C) external and internal auditors' functions. Unit V Types of Private Sector Organization

Grammar: Perfect Tenses

Wordlist

annual	щорічний	ежегодный
appropriate	виділяти, надавати	выделять, присваивать
be responsible	бути відповідальним	быть ответственным
entrepreneur	підприємець	предприниматель
legal existence	законне існування	законное существование
limit	обмеження, межа	ограничение, предел
limited liability	обмежена відповідальність	ограниченная ответственность
partnership	товариство, компанія	товарищество, компания
run the company	керувати компанією	управлять компанией
sole trader	одноособовий торговець	единоличный торговец
unincorporated business	неакціонерна компанія	неакционерная компания

I. Read the text and determine the main features of unincorporated businesses.

The main types of organizations in the UK economy are found in the private and public sectors.

UK economy

Private sector

Public sector

Sole traders

Partnerships

Companies

Other forms, e.g. cooperatives

Public corporations and nationalized industries

Local authorities

State services, e.g. education

Limited

PLC

Private sector firms are owned by individuals, rather than by the state, and these owners – entrepreneurs – seek to make profit by producing and selling their goods and services.

Sole traders and partnerships

A typical example of a sole trader is the traditional "corner shop". Partnerships are again traditionally associated with the professions, such as accountants and lawyers. Many people can be employed by a sole trader organization: the term “sole” refers to the fact that there is a single owner. Sole traders and partnerships are examples of unincorporated businesses. The key features of unincorporated businesses are that:

1. These firms have no separate legal existence from their owner(s). the firms cannot enter into contracts in their own name, and the owners are responsible for business debts.

2. There is unlimited liability for these business debts.

Unlimited liability means that the owners of a business have to use their personal wealth to meet any business debts that cannot be paid from their firm’s resources.

The main difference in accounting terms is how profit is dealt with. With a sole trader, there is no problem – one person, one profit. With a partnership, however, this single profit must be appropriated-shared out-between (at least) two partners.

Another feature affecting the accounts is that the death or retirement of an existing partner, or the introduction of a new partner, means that the existing partnership ends.

Limited companies

Unlike sole traders and partnerships, limited companies have a separate legal existence from that of their owners (shareholders): the company can take, and defend, legal actions in its own name. Its shareholders also have the benefit of limited liability.

Limited liability means that owners of a company can only lose the amount they have invested (or have agreed to invest) in the company.

With companies there tends to be a separation of ownership and control. Unlike sole trades and partnerships, where the owners normally run the business themselves, the shareholders of a limited company elect directors (at the AGM – annual general meeting) who then delegate by appointing managers to run the company on a day-to-day basis.

The two classes of company are private, with the word ’limited’ or ‘ltd’ at the end of their name, and public, with ‘public limited company’ or ‘plc’ at the end of their name. As their name suggests, PLCs can invite the public to invest in their shares.