Understanding Business Structures Quiz

Which type of business is owned and operated by one individual?

• Corporation

• Sole Proprietorship

• Partnership

• Franchise

What is the main advantage of a corporation compared to a sole proprietorship?

• Unlimited liability

• Limited liability

• Owned by one person

• No legal status

Which business type involves two or more people sharing ownership and responsibilities?

• Franchise

• Partnership

• Corporation

• Sole Proprietorship

A McDonald's restaurant operated by a local owner is an example of which type of business?

• Sole Proprietorship

• Franchise

• Partnership

• Corporation

Which of the following is NOT a characteristic of a sole proprietorship?

• Owned by one person

• Easy to start

• Limited liability

• Owner keeps all profits

If two friends start a bakery together and share profits and losses, what type of business have they formed?

• Corporation

• Partnership

• Franchise

• Sole Proprietorship

Why might someone choose to start a franchise instead of an independent business?

• To have complete creative control

• To use an established brand and business model

• To avoid paying fees

• To have unlimited liability

Which business type allows for the easiest transfer of ownership through the sale of stock?

• Sole Proprietorship

• Partnership

• Corporation

• Franchise

A sole proprietorship faces which of the following risks?

• Shared liability

• Limited liability

• Unlimited liability

• No liability

If a corporation is sued, who is responsible for the debts?

• The shareholders personally

• The corporation as a separate legal entity

• The CEO only

• The government