Business Structures Quiz

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

• Ability to sell stock

• Limited liability

• Complete control by the owner

• Easier to raise large amounts of capital

In a partnership:

• Only one person is legally responsible for the business

• Profits and losses are shared between two or more people

• There is no personal liability for any of the owners

• The business is required to sell shares of stock

Why might a company decide to incorporate and become a corporation?

• To reduce profits

• To increase personal liability

• To raise money by selling stock

• To avoid government regulation

A merger is best described as:

• The creation of a government-run business

• A new business started by a single owner

• Two or more companies combining into one

• A business opening its first store overseas

Which of the following best describes a multinational corporation?

• A company with locations only in its home country

• A business owned by a single person

• A corporation that operates in more than one country

• A government-owned business serving local citizens

What is a disadvantage of a sole proprietorship?

• Profits must be split with shareholders

• The owner has unlimited liability

• It's difficult to make decisions quickly

• It’s more expensive to form than a corporation

Which business structure typically allows for the easiest access to large amounts of capital?

• Sole proprietorship

• Partnership

• Corporation

• Franchise

A corporation offers limited liability to its owners (shareholders).

• True

• False

Partnerships may only have two owners (partners) to be legal.

• True

• False

Mergers can help companies eliminate competition or increase market share.

• True

• False