Ch 5 - Business Forms of Ownership

A characteristic of a sole proprietorship is that the owner:

• Has access to unlimited funds
• Receives all the profit
• Transfers all the risk
• Delegates all functions

To form my business, I used all of my savings and borrowed from the bank, and I'm personally liable for all of the debts. This statement is an example of which of the following forms of business ownership:

• Partnership
• Sole proprietorship
• Corporation
• Cooperative

John, Robert, and Charles were college friends who wanted to start a business. John has creative ability, Robert's expertise is selling, and Charles' expertise is management. However, each has limited capital. The ideal business ownership for these young men is a

• Merger
• Partnership
• Franchise
• Corporation

The Scott Company decided to sell stock to raise capital. Under what form of business organization does the company operate?

• Corporation
• Cooperative
• Partnership
• Sole proprietorship

A type of state-chartered corporation that was developed to help small businesses by taxing them as individuals in a partnership is a(n) __________ corporation.

• S Corporation
• C Corporation
• Private
• Limited

What type of corporation sells millions of shares and must furnish complete information about its earnings, assets, and debts?

• C Corporation
• S Corporation
• Private
• Limited

The American Red Cross is an example of a(n) ___________ corporation.

• Hybrid
• Nonprofit
• S Corporation
• C Corporation

One of the characteristics of the form of business ownership known as an LLC is that

• This kind of business can last indefinitely.
• It is required to have at least three owners (members).
• The IRS collects taxes based on the LLC's gross income.

• The owners' personal property cannot be taken to pay the business's debts.

Wendy's sells the right to operate its restaurants to individuals who meet the company's criteria. The arrangement between Wendy's and these individuals is an example of

• A partnership agreement
• Multi-level marketing
• Licensing
• Franchising

Which of the following forms boards to act as governing bodies and is the most complicated form of business?

• Corporation

• Partnership

• Sole proprietorship

• Franchise