Chapter 3: Forms of business organisation

Almost every country consists of two business sectors, the private sector and the public sector. Private sector businesses are operated and run by individuals, while public sector businesses are operated by the government. The types of businesses present in a sector can vary, so lets take a look at them.

Private Sector

Sole Traders

Sole traders are the most common form of business in the world, and take up as much as 90% of all businesses in a country. The business is owned and run by one person only. Even though he can employ people, he is still the sole proprietor of the business. These businesses are so common since there are so little legal requirements to set up:

• The owner must register with and send annual accounts to the government Tax Office.
• They must register their business names with the Registrar of Business Names.
• They must obey all basic laws for trading and commerce.

Chapter 4: Government and economic influences on business

The impact of business activity on society

All business activity has benefits and undesirable effects on society. These reasons are why governments want to have some control over business activity:

Possible benefits:

• Production of useful goods to satisfy customer wants.
• Create employment/increases workers living standards.
• Introduction of new products or processes that reduces costs and widen product range.
• Taxes help finance public services.
• Business earn foreign currency in exports and this could be spent on imports.

Chapter 5: Other influences on business

External constraints and constraints on business activity

Businesses cannot survive by neglecting the "real world", which includes influences that forces a business to make certain decisions or constraints that limits or controls actions. External constraints are things that businesses cannot control, these are:

• Technological change: New products.
• Technological change: New production processes.
• Increased competition.
• Environmental issues.
  

Chapter 6: Business costs and revenue

Business costs

All business activity involves some kind of cost. Managers need to think about the because:

• Whether costs are lower than revenues or not. Whether a business will make a profit or not.
• To compare costs at different locations.
• To help set prices.

There are two main types of costs, fixed and variable costs. Here are some types of costs:

• Fixed costs = stay the same regardless of the amount of output. They are there regardless of whether a business has made a profit or not. Also known as overheads.
• Variable costs = varies with the amount of goods produced. They can be classified as direct costs (directly related to a product).
• Total costs = fixed + variable costs

Chapter 7: Business Accounting

What are accounts an why are they necessary?

Accounts are financial records of a firm's transactions that is kept up to date by the accountants, who are qualified professionals responsible for keeping accurate accounts and producing the final accounts.

Every end of the year, a final accounts must be produced which gives details of:

• Profits and losses made.
• Current value of the business.
• Other financial results.

Limited companies are bound by law to publish these accounts, but not other businesses.