Forms of Ownership (Sole trader and Partnership)

Which of the following is a key characteristic of a sole trader?

• A. Limited liability

• B. Unlimited liability

• C. Shared decision-making

• D. Ownership by more than one person

2. In a partnership, the profits are usually

• A. Distributed equally among partners

• B. Distributed based on capital contribution

• C. Retained by the business

• D. Distributed at the discretion of the partners

3. What is the maximum number of partners allowed in a partnership according to South African law?

• A. 5

• B. 10

• C. 20

• D. 50

4. Which of the following is an advantage of a sole trader?

• A. Easier to raise capital

• B. Easier to share risks

• C. Quick decision-making

• D. Shared responsibility

5. In a sole proprietorship, how are taxes generally handled?

• A. The business is taxed separately

• B. The owner pays personal income tax on business profits

• C. The business pays corporate tax

• D. No taxes are required

6. In a partnership, if one partner incurs debt, the responsibility for repayment:

• A. Is limited to that partner

• B. Is shared among all partners

• C. Falls only on the managing partner

• D. Is covered by insurance

7. Which of the following is a disadvantage of a partnership?

• A. Limited liability

• B. Difficulty in decision-making

• C. Full control over the business

• D. Easy transfer of ownership

8. A sole trader business can:

• A. Continue indefinitely after the owner’s death

• B. Be easily converted into a partnership

• C. Be passed on to a new owner through a will

• D. Only exist as long as the owner is alive and involved

9. Which of the following is a common reason to choose a partnership over a sole trader?

• A. To have fewer regulations

• B. To share capital and expertise

• C. To maintain full control over decisions

• D. To avoid taxes

10. Which of the following is NOT a characteristic of a sole trader?

• A. Business owned by one person

• B. Owner has full control of the business

• C. Owner has limited liability

• D. Owner is personally responsible for business debts