ORG&MNGMNT QUIZ 5

Which best defines an organization?

• A group of owners who share profits

• A collection of people working together to achieve goals

• A legal document of business operations

• A building that houses a company

Which is an advantage of a sole proprietorship?

• Easy transfer of ownership

• Owner receives all profits

• Limited liability for debts

• Existence continues beyond owner’s death

What is the major drawback of a sole proprietorship?

• Difficulty in managing employees

• Owner is personally liable for debts

• Higher cost in setting up the business

• Profits must be shared

When the sole proprietor dies, what usually happens to the business?

• It automatically becomes a corporation

• It is transferred to employees

• It ceases to exist

• It merges with another business

What is one key advantage of a partnership?

• Existence continues beyond partners’ deaths

• Shared knowledge and resources

• Limited liability for partners

• Profits are taxed twice

What is one disadvantage of a partnership?

• Expensive to form

• Partners must share profits

• Cannot hire employees

• No need for legal agreement

Who are the owners of a corporation?

• Managers

• Shareholders

• Creditors

• Employees

In a corporation, who oversees major policies and decisions?

• Secretary

• Treasurer

• Board of Directors

• Shareholders directly

Which is a unique advantage of a corporation?

• Easy decision-making

• Separate legal personality

• No taxes required

• Requires no formal registration

Which is a disadvantage of a corporation?

• Owners have unlimited liability

• Higher tax burden

• Cannot raise funds through shares

• Automatically dissolves upon owner’s death