Forms of Ownership & Investment is one of 8 topics in the Grade 12 Business Studies CAPS syllabus, covered across 3 lessons on Study Vault. Below are real practice questions from this topic with full worked answers.
Sample practice questions
Easy
1. A sole trader (sole proprietorship) is owned by:
One person
Two to twenty partners
Multiple shareholders
A cooperative's members only
Answer: One person — A sole trader is a business owned and controlled by a single person, the simplest and cheapest form of ownership to establish.
Easy
2. What does "unlimited liability" mean for a sole trader?
The owner's personal assets can be used to pay off business debts
The business can never be sued
The owner has no responsibility for business debts
The business has no legal restrictions of any kind
Answer: The owner's personal assets can be used to pay off business debts — Unlimited liability means there is no legal separation between the owner's personal assets and the business's debts, so personal assets are at risk if the business cannot pay its debts.
Medium
3. What term describes the type of liability enjoyed by shareholders of a private or public company, where they can only lose the amount they invested?
Answer: Limited liability — Limited liability means shareholders' personal assets are protected, since the company is a separate legal entity and shareholders can only lose what they invested.
