Chapter 3 Quiz

Which type of business ownership provides limited liability for the owner(s)?

• Corporation
• Sole proprietorship
• General partnership
• All of the above

One advantage of a general partnership over a sole proprietorship is a general partnership

• provides limited liability
• is a corporation
• provides unlimited liability
• can rely on more than one person for financial backing

Which of the following phrases best describes a wholesaling business?

• a business that converts materials into products for sale
• a business that sells products to final buyers
• a business that performs services
• a business that sells products to retailers

Most businesses in the United States are

• corporations
• partnerships
• sole proprietorships
• cooperatives

Over the past fifty year, the American economy has changed in what way?

• manufacturing has replaced retailing as the most dominant industry
• service businesses have become for less important to the economy
• wholesaling has become the dominant industry in the economy
• service and trade businesses have become the dominant industries

Which of the following statements about corporations is true?

• corporations are easier to set up than sole proprietorships
• a limited partnership is a type of corporation
• corporations sell stock to raise money
• a cooperative is a type of corporation

The businesses predicted to undergo the most growth in the coming decade are

• primarily service businesses
• primarily manufacturing businesses
• businesses that convert materials into products
• businesses that sell retail products to wholesalers

A business owner with unlimited liability

• could have to sacrifice personal money and possessions to pay business debt
• is not personally responsible for the debts of the business
• is a shareholder of a corporation
• would not have to sacrifice personal money and possessions to pay business debt

The purpose of a cooperative is 

• to earn profits for management
• to benefit its members
• to provide unlimited liability to its members
• to pay dividends to investors

One advantage of a corporation as compared to a sole proprietorship is

• a corporation is easier to set up and requires less paperwork
• a corporation provides limited liability for its owners
• a corporation has few shareholders
• a corporation has a partnership agreement