A Trivia Quiz On Types Of Businesses!
Do you know how many types of businesses exists? Would you be able to pass this quiz? The types of companies include sole proprietorship, limited liability proprietorship, partnerships, corporations, and non-profit organizations. Structuring your business is the most important part of starting a business. For example, a limited liability proprietorship is when profits and losses can go through to your income without facing corporate taxes. Take this quiz, and you will earn a certificate.
- 1.
Which of the following are characteristics of sole proprietorships?
- A.
Limited life and unlimited liability
- B.
Limited life and limited liability
- C.
Unlimited life and unlimited liability
- D.
Unlimited life and limited liability
Correct Answer
A. Limited life and unlimited liabilityExplanation
Sole proprietorships have limited life because they are dependent on the life of the owner. If the owner dies or decides to sell the business, the sole proprietorship ceases to exist. Additionally, sole proprietorships have unlimited liability, meaning the owner is personally responsible for all debts and liabilities of the business. This means that if the business fails or incurs debts, the owner's personal assets can be used to satisfy those obligations.Rate this question:
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- 2.
Which of the following is most likely to be a sole proprietorship?
- A.
A car manufacturer
- B.
A legal firm with four lawyers
- C.
A home builder
- D.
A dog grooming service
Correct Answer
D. A dog grooming serviceExplanation
A dog grooming service is most likely to be a sole proprietorship because it is a small business that can be easily owned and operated by one individual. Unlike the other options, such as a car manufacturer or a legal firm with multiple lawyers, a dog grooming service typically does not require a large team or extensive resources to run. It is a service-based business that can be easily managed by a single owner, making it a common choice for sole proprietorships.Rate this question:
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- 3.
What often happens when the owner of a sole proprietorship dies?
- A.
The business closes down.
- B.
The business changes names.
- C.
The partner takes over the business.
- D.
The government takes over the business.
Correct Answer
A. The business closes down.Explanation
When the owner of a sole proprietorship dies, the business often closes down. This is because a sole proprietorship is a business owned and operated by a single individual, and the business is not separate from its owner. Therefore, when the owner dies, there is no one to continue running the business, resulting in its closure.Rate this question:
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- 4.
Which of the following characteristics is most likely to characterize someone who opens a sole proprietorship?
- A.
Risk-taking
- B.
Conformity
- C.
Caution
- D.
Government dependence
Correct Answer
A. Risk-takingExplanation
Someone who opens a sole proprietorship is most likely to be characterized by risk-taking. This is because starting a sole proprietorship involves taking on the full financial and legal responsibility for the business. It requires the individual to invest their own money, take on potential debt, and assume all the risks associated with the business. This includes the possibility of failure and financial loss. Therefore, risk-taking is a key characteristic of someone who chooses to open a sole proprietorship.Rate this question:
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- 5.
What is a general partnership?
- A.
A business in which none of the partners is responsible for the debts or liabilities of the other partners
- B.
A business in which one partner acts as the general manager
- C.
A business in which the partners share management and liabilities
- D.
A business in which at least one partner is not involved in management and is liable only for his or her investment
Correct Answer
C. A business in which the partners share management and liabilitiesExplanation
A general partnership is a type of business structure where the partners share both the management and liabilities of the business. This means that each partner has an equal say in the decision-making process and is also personally responsible for any debts or liabilities incurred by the partnership. This type of partnership allows for a shared workload and shared risk among the partners.Rate this question:
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- 6.
Who is most likely to look for limited partners?
- A.
Someone who needs money and management advice
- B.
Someone who wants to share liabilities and debts if the business fails
- C.
Someone who needs assistance with the day-to-day management
- D.
Someone who needs money but wants to retain control of the business
Correct Answer
D. Someone who needs money but wants to retain control of the businessExplanation
The person who needs money but wants to retain control of the business is most likely to look for limited partners. Limited partners are investors who contribute capital to a business but have limited liability and no involvement in the day-to-day management of the business. By seeking limited partners, the person can secure the necessary funds while still maintaining control and decision-making power over the business.Rate this question:
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- 7.
What is one of the biggest disadvantages of partnerships?
- A.
Potential for conflict between partners
- B.
Increased liability
- C.
Decreased resources
- D.
