BA 100 Survey of Business - Ch 6 - Quiz #4

A sole proprietorship is a form of business ownership in which:

• the company is considered a legal entity that is separate from its owners

• a single owner actively manages the company

• two or more people act as co-owners of the company

• the owners of the business are offered limited liability and flexible tax treatment

Amanda has always been inclined toward baking and wants to open her own bakery. She takes a loan of $20,000 from the bank and starts a bakery in her hometown. In the context of the four forms of business, Amanda most likely _____.

• owns a limited liability company

• has a sole proprietorship

• has a general partnership

• owns a statutory close corporation

A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.

• vertical merger

• partnership

• S corporation

• acquisition

A _____ refers to a partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm.

• limited partnership

• general partnership

• limited liability partnership

• publicly traded partnership

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners

• sole proprietorship

• partnership

• cooperative

• corporation

Unlike a sole proprietorship, a corporation:

• avoids the undesirable possibility of double taxation of earnings.

• does not require the articles of incorporation to set up the company

• is considered to be a legal entity that is separate and distinct from its owners

• is a voluntary agreement under which two or more people act as co-owners

A corporation is a separate entity from its owners where the:

• owners are not personally responsible for the obligations of the company

• articles of incorporation are not required to set up the company

• company cannot enter into binding contracts in its name

• death or withdrawal of an owner dissolves the company

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

• Retention of control

• Unlimited liability

• Permanence

• Ease of transfer of ownership

Which of the following features of a sole proprietorship proves that it is a risky endeavor?

• The complications associated with operating in more than one state

• Its lack of continuity

• The potential for disagreements

• Its unlimited liability

The benefits of a general partnership include its _____.

• ability to pool financial resources

• . ease of withdrawal

• limited liability

• permanence