Test: Business Organizations & Market Structures

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The most common form of business organization is

• A. the corporation.
• B. the sole proprietorship.
• C. the general partnership.
• D. the franchise.

Which of the following is an advantage of a sole proprietorship?

• Lack of permanence
• Limited access to resources
• Easy to discontinue
• Unlimited liability

Liability is the

• A. necessity to do a lot of paper work.
• B. requirement to offer fringe benefits.
• C. legal obligation to pay debts.
• D. opportunity of the sole proprietor to keep all profits after taxes.

A partnership is a business organization owned by

• A. one or more individuals.
• B. two or more individuals.
• C. individuals and stockholders.
• D. one general partner and many stockholders.

In a limited liability partnership, all partners

• A. always have no liability.
• B. have personal liability.
• C. are required to be general partners.
• D. are limited from personal liability in certain situations.

Most large businesses are

• A. sole proprietorships.
• B. general partnerships.
• C. corporations.
• D. cooperatives.

One of the ways a corporation can raise money is by

• A. selling stock on the stock market.
• B. buying bonds from other corporations.
• C. seeking money from the government for research and development.
• D. selling shares to the founders.

Which of the following is an example of a merger?

• A. An individual buys a franchise.
• B. Two individuals form a partnership.
• C. A company combines with a company that supplies it with raw materials.
• D.A company sells bonds to raise money for expansion.

In return for a fee to a franchiser, a business owner receives the right

• A. to sell the franchiser’s stocks and bonds.
• B. to run the business in the way he or she wishes.
• C. to form a partnership with the franchiser.
• D.to sell the franchiser’s goods and services.