Intro to Business: Chapter 4

A sole proprietorship requires minimal paperwork and has low startup costs.

• True
• False

Limited partners in a partnership have equal responsibility for managing the business.

• True
• False

Corporations offer limited liability protection to their stockholders.

• True
• False

Franchisors have full control over the day-to-day operations of franchisee businesses.

• True
• False

Horizontal mergers occur between companies in the same industry to reduce costs.

• True
• False

What is a key characteristic of a sole proprietorship?

• A. Limited liability for the owner
• B. A business owned by multiple individuals
• C. A business established, owned, and operated by one person
• D. High startup costs

Which of the following is an advantage of a sole proprietorship?

• A. Easy access to funding
• B. Limited liability
• C. Full control over business decisions
• D. Shared responsibilities

What is a major disadvantage of a sole proprietorship?

• A. Complex tax regulations
• B. Difficulty in transferring ownership
• C. Unlimited liability
• D. Restricted independence

Which of the following is an advantage of a partnership?

• A. Double taxation
• B. Access to diverse skills and expertise
• C. Individual liability protection
• D. Easy dissolution

Which of the following is a disadvantage of a partnership?

• A. Limited liability for all partners
• B. Simplified profit-sharing agreements
• C. Easy exit for all partners
• D. Risk of conflicts over business decisions