F.4_ECON_Book 2 Chapter 8_22_23_20230202

Which of the following is NOT a characteristic of a sole proprietorship?

• No separate legal status

• Unlimited liability

• Lasting continuity

• Freedom of transfer of ownership

Tom and Mary are owners of a firm. Tom borrows money on behalf of the firm, so Mary also has the responsibility of paying back the money and interest. The firm is

• a sole proprietorship.

• a partnership.

• a private limited company.

• a public limited company.

Which of the following statements about a partnership is correct?

• It can have only one owner.

• It is a legal entity.

• The liability of owners is limited.

• It does not need to disclose its financial accounts to the public.

Peter is planning to start a bookstore. He wants to have more sources of capital but he does not want to pay a high profits tax rate. Which of the following is a good option for him?

• Sole proprietorship

• Partnership

• Private limited company

• Public limited company

Which of the following is NOT a feature of a partnership?

• No separate legal status

• Each partner’s decision is binding on all other partners

• The maximum number of partners is 20

• Lack of continuity

A sole proprietorship is different from a partnership in that

• a sole proprietor bears unlimited liability.

• the former has a separate legal status.

• the former has wider sources of capital.

• the former is more flexible in decision making.

Which of the following descriptions about a private limited company is correct?

• The maximum number of shareholders is 20.

• Some shareholders have to bear unlimited liability.

• Profits belong to the company, not the shareholders.

• When the major shareholder passes away, the company has to end.

Which of the following is a feature of a public limited company?

• It can raise funds by issuing bonds.

• It is a public corporation.

• It is subject to a lower profits tax rate than a private limited company.

• The consent of other shareholders is required to transfer ownership.

Which of the following comparisons between a private limited company and a public limited company is correct?

• More capital is required to set up a public limited company.

• A public limited company is subject to a higher profits tax rate.

• A public limited company employs more employees.

• A public limited company has more sources of capital.

Limited liability means

• the firm needs to disclose its financial accounts to the public.

• an individual’s liability is limited to the amount he has invested in a firm.

• all losses suffered by an individual are borne by the government.

• the maximum amount of loss is limited to the amount of an individual’s annual income.