Business Organizations Quiz

Which of the following is the most common form of business organization in the U.S.?

• Partnership

• Corporation

• Sole Proprietorship

• Limited Liability Company

One major disadvantage of a sole proprietorship is:

• Easy startup

• Unlimited liability

• Retention of all profits

• Lack of taxes

What is a psychological advantage of being a sole proprietor?

• Limited liability

• Being your own boss

• Easy access to capital

• No competition

In a partnership, who is responsible for debts in a general partnership?

• Only the managing partner

• Each partner equally

• The government

• Only investors

What is a key disadvantage of a partnership?

• No need for legal paperwork

• Unlimited life

• Potential conflicts between partners

• Difficult to attract employees

Which of the following is NOT an advantage of a partnership?

• Easier to attract capital than a sole proprietorship

• Ease of management

• No legal formalities required

• More efficient operations

A corporation is considered a legal entity separate from its owners. This means it has:

• No ability to raise capital

• Limited liability for shareholders

• A guaranteed profit

• Fewer government regulations

What is issued by the government when a corporation is formed?

• Bond

• Charter

• Partnership agreement

• Stock

One major disadvantage of a corporation is:

• Double taxation

• Limited liability

• No access to stock sales

• Lack of investment opportunities

What is the difference between common stock and preferred stock?

• Common stockholders have voting rights; preferred stockholders do not

• Preferred stockholders always get higher dividends

• Common stock is only available to founders

• Preferred stockholders have unlimited liability