1.1.1 Types of Business Entities
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Businesses exist to make a profit by producing and selling goods and services. Profit is the difference between the income and expenses of a business.
While businesses share a similar purpose, they can still differ significantly. Businesses vary in terms of size, financing, and legal structure. These factors influence what is reported in their financial statements.
A business can operate as a sole trader, a partnership, or a limited liability company.
| Exam advice |
| In the exam, students may be tested on the ability to recognise the key features of each type of business entity. |