGANISATIONS

1. Which of the following is NOT a key feature of an organisation?

A Controlled performance
B Collective goals
C Social arrangements
D Creation of a product or service (2 marks)

2. Which of the following organisations is normally found in the public sector?

A. Schools
B. Charities
C. Clubs
D. Businesses (2 marks)

3. The public sector is normally concerned with:

A. A making profit from the sale of goods
B. providing services to specific groups funded from charitable donations
C. the provision of basic government services
D. raising funds by subscriptions from members to provide common services
(2 marks)

4. NA Co is a company which specialises in forestry. It has recently purchased B Co,

which runs a chain of recreational resorts. A has allowed B to build several new resorts
on land which is owned by A, but which it is no longer able to use. The resorts have
proven highly profitable and popular. Which of the following best explains the reason
for the improved performance of the combined entity?
A. Specialisation
B. Social interactivity
C. Synergy
D. Service

5. Which of the following statements regarding limited companies is correct?

A. Public limited companies have access to a wider pool of finance than
partnerships or sole traders
B. Both public and private limited companies are allowed to sell shares to the
public
C. Companies are always owned by many different investors
D. Shareholders are liable for any debts the company may incur (2 marks)

6. Consider the following list of different organisations:

(i) Government departments
(ii) Partnerships
(iii) Charities
(iv) Companies
Which of these organisations would normally be classified as BOTH a not-for-profit
organisation AND a private sector organisation?
A. (i) and (iii) only
B. (iii) only
C. (i) only

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 D. (ii) and (iii) only (2 marks)
7. ‘An organisation that is owned and democratically controlled by its members.’ To
which type of organisation does this definition relate?
A. Charities
B. Non-governmental organisations
C. Co-operatives
D. Private limited companies (2 marks)

8. Westeros is an organisation which imports computers into country A and sells them the
public in order to make a profit. It is owned by fifteen individual investors, each of
whom owns an equal number of shares in Westeros. Westeros is not a public limited
company. Which of the following is likely to be the most appropriate source of finance
for Westeros?
A. Central government funding
B. The existing owners of Westeros
C. Issue of shares to the public
D. Donations from the public

9. Consider the following statements:

(i) Not-for-profit organisations (NFPs) have varied objectives, which depend on
the needs of their members or the sections of society they were created to
benefit.
(ii) The primary objective of government-funded organisations is to reduce costs of
their operations and thus minimise the burden on tax payers. Which of these
statements is/are correct?
A. (i) only
B. (ii) only
C. Both
D. Neither (2 marks)

10. Consider the following statement: Charities would usually be classified as a type of
non-governmental organisation (NGO) Is this statement TRUE or FALSE?
A. True
B. False

11. The primary goal in non-profit organisations is the

maximisation of profits
A. reward to its employees
B. shareholders' wealth
C. provision of goods/services

12. Which of the following is an example of a mutual organisation?

A. Bank
B. Hospital
C. ACCA
D. Government Department

13. What is the most appropriate goal of the firm?

A. Shareholder wealth maximisation
B. Profit maximisation

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 C. Stakeholder maximisation
14. Which of the following statements is true?
A. Partnerships offer the same benefits as limited companies
B. Sole traders have no personal liability for business debts
C. Limited Companies are classed as a separate legal entity, therefore, the
shareholders are not personally liable for any debts of the business
D. A partnership can be made up of no more than 20 partners

15. Which of the following are owners of a limited company?

A. Non-executive directors
B. Stakeholders
C. Shareholders

16. Which of the following is one of the key aspects of Buchanan and Huczynski's
definition of an organisation?
A. Shared profits
B. Regular reporting
C. Controlled performance
D. Clearly defined structure

17. Which of the following does not fall within the definition of an organisation given by
Buchanan and Huczynski:
A. service companies
B. factories
C. retail companies
D. political parties
E. shareholders in a quoted company
F. charities
G. local councils
H. the army, navy and air force
I. schools

18. How can a business organisation differ from one another? Which one is False
A. Size
B. Technology
C. Have inputs which are processed and provide an output
D. Ownership

19. A private sector organisation is one owned or run by:

A. Central Government
B. Local Government
C. Government agencies
D. None of the above.

20. ‘An organisation is a social arrangement which pursues

collective........................................, which controls its own performance and which has
a boundary separating it from its environment.’ Which of the following words best
completes this sentence?
A. Profits
B. Stakeholders

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 C. Goals
D. Tactics (2 marks)

