OBJ 1.05

A form of business ownership that operates under a charter issued by the state is called a(n)

• sole proprietorship.

• corporation.

• general partnership.

• entrepreneur.

Joan borrowed $10,000 from a relative to start her own business. Assuming she takes all responsibility for the company's financial risks, the company is most likely a

• sole proprietorship.

• limited partnership.

• corporation.

• partnership.

A business that is owned by two or more people who share the risk of loss and the chance for profit is known as a

• sole proprietorship.

• franchise.

• partnership.

• corporation.

The business agreement under which a business distributes the goods or services of a parent company is called a

• franchise.

• corporation.

• partnership.

• proprietorship.

Which of the following is a characteristic of a business-format franchise:

• Products are bought directly from the supplier.

• It is the least popular franchise arrangement.

• The name of the business is chosen by the franchisee.

• Continuous assistance is provided by the franchisor.

A type of business ownership in which one or more of the owners does not have full liability is called a

• limited partnership.

• general partnership.

• sole proprietorship.

• service organization.

To sell sweatshirts, jackets, and T-shirts imprinted with ABC University's logo, the Collegiate Sportswear Company pays royalties to the university. What type of business ownership does this situation exemplify?

• Multi-level marketing

• Licensing agreement

• Business-format franchise

• General partnership

Which of the following is a benefit of the business-format franchise arrangement:

• Strict operating hours

• Limited number of vendors

• Reduced risk of failure

• Uniform store appearance

Sarah borrowed $15,000 from a family member to start her own business, and she is fully responsible for any financial issues. What is the most likely structure of her business?

• Limited liability company

• Corporation

• Sole proprietorship

• Partnership

What is a key advantage of forming a corporation?

• Unlimited liability

• Ease of formation

• Limited liability for owners

• Direct control by owners