Business Structures Quiz

What is the biggest disadvantage of a sole proprietorship?

• High startup costs

• Limited liability

• Unlimited liability

• Complex tax structure

Which of the following is a benefit of a sole proprietorship?

• Separate taxation from the owner

• No need to share profits

• Limited financial risk

• Limited liability

What happens if a sole proprietorship accumulates debts that cannot be paid?

• The government pays off the debts

• The business is sold to cover the debts

• The owner is personally responsible for the debt

• The business dissolves, and debts are canceled

What is the main difference between a sole proprietorship and a partnership?

• A partnership has more than one owner

• A partnership has limited liability

• A partnership is required to have a board of directors

• A partnership must pay corporate taxes

How are debts handled in a partnership?

• Partners are not responsible for the debts

• Each partner is responsible for debts based on their share of ownership

• Only the partner who signed the loan is responsible

• The business is solely responsible, not the partners

Which of the following is NOT a characteristic of a partnership?

• Shared decision-making

• Unlimited liability

• Limited number of owners

• Protection from business debts

What is a key advantage of a corporation?

• It is easy to establish

• Owners have limited liability

• Owners pay lower taxes than sole proprietors

• There are no government regulations

What is the process called when a private company offers shares to the public for the first time?

• Stock exchange

• Initial Public Offering (IPO)

• Public merger

• Share acquisition

What is a major disadvantage of forming a corporation?

• Owners have unlimited liability

• High setup costs and complex regulations

• Lack of investor interest

• Inability to sell shares

Which type of share in a corporation provides voting rights?

• Preferred shares

• Common shares

• Equity bonds

• Limited shares