Willey 1 Accounting: Introduction to Financial Statements

What is the definition of a sole proprietorship?

• A business owned and operated by a single individual

• A business owned by shareholders

• A partnership between two or more individuals

• A corporation owned by a board of directors

What is an advantages of a sole proprietorship?

• Simple to establish

• Corporate Controlled

• Multiple Shareholders

• All of the questions

Which of the following are examples of typical sole proprietorships?

• Freelance writer

• Local bakery

• Independent consultant

• All of the above

What is the definition of a Partnership?

• A business organization where two or more individuals manage and operate the business.

• A type of business owned by a single individual.

• A large company with many shareholders.

• A non-profit organization.

What is an advantage of a partnership?

• One owner

• No personal liability

• Easy to transfer ownership

• Tax advantages

What type of businesses typically form partnerships?

• Corporations

• Large manufacturing plants with many owners

• Lawyers, doctors, and Accountants

• Non-profit organizations

Which of the following best defines a Corporation?

• A legal entity that is separate and distinct from its owners

• A type of partnership where partners share equal responsibility

• A small business owned by a single individual

• A non-profit organization focused on charitable activities

What are three advantages of a corporation?

• Easier to transfer ownership through purchase of stock

• Easier to raise funds than other forms of ownership

• No personal liability

• Simple to establish

What is a disadvantage of sole proprietorship and partnerships?

• Limited liability

• Unlimited liability

• Easy transfer of ownership

• Complex tax structure

What form of business has the highest revenue produced and is used by most large businesses in the United States?

• Sole Proprietorship

• Partnership

• Corporation

• Limited Liability Company (LLC)