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ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation

A national government owns a railway company outright, but the company is run as a commercial business with its own board and sells tickets to the public. Which of the following is the most accurate classification of this organisation?

The railway is a public sector organisation because the sector is determined by who owns and controls it. State ownership makes it public sector, even though it trades commercially, charges fares and has its own board of directors.

  1. APrivate sector, because it sells services to customers
  2. BNot-for-profit, because it is owned by the government
  3. CPublic sector, because it is owned and controlled by the stateCorrect
  4. DPrivate sector, because it has its own board of directors

Explanation

The sector depends on ownership and control, not on whether the body charges customers or has a board. Because the government owns the railway outright, it is a public sector organisation even though it operates commercially. Option A is wrong because selling services does not make an entity private.

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