Business Ownership Quiz

What is the main advantage of a Sole Proprietorship in terms of taxation?

• Pay tax at personal tax, lower than the tax paid by corporations.

• Pay tax at a variable rate, depending on the business size.

• Pay tax at corporate tax, higher than the tax paid by corporations.

• Pay tax at a fixed rate, similar to the tax paid by corporations.

Which form of business ownership has the advantage of having the most freedom from government regulation?

• Public Corporation

• Partnership

• Corporation

• Private Corporation

What is a characteristic of a Limited Liability Company (LLC)?

• Shareholders have unlimited liability

• Can have unlimited number of shareholders

• No need to pay corporate tax

• Formed by many small businesses

What is a disadvantage of a Partnership in terms of taxation?

• Partners pay no tax at all

• Partners pay a fixed tax rate

• Rich partners may have to pay higher tax rate than a corporation

• Partners pay a lower tax rate than corporations

What is the main advantage of a Corporation in terms of raising funds?

• Cannot expand into new businesses

• Difficult to find extra capital

• Easy raising money than other forms of business

• Cannot sell shares to the public

What is a characteristic of a General Partnership?

• Owned and operated by one person

• Shared profit and loss

• Cannot manage the business and have limited liability

• Assets and liabilities are separate from its owners

What is a disadvantage of a Public Corporation in terms of taxation?

• Pay tax at personal tax, lower than the tax paid by corporations

• Pay tax at corporate tax on profit

• Pay no tax at all

• Pay a fixed tax rate

What is the main advantage of a Cooperative (co-op) in terms of business responsibility?

• Directors are not the owners if they do not own shares

• Employees are still employees even if they do not own shares

• One partner's bad decision can put other partners' resources at risk

• Easy to access financial information

What is a characteristic of a Private Corporation?

• May become public by selling stock

• No need to submit financial information to the public

• Owned by one or few people closely involved in managing the business

• Assets and liabilities are separate from its owners

What is a disadvantage of a Sole Proprietorship in terms of continuity?

• Owner has complete control over the business

• Owner may have to sell assets to pay for the business firm's debt

• Owner has to fully liable for the business firm's debt

• Business firms have to be dissolved when the owner dies or goes bankrupt