Business Structures Quiz

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

• Ability to sell stock to raise capital

• Enjoys all profits from the business

• Limited liability for debts

• Business continues if owner leaves

What is a major disadvantage of a sole proprietorship?

• Double taxation

• Unlimited liability for debts

• Complex regulations

• Shared decision-making

In a general partnership, what happens if one partner leaves the firm?

• The business continues as usual

• The business legally ceases to exist

• The remaining partners automatically become a corporation

• The business is sold to the state

Which of the following is NOT a characteristic of a corporation?

• Unlimited liability for owners

• Ability to enter into contracts

• Can sue or be sued

• Can issue bonds to raise money

How do corporations raise money that sole proprietorships and partnerships typically cannot?

• By taking out personal loans

• By selling stock and issuing bonds

• By increasing owner contributions

• By reducing expenses

Who bears the responsibility for all debts in a sole proprietorship?

• The government

• The sole owner

• The board of directors

• The shareholders

Which business structure is subject to the most government regulations?

• Sole proprietorship

• Partnership

• Corporation

• Cooperative

What is a key disadvantage of a partnership?

• Profits are taxed twice

• Unlimited liability for all partners

• Difficult to form

• Cannot raise capital

Which of the following is true about corporations and ownership changes?

• The business ceases to exist if an owner leaves

• The business continues even if ownership changes

• The business must be dissolved

• The business becomes a partnership

What legal rights do corporations have?

• Only the right to make profits

• The same as a sole proprietorship

• Many of the legal rights of an individual

• No legal rights