Chapter 4 Review

An advantage of a sole proprietorship is...

• unlimited liability
• ease of raising capital
• full control of the business
• taxed higher than other forms of business

A disadvantage of a sole proprietorship is...

• owner keeps all profits
• unlimited liability
• only taxed once
• responsible for others' decisions

Sole proprietorships are typically small businesses that...

• are formed by two or more partners.
• provide their owners the advantage of limited liability.
• focus on providing a service rather than earning a profit.
• employ fewer than 50 people.

An advantage of a partnership is...

• limited liability
• difficult to sell a partnership interest
• combined knowledge and skills
• perpetual life

A disadvantage of a partnership is...

• unlimited liability
• possible conflicts between partners
• sharing of profits
• all of these are correct

Which one is the best example of a partnership?

• Apple
• Mack & Manco's Pizza
• Ocean City High School
• McDonald's

An advantage of a corporation is...

• owners and managers disagree
• cheap to start
• only one partner
• securing funding is easier

A disadvantage of a corporation is...

• double taxation of profits
• limited liability
• ease of transferring ownership
• unlimited life

The board of directors of a corporation are...

• appointed by outside officers
• elected by the stockholders
• elected by inside directors
• officers hired to run the corporation

Catalina owns a small restaurant and is solely responsible for its debts and liabilities. She is also entitled to all the profits the restaurant makes after paying off taxes and other expenses. Her business is an example of a(n):

• corporation
• sole proprietorship
• partnership
• franchise