21. What is the term given to the idea that the combined output of a number of individuals
working together will exceed that of the same individuals working separately?
A. Sympathy
B. Specialisation
C. Synergy
D. Systems thinking (2 marks)

22. Which of the following statements is true?

A. Limited company status means that a company is only allowed to trade up to a
predetermined turnover level in any one year.
B. For organisations that have limited company status, ownership and control are
legally separate.
C. The benefit of being a sole trader is that you have no personal liability for the
debts of your business.
D. Partnerships offer the same benefits as limited companies but are usually
formed by professionals such as doctors and solicitors. (2 marks)

23. An organisation owned or run by central or local government or government agencies

is part of the voluntary sector. Is this statement true or false?
A. True
B. False (1 mark)

24. 1 Private companies can raise share capital by advertising to the general public.
2 Private companies can raise share capital from venture capitalists
Are these statements true or false?
A. Statement 1 is true and statement 2 is false
B. Statement 1 is false and statement 2 is true
C. Both statements are true
D. Both statements are false

25. Which of the following groups are the owners of a limited company?
A. Executive directors
B. Non-executive directors
C. Stakeholders
D. Shareholders

26. Which of the following would be considered to be an organisation according to the

definition produced by Buchanan and Huczynski?
(i) A sole trader
(ii) A tennis club
(iii) A hospital
A. (i), (ii) and (iii)
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i) and (iii) only

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27. Jared is organising a social event. Which of the following would be benefits of him
forming a committee to manage the planning process and the event itself?
(i) It would help to overcome his limitations, by bringing on board other people
with different skills to him.
(ii) It would save time through the joint efforts of everyone on the committee.
(iii) It would help to satisfy Jared’s social needs.
(iv) All members of the committee would have to be skilled in all aspectsof
managing the social event.
A. (i), (ii) and (iii) only
B. (i), (iii) and (iv) only
C. All of the above
D. None of the above

28. Many schools run fund-raising events such as fêtes, where the intention is to make a
profit. This makes them ‘profit-seeking’.
Is this statement:
A. True
B. False

29. Which of the following are usually seen as the primary objectives of companies?
(i) To maximise the wealth of shareholders
(ii) To protect the environment
(iii) To make a profit
A. (i), (ii) and (iii)
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i) and (iii) only

30. Which of the following organisations is most likely to be classified as part of the public
sector?
A. A charity
B. A social club
C. A school
D. A public limited company

31. Which of the following statements regarding types of business is correct?

A. A Partnerships are owned and run by one or more people
B. Private limited companies can sell shares to the public
C. Shareholders in companies typically have limited liability
D. The owners of sole traders typically have limited liability

32. Green Watch is an independent environmental charity set up to lobby the government
for improved environmental regulation on business. What type of organisation is Green
Watch most likely to be classed as?
A. Public sector
B. Co-operative
C. Non-governmental
D. Commercial

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33. Which of the following is NOT a benefit that organisations have over individuals?
A. They allow the sharing skills and knowledge
B. They enable people to perform tasks they would be unable toachieve on their
own
C. They enable synergy to be achieved
D. They speed up the time taken to make decisions

34. Which of the following statements regarding organisations are correct?

(i) Companies tend to raise money from central government.

(ii) Most sole traders and partnerships have the aim of maximising owner wealth.
(iii) Public sector organisations are controlled by the central government.
(iv) Charities form part of the public sector.
A. (i) and (ii) only
B. (iii) and (iv) only
C. (ii) and (iii) only
D. (ii) and (iv) only

SECTION B

QUESTION 1

Here are four statements relating to the features of different types of organisation:
Required:
A. This type of organisation can sell its shares to the public.
B. This type of organisation is owned and run by two or more peoplewho are
legally indistinguishable from the organisation itself.
C. This type of organisation is controlled by the government.
D. This type of organisation is owned and democratically controlled by its
members.

(a) Identify the description above which is associated with each of the following
types of organisation, by selecting A, B, C, D or none.
(i) Private limited company
(ii) Partnership
(iii) Public limited company
(iv) Co-operative
(v) Public sector organisation
(vi) Sole trader
(0.5 marks each, total = 3 marks)

(b) Below are four types of organisation:

A. Charities
B. Schools
C. Limited companies
D. Police forces

Write down which two of the above are most likely to be classified as part
of the private sector by selecting TWO of the letters from (A, B, C, D).
(0.5 marks each, total = 1 mark)

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(Total: 4 marks)