23/1 Business Forms Quiz

Which of the following is a characteristic of unincorporated businesses?

• Limited liability

• Separate legal identity

• Unlimited liability *

• Shareholders own the company

In an incorporated business, the owners:

• Have unlimited liability

• Are the same as the business

• Have limited liability *

• Are responsible for all debts

Which of the following businesses is most likely unincorporated?

• Sole trader *

• Private limited company

• Public limited company

• Franchisor

The legal separation between the business and the owner exists in:

• Sole traders

• Incorporated businesses *

• Partnerships

• Lifestyle businesses

What is a key disadvantage of operating as a sole trader?

• Unlimited liability *

• Minimal paperwork

• Easy to close down

• Full control over decision-making

Which of the following is true about a sole trader?

• The business assets are owned by shareholders

• The owner has limited liability

• The owner has unlimited liability *

• The owner is not responsible for business debts

A benefit of being a sole trader is:

• Harder to raise finance

• Simple decision-making process *

• Difficult to close down

• Higher taxes compared to companies

Sole traders can:

• Share liability with employees

• Operate as a limited company

• Have full personal responsibility for debts *

• Issue shares to raise capital

Which of the following describes a partnership?

• Business owned by one person

• Business owned by shareholders

• Business owned by two or more people *

• Business incorporated by law

In a partnership, how are profits typically shared?

• Equally between partners

• Based on a partnership agreement *

• Distributed to shareholders

• Based on the company's financial performance