Types Of Business Quiz Exam!
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How much do you know about different types of business? Take this 'Types of Business Quiz Exam' and test your knowledge of business types. The different business types include limited liability partnerships, sole proprietorship, partnerships, corporations, non-profit organizations, etc. Sole proprietorships are the most commonplace types of businesses in the United States. It provides a simple structure that permits owners to have total control over company operations. With this quiz, gauge your understanding of businesses and their types.
Questions and Answers
- 1.
What kind of business is BEST described by these statements? "I am the only owner of my business. I take all the risks of doing business. I keep all the profits."
- A.
Sole proprietorship
- B.
Solo partnership
- C.
Partnership
- D.
Cooperative
Correct Answer
A. Sole proprietorshipExplanation
The given statements indicate that the business owner is the sole proprietor, meaning they are the only owner of the business and take on all the risks and keep all the profits. This aligns with the concept of a sole proprietorship, where an individual operates a business on their own.Rate this question:
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- 2.
An entrepreneur:
- A.
Enforces government regulations
- B.
Takes the risk to earn profit
- C.
Sets the interest rates at banks
- D.
Manages financial investments
Correct Answer
B. Takes the risk to earn profitExplanation
An entrepreneur takes the risk to earn profit by starting and running a business venture. They are willing to invest their time, money, and resources into a new venture with the hope of generating profits. Unlike other options listed, such as enforcing government regulations, setting interest rates, or managing financial investments, the primary focus of an entrepreneur is on identifying opportunities, taking calculated risks, and creating value in the market to generate profits.Rate this question:
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- 3.
In a sole proprietorship and partnership, owner(s) share profit, but liability is limited to______ and they are know to be __________
- A.
Investment, unincorporated
- B.
Distribution, unincorporated
- C.
Production, unincorporated
- D.
Theft, unincorporated
Correct Answer
A. Investment, unincorporatedExplanation
In a sole proprietorship and partnership, the owner(s) share profit but their liability is limited to their investment. This means that if the business incurs any debts or legal obligations, the owner(s) are only responsible for the amount they have invested in the business. They are known to be unincorporated, which means that they do not have a separate legal entity from their owners.Rate this question:
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- 4.
What is a disadvantage of partnerships?
- A.
Ease of formation
- B.
Owners share responsibilities
- C.
Limited liability
- D.
Possibility of personality conflict
Correct Answer
D. Possibility of personality conflictExplanation
A disadvantage of partnerships is the possibility of personality conflict. In a partnership, multiple individuals come together to run a business, and disagreements or clashes in personalities can arise. This can lead to tension, communication breakdowns, and ultimately affect the smooth functioning of the partnership and the business as a whole. It is important for partners to have compatible personalities and be able to effectively resolve conflicts in order to maintain a successful partnership.Rate this question:
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- 5.
What is the advantage of corporations?
- A.
Minimal government regulation
- B.
Limited liability
- C.
Short life span
- D.
It has one owner
Correct Answer
B. Limited liabilityExplanation
The advantage of corporations is limited liability. This means that the owners or shareholders of a corporation are not personally liable for the debts or legal obligations of the company. Their liability is limited to the amount of their investment in the corporation. This provides a level of protection for individual shareholders and encourages investment in corporations, as it reduces the risk of personal financial loss.Rate this question:
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- 6.
Floral Shops, Bookstores, Farms are examples of what type of business?
- A.
Sole Proprietorship
- B.
Corporation
- C.
Franchise
- D.
Multinational Corporation
Correct Answer
A. Sole ProprietorshipExplanation
Floral shops, bookstores, and farms are examples of sole proprietorship businesses. In a sole proprietorship, the business is owned and operated by a single individual who assumes all the risks and responsibilities. This type of business structure is the simplest and most common form, where the owner has complete control over the business operations and retains all profits.Rate this question:
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- 7.
Limited companies such as private limited do NOT continue when stockholders sell the stock.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Limited companies, including private limited companies, do continue to exist even when stockholders sell their stock. The ownership of the company may change, but the company itself remains as a legal entity. The company's operations and business activities continue irrespective of changes in stock ownership. Therefore, the statement that limited companies do not continue when stockholders sell the stock is false.Rate this question:
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- 8.
What is the most used form of a business?
- A.
Partnership
- B.
Sole proprietorship
- C.
Coperation
- D.
Single trade
Correct Answer
B. Sole proprietorshipExplanation
Sole proprietorship is the most used form of a business because it is the simplest and easiest to set up. In this type of business, there is only one owner who has complete control and responsibility for the business. The owner has the flexibility to make decisions and keep all the profits. Additionally, there are fewer legal formalities and lower start-up costs compared to other forms of business.Rate this question:
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- 9.
Unlimited liability is when the owner is only limited to the amount he invested.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Unlimited liability refers to a situation where the owner of a business is personally responsible for all the debts and obligations of the business, even if it exceeds the amount initially invested. Therefore, the statement that the owner is only limited to the amount he invested is incorrect. In unlimited liability, the owner's personal assets can be used to satisfy the business's debts, which means there is no limit to the owner's liability.Rate this question:
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- 10.
An unincorporated business is one that does have a separate legal identity.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
An unincorporated business is one that does not have a separate legal identity. This means that the business and the owner are considered as the same entity in the eyes of the law. The owner is personally liable for any debts or legal obligations of the business. This is in contrast to a incorporated business, which has a separate legal identity and provides limited liability protection to its owners.Rate this question:
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- 11.
One of the advantages of a joint venture is:
- A.
Disagreements between partners
- B.
