Unit 3: Types of Businesses

When two or more people legally agree to become co-owners of a business, the form of business is called a partnership.

• True

• False

It is usually easy to start and end a sole proprietorship.

• True

• False

The profits of a sole proprietorship are taxed as the personal income of the owner.

• True

• False

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

• True

• False

One of the strengths of the sole proprietorship is its ability to sustain rapid growth by quickly raising large amounts of financial resources.

• True

• False

The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

• True

• False

A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

• True

• False

If a sole proprietorship fails, the owner may lose whatever was invested in the business, and the owner's personal assets are also at risk.

• True

• False

All partners in a general partnership have limited liability for the debts of their firm.

• True

• False

A limited partner is an owner who assumes no management responsibility and has no liability for losses beyond the amount invested.

• True

• False