More government oversight
Correct Answer
A. Potential for conflict between partnersExplanation
One of the biggest disadvantages of partnerships is the potential for conflict between partners. In a partnership, multiple individuals with different ideas, goals, and decision-making styles come together to run a business. This can lead to disagreements, disputes, and conflicts that can hinder the smooth functioning of the partnership. Such conflicts can arise due to differences in opinions, decision-making power, financial matters, or even personal issues. Resolving these conflicts can be time-consuming, stressful, and may even result in the dissolution of the partnership. Therefore, the potential for conflict is a significant drawback of partnerships.Rate this question:
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- 8.
Which of the following is a major advantage of owning a franchise?
- A.
Having complete control over product
- B.
Selling a product that consumers know
- C.
Being free from all oversight
- D.
Decorating your business the way you want
Correct Answer
B. Selling a product that consumers knowExplanation
A major advantage of owning a franchise is selling a product that consumers know. This is because franchises are typically associated with well-known brands that have established customer bases. By owning a franchise, individuals can benefit from the brand recognition and trust that consumers already have, which can lead to increased sales and profitability. Additionally, selling a familiar product reduces the need for extensive marketing efforts and allows franchise owners to tap into existing consumer demand.Rate this question:
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- 9.
What type of organization is a credit union?
- A.
Franchise
- B.
Service cooperative
- C.
Consumer cooperative
- D.
Nonprofit organization
Correct Answer
B. Service cooperativeExplanation
A credit union is a type of organization known as a service cooperative. This means that its primary purpose is to provide financial services to its members, who are also the owners of the credit union. Unlike traditional banks, credit unions are not-for-profit organizations that prioritize the needs and interests of their members. They typically offer services such as savings accounts, loans, and other financial products with the goal of promoting the financial well-being of their members.Rate this question:
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- 10.
What is a typical requirement of a consumer cooperative?
- A.
Paying a membership fee
- B.
Paying a licensing fee
- C.
Working without a salary
- D.
Maximizing profit
Correct Answer
A. Paying a membership feeExplanation
A typical requirement of a consumer cooperative is paying a membership fee. This fee is usually paid by individuals who want to become members of the cooperative and enjoy the benefits and services offered by the cooperative. The membership fee helps cover the operational costs of the cooperative and allows members to have a say in the decision-making process. It is a way for individuals to financially contribute to the cooperative and support its activities.Rate this question:
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- 11.
A group of city leaders decide to raise funds for a museum to honor the city's founder. What type of organization will they use for this purpose?
- A.
A consumer cooperative
- B.
A producer cooperative
- C.
A service cooperative
- D.
A nonprofit organization
Correct Answer
D. A nonprofit organizationExplanation
The group of city leaders will use a nonprofit organization to raise funds for the museum. Nonprofit organizations are specifically designed to serve the public interest and operate for the benefit of the community rather than for personal gain. They are commonly used for charitable, educational, religious, or scientific purposes, making them an ideal choice for raising funds to honor the city's founder through a museum.Rate this question:
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- 12.
What term is defined as an enterprise that produces goods or services, usually to make a profit?
- A.
Business organization
- B.
Unlimited liability
- C.
Stock
- D.
Vertical merger
Correct Answer
A. Business organizationExplanation
A business organization is defined as an enterprise that produces goods or services, usually with the intention of making a profit. It refers to any entity, such as a corporation, partnership, or sole proprietorship, that engages in commercial activities. Business organizations are formed to meet the demands of the market and generate revenue through the sale of products or services. They play a crucial role in the economy by creating employment opportunities, driving innovation, and contributing to economic growth.Rate this question:
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- 13.
What does the term-limited life mean?
- A.
The business does not continue if the owner leaves.
- B.
There are many regulations on business activities.
- C.
There is a ceiling on the number of business expenses.
- D.
The business is restricted in size.
Correct Answer
A. The business does not continue if the owner leaves.Explanation
The term "limited life" refers to the fact that the business will cease to exist if the owner leaves. This means that the business is dependent on the owner's presence and does not have the ability to continue operations without them. Unlike other options such as regulations on business activities, a ceiling on expenses, or restrictions on size, the concept of limited life specifically focuses on the owner's departure as the determining factor for the business's continuation.Rate this question:
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- 14.
What do many people consider to be the chief advantage of a sole proprietorship?
- A.
The owner has unlimited liability.
- B.
The owner keeps all the profits.
- C.
The owner has unlimited startup funds.
