Understanding Business Structures Quiz

What is a sole proprietorship?

• A business owned by multiple people

• A business owned and operated by one person

• A business that is registered by a state

• A business with limited liability

What does liability protection provide?

• Insurance against personal health issues

• Insurance against the debts and actions of a business

• Insurance for property damage

• Insurance for employee benefits

What is unlimited liability?

• Limited responsibility for business debts

• Full responsibility for all debts and actions of a business

• No responsibility for business actions

• Shared responsibility among partners

Which of the following best describes a partnership?

• A business owned by one person

• A business with two or more owners sharing decisions, assets, liabilities, and profits

• A business registered by a state

• A business with limited liability

Who is a general partner?

• A partner with limited liability

• A participant in a partnership with unlimited personal liability and full responsibility for managing the business

• A partner who does not manage the business

• A partner who only invests in the business

What is the role of a limited partner?

• To manage the business actively

• To have unlimited liability

• To have liability limited to their investment and not be actively involved in managing the business

• To be the sole decision-maker

What is a corporation?

• A business owned by one person

• A business that is registered by a state and operates apart from its owners

• A business with unlimited liability

• A business that cannot issue shares of stock

Who are the shareholders in a corporation?

• The managers of the corporation

• The employees of the corporation

• The owners of the corporation

• The customers of the corporation

What is a Limited Liability Corporation (LLC)?

• A corporation with unlimited liability

• A corporation with partial responsibility for debts

• A corporation that cannot issue shares

• A corporation owned by one person

Which business form is the easiest and most popular to create?

• Corporation

• Partnership

• Sole Proprietorship

• Limited Liability Corporation