Types of Business Entities

Which of the following is NOT one of the four types of business entities?

• Sole proprietorship

• Partnership

• Cooperative

• Corporation

Which type of business entity is characterized by limited liability for its owners?

• Sole proprietorship

• Partnership

• Limited liability company (LLC)

• Corporation

Which of the following is a characteristic of a sole proprietorship?

• It is the least common form of business ownership.

• It is the most expensive form of business to start.

• There is no difference between the business and its owner, who is completely responsible for all losses and liabilities.

• The business continues to operate after the owner's death.

What happens to a sole proprietorship when the owner dies?

• The business is transferred to the owner's heirs.

• The business is sold to the highest bidder.

• The business ceases to exist.

• The business becomes a partnership.

How is the income from a sole proprietorship taxed?

• At the corporate tax rate.

• At a special rate for small businesses.

• At the personal tax rate of the owner.

• It is not taxed.

What is one of the advantages of starting a sole proprietorship?

• It requires a complex legal structure.

• It is the least common type of business.

• It is the least expensive to start.

• It requires multiple owners.

How many owners must a partnership have at a minimum?

• One

• Two

• Three

• Four

What is one characteristic of a partnership in terms of liability?

• Owners are not liable for business debts

• Only one owner is liable for business debts

• Owners are personally liable for business debts

• Owners are liable only up to the amount they invested

What happens to a partnership when one partner decides to leave?

• The partnership must find a new partner

• The partnership continues without any changes

• The business usually ends

• The remaining partners become sole proprietors

Which of the following best describes the decision-making in a partnership?

• Only the majority of partners can bind the partnership

• Each partner operates independently

• All partners are bound by one partner’s decisions

• Partners cannot make decisions without external approval