22-23 BM2A Unit 4 Quiz

Dax is evaluating the options between starting a business by himself or with a friend. In most situations, Dax prefers to be in charge; however, his friend has some expertise that would likely be helpful in running the business. Dax is carefully considering the pros and cons associated with the different types of business ownership. As he evaluates his options, what key question should he answer to help him determine if starting a business with his friend meets his needs?

• How much control of the business do you want?

• What do you want to name the business?

• How will you determine where to market your product?

• What do you want to pay to set up the business?

Caitlin is meeting with a business advisor to discuss how she should structure the ownership of her new business. When the advisor asks Caitlin if she’s prepared to pay any potential debts out of her own pocket, she tells him that she is unsure. Before deciding which ownership structure would be best for her business, Caitlin must determine the level of _____ she is willing to take.

• profits

• continuity

• risk

• capital needs

Luis is setting up a new business and exploring ownership options with the least amount of restrictions. What question might Luis ask himself that addresses this issue as he explores to ownership options for his new business?

• How much money do I need to start my business?

• Do I have the expertise needed to run my business myself?

• Am I willing to share profits with other people?

• Can I avoid complicated government regulations and business reporting?

Business partners Melinda and Joseph are discussing which legal structure to choose for their business. They are leaning toward creating a corporation. What is one advantage of a corporation for these partners?

• They would have lower setup costs.

• They would follow fewer government regulations.

• They would have protection from personal liability.

• They could set the business up without assistance from a lawyer.

Darrell is sure he would like to be a sole proprietor of his business, but he knows he should weigh the pros and cons of that decision. What would be a disadvantage of sole proprietorship for Darrell?

• He would be the only owner and make all the decisions.

• He would be liable or legally responsible for all debts

• He would be subject to very few government regulations.

• He would be eligible to receive all after-tax income earned in the business.

Monica and Chandler are reviewing business structures for their new bagel bakery and have discovered they like some aspects from each of the business structures they have reviewed. Ideally, they would like to use a structure that combines elements from more than one business structure. Which business structure is a hybrid of two other structures?

• Sole proprietorship

• Limited liability company

• Partnership

• Corporation

Angelica has been studying various forms of business ownership for her art gallery. She thinks she will select this type of legal structure because it is the easiest and most common form of business ownership for small business owners.

• Partnership

• Corporation

• Sole proprietorship

• Limited liability company

Alicia and Geraldo operate a large company that includes multiple shareholders who require regular reporting. What form of business ownership have they established for their company?

• Corporation

• Partnership

• Limited liability company

• Sole proprietorship

Olivia and Liam have heard complaints from fellow business owners about the tax burden they face due to their company’s business structure. What form of business ownership may involve double taxation?

• Sole proprietorship

• Partnership

• Corporation

• S corporation

Xavier wants to ensure his business structure will allow him to include his twin sister Ramona as a business partner. While he has the creative skills, she has the financial background the business needs. What is an advantage of a partnership?

• Shares in company stock

• Wider mix of talents

• Lowered risk or liability

• One sole decision maker