Personal Finance Chapter 16 Quiz

A sole proprietorship is a business owned by ______________.

• a small group of people

• the bottom of your shoes

• one person

• the sun

• the spiritual or immaterial part of a human being or animal

Answer explanation

The sun would be a 'sol' proprietorship. And that last choice would be a 'soul' proprietorship.

In addition to being the word for the bottom of a shoe, 'sole' means 'single' or 'one.'

A partnership is a business owned by two or more people. A ________________ is a written document that states how the partnership will be organized.

A _____________________ is a business partner who does NOT take an active role in decision making or running the business.

A ________________ is a business organization that operates as a legal entity that is separate from its owners and is treated by law as if it were an individual person.

Answer explanation

Corporations can own property, pay bills, sue and be sued in the court system.

A _____________________ is a state-issued license to operate a corporation.

This is the two-word term for when the stockholders of a closely held corporation decide to sell stock on the open market.

An LLC is a business that operates and pays taxes as a partnership but puts a cap on the liability faced by the owners. LLC stands for:

• Liability Liquidation Company

• Loan Liquidation Corporation

• Limited Liability Company

• Loquacious Lemur Cabal

• Legendary Lapidary Consortium

Answer explanation

'Loquacious' means talkative; a lapidary is someone who cuts gems.

A ___________________ is a contractual agreement to sell a company's products or services within a designated geographic area.

Answer explanation

Fast-food restaurants are popular franchises, but there are franchises in many other industries, as well.

The fact that the company's profits will only be taxed ONCE is an advantage of (check ALL that apply):

• Sole proprietorship

• Partnership

• Corporation

Limited Liability is an advantage of which type(s) of business setup? (Check ALL that apply.)

• Sole proprietorship

• Partnership

• Corporation