When a case states an ownership form, your job is to use its general features, such as who decides, who shares profit and how much an owner can lose, and link them to the business. Your job is not to add specific laws, filing duties or tax rates that the case never mentions.
This builds on distinguishing ownership from management. Business Studies 0450 and Business 0264 are separate Cambridge specifications, so check which ownership forms and features your syllabus version names on the Cambridge IGCSE Business page.
How do you use a form safely?
Follow this routine:
- Quote the form exactly as the case states it.
- List the general features your syllabus teaches for it: decision-making, profit sharing, risk and ability to raise money.
- Link each feature to a case fact, such as an investment amount or an agreed split.
- Leave out anything the case does not support, including named laws, tax rates and reporting duties.
If a feature depends on the exact law in a country, say it depends on the legal rules that apply, rather than guessing the detail.
Worked example
Kedai Jahit Mawar is a tailoring shop in Johor Bahru run as a partnership between Aina and Wei Jian. Aina put in RM30,000 and Wei Jian RM15,000.
The case states they agreed to share profit in the ratio 2 : 1. Profit this year was RM72,000. The case also states that Aina makes the final decision on fabric orders.
Step 1, ratio to shares. 2 + 1 = 3 parts. One part = RM72,000 ÷ 3 = RM24,000.
Step 2, split. Aina gets 2 × 24,000 = RM48,000. Wei Jian gets 1 × 24,000 = RM24,000.
Step 3, check. 48,000 + 24,000 = RM72,000, which matches the profit.
Step 4, explain with the case. The split follows the agreed ratio, not the amount invested alone. Aina invested twice as much (RM30,000 against RM15,000), and the 2 : 1 ratio happens to match this. The case gives the agreement, so that is the evidence to cite.
Step 5, what you can and cannot say. You can say profit and decisions are shared by agreement and Aina holds the fabric decision. You cannot say “partnerships must register with a particular body” or “the shop pays tax at a certain rate”, because the case gave no such facts.
Now suppose the same shop were a company, and the case stated that owners can lose only what they invested. If the business lost RM200,000 and Aina had invested RM50,000, then using the stated feature her loss is limited to RM50,000, not RM200,000 and not a share of the debt beyond that. The statement in the case supplies the rule you need.
The mistake to watch for
Students sometimes add a legal rule from memory, which may be wrong or may not apply.
Mistaken answer: “As a partnership, Kedai Jahit Mawar must publish its accounts every year and pays company tax of 24%.”
The case said none of this, and the figure may not match any real rule.
Correction: “As a partnership, Aina and Wei Jian share profit under their agreed 2 : 1 ratio and Aina holds the fabric decision. A disagreement could slow decisions because two people share ownership. Any legal duties would depend on the rules that apply to the business.”
Check yourself
1. Two partners agree to share profit 3 : 2. Profit is RM50,000. How much does each receive?
Show answer
3 + 2 = 5 parts. One part = RM10,000. Partners receive RM30,000 and RM20,000. Check: 30,000 + 20,000 = 50,000.
2. The case says a sole trader’s business “makes RM5,000 profit a month”. A student writes “she will pay income tax of 10%”. Why is this a weak answer?
Show answer
The case gave no tax rate, so the figure is invented. A safer comment is “she keeps the profit herself after any tax and costs that apply”, without quoting a rate.
3. A case says the owners of a company “can lose only the money they invested”. An owner invested RM20,000 and the company fails owing RM90,000. What is the owner’s maximum loss?
Show answer
RM20,000. The stated feature limits the loss to the amount invested, so the RM90,000 debt does not pass to the owner.
Where this leads next
Now combine everything in analysing a growth decision using case constraints, then test yourself on the mixed practice set. The case-answer planner has a relevance prompt for points that do not link back to the case.
If your answers are sound but include extra facts, our teachers can mark the paragraphs with you in online one-to-one Business tuition.