1.4 Legal Entity Types

What is a legal entity in business?

• An individual with no legal rights

• Any organization or company recognized as having legal rights and responsibilities

• A group of people with no legal responsibilities

• A non-profit organization only

Which of the following is NOT a responsibility of a legal entity?

• Entering into contracts

• Acting as a buyer, seller, or supplier

• Suing or being sued in a court of law

• Avoiding all legal obligations

What can a legal entity do in a court of law?

• Only act as a witness

• Sue or be sued

• Only provide evidence

• Avoid legal proceedings

Which of the following is an example of a legal entity?

• A random group of friends

• A recognized company

• An unregistered club

• A family gathering

What are the two major types of business entities?

• Sole proprietorship and partnership

• Unincorporated and incorporated

• Limited liability and unlimited liability

• Public and private

What determines a business's status to be recognized as a legal entity in its own right?

• The number of employees

• The amount of revenue

• Whether it is incorporated or not

• The type of products it sells

Which of the following is NOT a main form of unincorporated organisation?

• Sole trader

• Ordinary partnership

• Corporation

• Trusts

Which of the following statements is true about unincorporated organisations?

• They have a separate legal personality from their owners.

• Owners are protected from creditors.

• Owners can be sued for debts owed by the organisation.

• They are always limited partnerships.

Which of the following is a characteristic of an unincorporated organisation?

• Separate legal personality from its owners

• Owners are not protected from creditors

• Cannot be sued for debts owed by the organisation

• Always a corporation

Which of the following is NOT one of the seven main forms of incorporated organisations?

• Limited company

• Sole proprietorship

• Community interest company

• Cooperative society