- D.
The owner does not have to obey labor laws.
Correct Answer
B. The owner keeps all the profits.Explanation
Many people consider the chief advantage of a sole proprietorship to be that the owner keeps all the profits. In a sole proprietorship, there is no need to share the profits with any partners or shareholders, as the business is owned and operated by a single individual. This allows the owner to have complete control over the profits and use them as they see fit, whether it be reinvesting in the business or taking them as personal income.Rate this question:
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- 15.
What is a business owned and managed by a single person called?
- A.
Conglomerate
- B.
General partnership
- C.
Sole proprietorship
- D.
Limited partnership
Correct Answer
C. Sole proprietorshipExplanation
A business owned and managed by a single person is called a sole proprietorship. In this type of business structure, the owner has complete control over the operations and decision-making. They are personally liable for the business's debts and obligations, and they receive all the profits. Unlike other options listed, such as conglomerate (a corporation made up of several different businesses) or general partnership (a business owned by two or more individuals), a sole proprietorship is solely owned by one person.Rate this question:
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- 16.
What is the term for a business that is co-owned by two or more people who agree on how responsibilities, profits, and losses will be divided?
- A.
Partnership
- B.
Major partnership
- C.
Limited lifetime liability partnership
- D.
Limited liability corporation
Correct Answer
A. PartnershipExplanation
A partnership is a business structure in which two or more individuals come together and agree on how responsibilities, profits, and losses will be divided. In a partnership, each partner contributes to the business and shares in the decision-making process. This type of business allows for shared resources, skills, and expertise, as well as shared risks and rewards. It is a flexible and relatively easy way for individuals to start and run a business together.Rate this question:
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- 17.
What is the name for an individual who owns a share of a corporation and is entitled to part of its profits?
- A.
Stockholder
- B.
Director
- C.
Officer
- D.
President
Correct Answer
A. StockholderExplanation
A stockholder is an individual who owns a share of a corporation and is entitled to part of its profits. They are essentially a partial owner of the company and have a financial stake in its success. As a stockholder, they have the right to vote on certain matters affecting the corporation and may receive dividends as a return on their investment.Rate this question:
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- 18.
Which of the following is a corporation that issues stock that can be freely bought and sold?
- A.
Nonprofit corporation
- B.
Sole proprietorship
- C.
Not-so-public corporation
- D.
Public corporation
Correct Answer
D. Public corporationExplanation
A public corporation is a type of corporation that issues stock that can be freely bought and sold. This means that the shares of the company are available to the general public and can be traded on the stock market. Public corporations are typically larger and have a wide ownership base, allowing for greater access to capital and liquidity for investors.Rate this question:
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- 19.
What is it called when companies that produce the same product merge?
- A.
Horizontal merger
- B.
Conglomerate
- C.
Recreational merger
- D.
Multinational corporation
Correct Answer
A. Horizontal mergerExplanation
A horizontal merger refers to the consolidation of two or more companies that operate in the same industry and produce the same or similar products. This type of merger allows companies to combine their resources, reduce competition, and potentially increase market share and profitability. It is a strategic move that aims to achieve economies of scale, synergies, and improved competitiveness in the industry.Rate this question:
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- 20.
What is the name for a contract in which a corporation promises to repay borrowed money, plus interest, on a fixed schedule?
- A.
Share
- B.
Dividend
- C.
Stock
- D.
Bond
Correct Answer
D. BondExplanation
A bond is a contract in which a corporation promises to repay borrowed money, plus interest, on a fixed schedule. Unlike shares or stocks, which represent ownership in a company, bonds are debt instruments that allow corporations to raise capital by borrowing money from investors. The interest payments made by the corporation to the bondholders are known as bond dividends. Therefore, the correct answer is bond.Rate this question:
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- 21.
Angela opens a coffee shop, which she owns and where she sells a national brand of gourmet coffee. She pays licensing fees to do this. What kind of business it this?
- A.
A franchise
- B.
A cooperative
- C.
A nonprofit
- D.
A partnership
Correct Answer
A. A franchiseExplanation
This business is a franchise because Angela owns the coffee shop and sells a national brand of gourmet coffee, for which she pays licensing fees. A franchise is a type of business where an individual or company (the franchisor) grants the rights to another individual or company (the franchisee) to operate a business using its brand, products, and systems in exchange for fees or royalties. In this case, Angela is the franchisee, operating the coffee shop using the national brand of gourmet coffee.Rate this question:
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- 22.
