Forms and Economic Roles of Business Organizations

What is the definition of organization?

• A. A social unit of people that is structured and managed to meet a need or pursue collective goals.

• B. A system of organizations and institutions that facilitate the production and distribution of goods and services in a society.

• C. A business that is owned by only one individual for the practice of trade or profession.

• D. A duly registered association of persons with a common bond of interest, voluntarily joining together to achieve their social, economic and cultural needs.

Which form of business organization is the simplest and least costly?

• A. Sole Proprietorship

• B. Partnership

• C. Corporation

• D. Cooperative

What is the main advantage of a sole proprietorship?

• A. Easy to start, easy to dissolve; with less government requirements

• B. Limited source of capital

• C. Fast decision making; only one person decides

• D. The owner is legally obliged to pay all business debts

What is the main disadvantage of a partnership?

• A. Easy to form; with proper agreements on its formation

• B. Limited life – the business ceases to operate if one of the partners dies, becomes physically or mentally incapacitated.

• C. Suited to the practice of a profession

• D. Unlimited liability of one or all owners for the debts of the partnership.

What is the main advantage of a corporation?

• A. Capacity as a legal entity

• B. Activities limited by the articles of incorporation and corporate by-laws

• C. More sources of funds

• D. Costly to incorporate

What is the main disadvantage of a corporation?

• A. Unlimited life

• B. More regulations to be followed

• C. Easy to transfer ownership through selling of stocks

• D. Liability of stockholders/shareholders is limited

What is the main advantage of a cooperative?

• A. Unlimited life. The change of members does not dissolve the business

• B. Obtaining capital through investors

• C. Democratic organization. Social equality of members is the most important component of cooperatives.

• D. Lack of membership and participation. The cooperative may not fully function if members do not involve themselves in the routine business operation.

What is the main disadvantage of a cooperative?

• A. Unlimited life. The change of members does not dissolve the business

• B. Obtaining capital through investors

• C. Democratic organization. Social equality of members is the most important component of cooperatives.

• D. Lack of membership and participation. The cooperative may not fully function if members do not involve themselves in the routine business operation.

What role of business organization improves the economy through job creation?

• A. Provide Employment

• B. Through Investment

• C. Production of Goods and Services

• D. Increase in Government's Revenue

What is the definition of economy?

• A. A social unit of people that is structured and managed to meet a need or pursue collective goals.

• B. A system of organizations and institutions that facilitate the production and distribution of goods and services in a society.

• C. A business that is owned by only one individual for the practice of trade or profession.

• D. A duly registered association of persons with a common bond of interest, voluntarily joining together to achieve their social, economic and cultural needs.