Knowledge about the country operated is ready with the partner
- C.
You share profits
- D.
All of these
Correct Answer
B. Knowledge about the country operated is ready with the partnerExplanation
A joint venture offers the advantage of having knowledge about the country in which the venture operates readily available through the partner. This can be beneficial because the partner likely has experience and understanding of the local market, culture, regulations, and business practices. This knowledge can help the joint venture navigate the challenges and complexities of operating in a foreign country, potentially saving time and resources. Additionally, having access to this knowledge can increase the chances of success and profitability for the joint venture.Rate this question:
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- 12.
A franchise is a new business based according to the use of name, logo, and trading methods.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A franchise is a business model in which an individual or company purchases the rights to operate a business using the established name, logo, and trading methods of a larger, already successful company. This allows the franchisee to benefit from the brand recognition and established customer base of the franchisor. Therefore, the statement that a franchise is a new business based on the use of name, logo, and trading methods is true.Rate this question:
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- 13.
The franchise sells to the franchisee.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement "The franchise sells to the franchisee" is false. In a franchise agreement, the franchisee purchases the rights to operate a business using the franchisor's brand, system, and support. The franchisee pays fees and royalties to the franchisor, but the franchise itself is not sold to the franchisee. The franchisor retains ownership and control over the franchise system.Rate this question:
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- 14.
Franchisor contributes to:
- A.
Use of name
- B.
Advertising
- C.
Ideas
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The franchisor contributes to all of the above. They allow the franchisee to use their established name and brand, which helps attract customers. The franchisor also contributes to advertising efforts, which helps promote the franchise and increase brand awareness. Additionally, the franchisor may share ideas and provide support to help the franchisee succeed. Overall, the franchisor plays a significant role in contributing to the success of the franchise through these various means.Rate this question:
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- 15.
The best definition of a sole trader form of business organization is:
- A.
The business only employs one person
- B.
The business is owned by one person
- C.
The firm has a single customer
- D.
There is a single firm in the industry.
Correct Answer
B. The business is owned by one personExplanation
The correct answer is "The business is owned by one person." A sole trader form of business organization refers to a business that is owned and operated by a single individual. This means that the owner has full control over the business and is responsible for all its operations and decisions. Unlike other forms of business organizations, such as partnerships or corporations, a sole trader does not have any partners or shareholders. Therefore, the business is solely owned by one person.Rate this question:
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- 16.
These are all true disadvantages of a Public limited company except:
- A.
Lots of legal formalities
- B.
Limited liabilities
- C.
Unincorporated business
- D.
Incorporated business
Correct Answer
D. Incorporated businessExplanation
The correct answer is "Incorporated business." This is because a public limited company is a type of incorporated business, so it cannot be a disadvantage of it. The other options mentioned, such as lots of legal formalities and limited liabilities, are true disadvantages of a public limited company.Rate this question:
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- 17.
One of the advantages of the franchise to the franchisor.
- A.
Expansion is not fast
- B.
Bad reputation from poor management would affect the franchisor
- C.
The franchisor doesn't have any responsibility over the franchisee
- D.
All of the above
Correct Answer
C. The franchisor doesn't have any responsibility over the franchiseeExplanation
The correct answer is "the franchisor doesn't have any responsibility over the franchisee." This means that the franchisor is not held accountable for the actions or performance of the franchisee. This can be advantageous for the franchisor as it allows them to focus on other aspects of their business and not be burdened by the day-to-day operations of each individual franchise. It also gives the franchisee more independence and freedom to run their own business.Rate this question:
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- 18.
These are all true characteristics of a private limited company except:
- A.
More available capital
- B.
Limited liability
- C.
Incorporated business
- D.
The business and the owner don't have separate identities
Correct Answer
D. The business and the owner don't have separate identitiesExplanation
A private limited company is a separate legal entity from its owners, which means that the business and the owner have separate identities. This allows the company to enter into contracts, own assets, and be held liable for its own debts and obligations. The other characteristics mentioned in the question, such as more available capital, limited liability, and being an incorporated business, are all true characteristics of a private limited company.Rate this question:
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- 19.
These are all advantages of a joint venture except:
- A.
Both partners share costs
- B.
Risks are shared
- C.
Difficulties of different cultures
- D.
Profits are not enough
Correct Answer
C. Difficulties of different culturesExplanation
A joint venture is a business partnership between two or more companies, where they collaborate to achieve a common goal. The advantages of a joint venture include sharing costs and risks, as both partners contribute resources and share the financial burden. Additionally, joint ventures can help companies enter new markets and access new technologies. However, difficulties arising from different cultures are not considered an advantage of a joint venture. Cultural differences can create challenges in communication, decision-making, and overall collaboration, making it harder for the partners to work together effectively.Rate this question:
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- 20.
Public limited companies and private limited companies mean that they are ___________ ownership and ______________ liability.
- A.
Private, unlimited
- B.
Public, limited
- C.
Private, limited
- D.
Public, unlimited
Correct Answer
C. Private, limitedExplanation
Public limited companies and private limited companies mean that they have different ownership structures and liability limits. Private limited companies have a restricted number of shareholders and their shares cannot be publicly traded. The liability of the shareholders is limited to the amount they have invested in the company. On the other hand, public limited companies can have an unlimited number of shareholders and their shares can be traded on the stock exchange. The liability of the shareholders is also limited, but in some cases, the company's debts can be paid off using the shareholders' personal assets.Rate this question:
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Current Version
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Jul 24, 2023Quiz Edited by
ProProfs Editorial Team -
Nov 04, 2019Quiz Created by
Raneen Wahba
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