What is cooperative?
- A.
An institution that makes laws
- B.
A business that licenses the right to sell its products in a particular area
- C.
A business operated for the shared benefit of its owners, who are also its customers
- D.
A semi-independent business that buys the right to run a franchise
Correct Answer
C. A business operated for the shared benefit of its owners, who are also its customersExplanation
A cooperative is a type of business that is operated for the shared benefit of its owners, who are also its customers. This means that the customers of the business are also the owners, and they work together to run the business and share in its profits. Unlike other businesses, where the goal is to maximize profits for shareholders, cooperatives prioritize the needs and interests of their members. This model allows for a more democratic and equitable distribution of resources and decision-making power within the business.Rate this question:
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- 23.
Which can be both an advantage and disadvantage of sole proprietorships?
- A.
The owner has total responsibility for all business decisions and financial obligations.
- B.
There are few government regulations placed on sole proprietorships.
- C.
A person who wants to open a sole proprietorship usually has limited funds.
- D.
The owner of a sole proprietorship keeps all the profits of the business.
Correct Answer
A. The owner has total responsibility for all business decisions and financial obligations.Explanation
The fact that the owner has total responsibility for all business decisions and financial obligations can be both an advantage and a disadvantage of sole proprietorships. On one hand, it allows the owner to have complete control over the business and make decisions without any interference. It also allows for quick decision-making and flexibility in adapting to market changes. On the other hand, the owner bears all the risks and liabilities associated with the business. They are personally responsible for any debts or legal issues, which can put their personal assets at risk.Rate this question:
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- 24.
Which of the following businesses is most likely to be a sole proprietorship?
- A.
Film studio
- B.
Lawn service
- C.
Kitchen appliance maker
- D.
Football helmet manufacturer
Correct Answer
B. Lawn serviceExplanation
A lawn service is most likely to be a sole proprietorship because it is a small, local business that typically does not require a large amount of capital or specialized equipment. It is common for individuals to start a lawn service on their own, without the need for partners or investors. Additionally, the nature of the business, which involves providing services rather than manufacturing or producing goods, makes it easier for an individual to operate as a sole proprietor.Rate this question:
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- 25.
What is a dividend?
- A.
The part of the corporation owned by a stockholder
- B.
The part of the corporate profits paid to a stockholder
- C.
The part of the corporation most available to stockholders
- D.
The part of the corporate debt owed by the stockholders
Correct Answer
B. The part of the corporate profits paid to a stockholderExplanation
A dividend is the portion of the profits that a corporation distributes to its stockholders. It is a way for the company to share its earnings with the shareholders as a return on their investment. This distribution is usually made in the form of cash, but it can also be in the form of additional shares or other assets. By receiving dividends, stockholders can benefit from the company's financial success and generate income from their investment.Rate this question:
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- 26.
Which of the following are advantages that corporations have over sole proprietorships and partnerships?
- A.
Limited life, limited liability
- B.
Limited life, greater access to funds
- C.
Unlimited life, limited liability
- D.
Unlimited liability, greater access to funds
Correct Answer
C. Unlimited life, limited liabilityExplanation
Corporations have the advantage of unlimited life, meaning they can continue to exist even if the owner or shareholders change. This is in contrast to sole proprietorships and partnerships, which have a limited life and may dissolve if the owner or partners leave or pass away. Additionally, corporations offer limited liability, which means that the owners' personal assets are protected from the company's debts and legal obligations. This is a significant advantage over sole proprietorships and partnerships, where the owners are personally liable for the business's liabilities.Rate this question:
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- 27.
What is it called when several companies producing unrelated products merge?
- A.
Horizontal merger
- B.
Vertical merger
- C.
Conglomerate
- D.
Multinational corporation
Correct Answer
C. ConglomerateExplanation
A conglomerate is formed when multiple companies that produce unrelated products merge together. This allows the conglomerate to diversify its business operations and enter into different industries. Unlike horizontal mergers, which involve companies in the same industry, or vertical mergers, which involve companies in different stages of the supply chain, conglomerates bring together companies from completely different sectors. This strategy allows conglomerates to spread their risks, increase their market presence, and take advantage of economies of scale.Rate this question:
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- 28.
