Business Admin Level 3- Business
awareness AAT level 3 Study Guide
Exam With 100% Correct Answers.
limited liability - Answer the owners liability for debts is limited (usually to how much they
have invested)
unlimited liability - Answer the owners liability for debts is unlimited, their personal assets
might be at risk if the business cant pay its debts
sole traders - Answer 1 person running their own business
have unlimited liability
(usually small and easy to set up as low regulations)
partnerships - Answer 2 plus people
unlimited liability and not allwed to own property in its name (partnership act 1890)
each partner is taxed individually (like sole trader)
limited liability partnerships - Answer taxed like a partnership but must be registered at
companies house
limited liability partnership act 2000
limited partnerships - Answer limited partnership act 2000
1 plus partners with unlimited liability and 1 plus partners with limited liability
partners with limited liability cant take part in management
must be registered at companies house
limited companies - Answer owners can be involved but no automatic right to be involved
owners and company taxed separately
private limited companies (ltd) - Answer companies act 2006
1 plus directors
if paid for shares in full owners (shareholders) liability is limited to amount of shares
must be registered to companies house
,public limited companies (plc) - Answer companies act 2006
2 plus directors and 2 plus shareholders
must have qualified company secretary
liability limited to their amount of shares
not for profit organisations characteristics - Answer both private and public sector
1. dont have external shareholders (dont raise capital this way)
2. dont issue dividends (retain surplus in organisation)
3. objectives include a social, environmental and charitable aspect
make 'profit', can either be incorporated or unincorporated
not for profit organisations- private sector - Answer inc nearly all charities, voluntary and
community organisations sports and housing associates
most dont have profit as main goal and money to pay for services is raised thorugh donations
and grants
not for profit organisations- public sector - Answer made of organisations that provide all
public services in the uk eg emergency services healthcare education housing
most dont have profit as primary objective and money is raised throught taxes
sole traders governance - Answer make all decisions themselves so no diverse viewpoints
owner isnt a separate legal entity from business
sole traders funding - Answer usually through personal sources either profits from business
they reinvest or loans from family or friends
bank loans harder as need formal business plans
partnerships governance - Answer need partnership agreement to set out each partners
rights and responsibilities how business operates day to day and how profits are shared
and what would happen in event of death or new partners
partnerships funding - Answer banks more likely to lend money as less risky
more partners more risk is shared
NOT a separate legal entity from owners
limited liability partnerships governance - Answer must have partnerships agreement or
otehr legal document to show how organisation will be administered
, must be registered at companies house
limited liability partnerships funding - Answer registered at companies house
can own property or contracs makes getting finance easier as separate legal entities
limited partnerships governance - Answer partnership agreement
must be registerred at companies house
limited partnership funding - Answer in scotland separate legal entity from partners and
easier to get finance
in england and wales have no separate legal entity and financed same way as partnership
private limited company governance - Answer at least 1 director
operate in accordance with its articles of association
owner sometimes a shareholder and director
private limited company funding - Answer shares traded privately (family and friends)
easier to raise funds especially for larger ltds
public limited company governance - Answer directors control it and operates in accordance
of articles of association
most have independent non executive directors as requirement of corporate government code
public limited company funding - Answer shares freely bought and sold on stock exchange
not for profit organisations governance - Answer depends on structure of organisation
dont have shareholders but have a board of trustees
not for profit organisations funding - Answer any profit or surplus reinvested into the
organisation
public sector - Answer governance- accountable to government
funding- funded by tax payers
7 legal duties under companies act 2006 for directors - Answer 1 duty to act within powers
2 duty to promote the success of the company
awareness AAT level 3 Study Guide
Exam With 100% Correct Answers.
limited liability - Answer the owners liability for debts is limited (usually to how much they
have invested)
unlimited liability - Answer the owners liability for debts is unlimited, their personal assets
might be at risk if the business cant pay its debts
sole traders - Answer 1 person running their own business
have unlimited liability
(usually small and easy to set up as low regulations)
partnerships - Answer 2 plus people
unlimited liability and not allwed to own property in its name (partnership act 1890)
each partner is taxed individually (like sole trader)
limited liability partnerships - Answer taxed like a partnership but must be registered at
companies house
limited liability partnership act 2000
limited partnerships - Answer limited partnership act 2000
1 plus partners with unlimited liability and 1 plus partners with limited liability
partners with limited liability cant take part in management
must be registered at companies house
limited companies - Answer owners can be involved but no automatic right to be involved
owners and company taxed separately
private limited companies (ltd) - Answer companies act 2006
1 plus directors
if paid for shares in full owners (shareholders) liability is limited to amount of shares
must be registered to companies house
,public limited companies (plc) - Answer companies act 2006
2 plus directors and 2 plus shareholders
must have qualified company secretary
liability limited to their amount of shares
not for profit organisations characteristics - Answer both private and public sector
1. dont have external shareholders (dont raise capital this way)
2. dont issue dividends (retain surplus in organisation)
3. objectives include a social, environmental and charitable aspect
make 'profit', can either be incorporated or unincorporated
not for profit organisations- private sector - Answer inc nearly all charities, voluntary and
community organisations sports and housing associates
most dont have profit as main goal and money to pay for services is raised thorugh donations
and grants
not for profit organisations- public sector - Answer made of organisations that provide all
public services in the uk eg emergency services healthcare education housing
most dont have profit as primary objective and money is raised throught taxes
sole traders governance - Answer make all decisions themselves so no diverse viewpoints
owner isnt a separate legal entity from business
sole traders funding - Answer usually through personal sources either profits from business
they reinvest or loans from family or friends
bank loans harder as need formal business plans
partnerships governance - Answer need partnership agreement to set out each partners
rights and responsibilities how business operates day to day and how profits are shared
and what would happen in event of death or new partners
partnerships funding - Answer banks more likely to lend money as less risky
more partners more risk is shared
NOT a separate legal entity from owners
limited liability partnerships governance - Answer must have partnerships agreement or
otehr legal document to show how organisation will be administered
, must be registered at companies house
limited liability partnerships funding - Answer registered at companies house
can own property or contracs makes getting finance easier as separate legal entities
limited partnerships governance - Answer partnership agreement
must be registerred at companies house
limited partnership funding - Answer in scotland separate legal entity from partners and
easier to get finance
in england and wales have no separate legal entity and financed same way as partnership
private limited company governance - Answer at least 1 director
operate in accordance with its articles of association
owner sometimes a shareholder and director
private limited company funding - Answer shares traded privately (family and friends)
easier to raise funds especially for larger ltds
public limited company governance - Answer directors control it and operates in accordance
of articles of association
most have independent non executive directors as requirement of corporate government code
public limited company funding - Answer shares freely bought and sold on stock exchange
not for profit organisations governance - Answer depends on structure of organisation
dont have shareholders but have a board of trustees
not for profit organisations funding - Answer any profit or surplus reinvested into the
organisation
public sector - Answer governance- accountable to government
funding- funded by tax payers
7 legal duties under companies act 2006 for directors - Answer 1 duty to act within powers
2 duty to promote the success of the company
