Lesson 3.1.2

3.1.2 Understanding different business forms Quiz: AQA Business, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.1.2, Understanding different business forms: 20 multiple choice questions for the AQA Business (7132), Unit 1: What is business?, written with Revision Ninja.

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The 20 questions

  1. What type of legal liability does a sole trader have for business debts?

    • Joint liability
    • Limited liability
    • Shared liability
    • Unlimited liability

  2. How are shares in a private limited company (Ltd) sold?

    • Via government auction
    • To general public
    • On stock exchanges
    • Privately to investors

  3. What key feature distinguishes a public limited company (plc) from a private limited company (Ltd)?

    • Public share sales
    • Government ownership
    • Unlimited liability
    • Guaranteed dividends

  4. How is the total market capitalisation of a listed company calculated?

    • Shares times price
    • Profit times price
    • Revenue times shares
    • Shares times dividend

  5. What is a dividend paid by a company to its shareholders?

    • Tax refund amount
    • Share of profit
    • Asset valuation figure
    • Loan interest payment

  6. Where do social enterprises primarily reinvest most of their financial profits?

    • Government treasury
    • Executive bonuses
    • Shareholder dividends
    • Social aims

  7. How are public sector organisations mainly funded in the UK?

    • Bank loans
    • Share issues
    • Taxation
    • Venture capital

  8. What legal feature of a sole trader forces owners to pay business debts from personal funds?

    • Legal personality
    • Limited liability
    • Unlimited liability
    • Share capital

  9. A public limited company has 2,000,000 shares in issue and a share price of 3.50. What is its market capitalisation?

    • 1,750,000
    • 7,000,000
    • 5,500,000
    • 3,500,000

  10. A company distributes 600,000 of profit as dividends across 4,000,000 shares. What is the dividend per share?

    • 24p per share
    • 15p per share
    • 6.67p per share
    • 1.50p per share

  11. What is the primary benefit of converting from a sole trader to a private limited company?

    • Fewer legal regulations
    • Lower taxation rates
    • Guaranteed profits
    • Limited liability

  12. A public limited company announces a profit warning and its share price falls from 4.00 to 3.20. What is the percentage fall?

    • 32%
    • 8%
    • 25%
    • 20%

  13. What is the most likely immediate impact of a profit warning on a company share price?

    • It falls
    • It doubles
    • No change
    • It rises

  14. What does a registered charity normally do with any financial surplus it generates?

    • Pay dividends
    • Reinvest in aims
    • Pay corporate tax
    • Distribute to owners

  15. How do business objectives typically shift after floating on the stock exchange as a plc?

    • Long-term social aims
    • Short-term profit focus
    • Reduced legal regulation
    • Environmental priorities

  16. What is the main reason a sole trader chooses to incorporate as a limited company?

    • Protect personal assets
    • Eliminate variable costs
    • Avoid filing accounts
    • Ensure tax exemption

  17. A company issues 500,000 new shares at 4 each. What total finance is raised?

    • 2,000,000
    • 4,000,000
    • 125,000
    • 500,000

  18. What major legal requirement applies when a business converts into a public limited company?

    • Private share sales
    • Exemption from tax
    • Financial disclosure
    • Unlimited liability

  19. Why might a company share price increase despite reporting a fall in current profits?

    • Optimistic future expectations
    • Immediate tax cuts
    • Guaranteed revenue growth
    • Guaranteed dividend payments

  20. What is the primary objective of most public sector organisations?

    • Generating corporate profit
    • Increasing market capitalisation
    • Providing public services
    • Maximising shareholder dividends

All AQA Business quizzes