Which of the following is an example of a franchise?
- A.
A restaurant that is part of a national chain: McDonald’s; Yum!; Subway
- B.
A single gas station named Art's Fuel and Service
- C.
A mom-and-pop grocery store
- D.
One of a chain of three dry cleaners owned by the same man
Correct Answer
A. A restaurant that is part of a national chain: McDonald’s; Yum!; SubwayExplanation
A franchise is a business model where a company grants individuals or groups the right to operate a business using its brand, trademarks, and business systems in exchange for a fee or royalty. In this case, a restaurant that is part of a national chain, such as McDonald's, Yum!, or Subway, fits the definition of a franchise because it operates under a well-known brand and follows the established business systems and guidelines set by the parent company.Rate this question:
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- 29.
If the owner of a sole proprietorship closes his business while owing many debts, what is likely to happen?
- A.
The creditors will forgive the debts because they were business related.
- B.
He will have to sell his house and use his savings to pay those debts.
- C.
He will deduct the debts on his income tax return and receive a big refund.
- D.
The bank will give him a business loan so he can pay debts and start over.
Correct Answer
B. He will have to sell his house and use his savings to pay those debts.Explanation
If the owner of a sole proprietorship closes his business while owing many debts, it is likely that he will have to sell his house and use his savings to pay those debts. As a sole proprietor, the owner is personally liable for the debts of the business. This means that his personal assets, such as his house and savings, can be used to satisfy the debts. The creditors are not likely to forgive the debts, and it is also unlikely that he will receive a big refund or be able to obtain a business loan to pay off the debts and start over.Rate this question:
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- 30.
Why do corporations sell stock?
- A.
To raise money to invest in the business
- B.
To involve more people in running the business
- C.
To spread liability among a larger group
- D.
To gain a more diverse group of owners
Correct Answer
A. To raise money to invest in the businessExplanation
Corporations sell stock to raise money to invest in the business. By selling shares of stock, corporations can generate funds that can be used to finance new projects, expand operations, or acquire assets. This allows the company to grow and increase its value. Selling stock also allows corporations to access capital from a wide range of investors, which can provide a larger pool of funds compared to relying solely on loans or other forms of financing. Additionally, selling stock helps spread the financial risk among a larger group of shareholders, reducing the liability of any individual investor.Rate this question:
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- 31.
What does double taxation mean?
- A.
The government taxes sole proprietors at higher rates.
- B.
The government taxes corporate profits and also shareholder dividends.
- C.
The government taxes both partners in a partnership.
- D.
Both the U.S. government and foreign governments tax multinational corporations.
Correct Answer
B. The government taxes corporate profits and also shareholder dividends.Explanation
Double taxation refers to the practice of taxing corporate profits at the corporate level and then taxing the dividends distributed to shareholders at the individual level. This means that the same income is being taxed twice, once at the corporate level and again at the individual level. This can result in a higher overall tax burden for shareholders and can discourage investment in corporations.Rate this question:
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- 32.
A group of organic farmers join together to market their produce. What is this an example of?
- A.
Producer cooperative
- B.
Nonprofit organization
- C.
Franchise
- D.
Consumer cooperative
Correct Answer
A. Producer cooperativeExplanation
A group of organic farmers joining together to market their produce is an example of a producer cooperative. In a producer cooperative, individuals or businesses in the same industry collaborate to collectively market and sell their products. By forming a cooperative, the organic farmers can pool their resources and expertise to improve their bargaining power, access larger markets, and increase their profitability. This enables them to have greater control over the marketing and distribution of their produce, ultimately benefiting all members of the cooperative.Rate this question:
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- 33.
If a firm has no employees, what form of business organization is it most likely to have?
- A.
Partnership
- B.
Sole proprietorship
- C.
Limited partnership
- D.
Corporation
Correct Answer
B. Sole proprietorshipExplanation
A sole proprietorship is the most likely form of business organization for a firm with no employees. In a sole proprietorship, the business is owned and operated by a single individual, who assumes all the responsibilities and risks associated with the business. Since there are no employees, the sole proprietor has complete control over the business and its operations. This form of organization is often chosen by small businesses or individuals starting a business on their own, as it is relatively easy to set up and requires less legal formalities compared to other forms of organization.Rate this question:
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Mar 21, 2023Quiz Edited by
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Mar 10, 2016Quiz Created by
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