Forms Of Business Ownership! Trivia Questions Quiz

Non-profit corporations are exempt from paying taxes on their profits. This is because these organizations are established for charitable, educational, or other public purposes, and their earnings are intended to be reinvested in their mission rather than distributed to shareholders or owners. This tax exemption allows non-profits to allocate more resources towards their programs and services, benefiting the communities they serve.

The statement is false because when a corporate owner dies, the corporation does not cease to exist. Instead, the ownership of the corporation may be transferred to the deceased owner's heirs or beneficiaries according to the laws of succession or the provisions of the owner's will. The corporation can continue to operate and conduct business under new ownership.

Credit unions are an example of a cooperative because they are financial institutions owned and operated by their members. Members pool their resources together to provide loans and other financial services to each other at competitive rates. The primary goal of credit unions is to serve their members' needs rather than earning profits for shareholders, making them a cooperative organization.

A disadvantage of a franchise is the high cost to purchase. Franchises often require a significant upfront investment, including franchise fees, initial inventory, and equipment costs. This can be a barrier for individuals or small businesses looking to enter the franchise market. The high cost to purchase a franchise can limit opportunities for potential franchisees and make it difficult to start or expand a franchise business.

The main disadvantage of being a sole proprietor is unlimited liability. This means that the owner is personally responsible for all debts and liabilities of the business. Unlike other business structures, such as corporations or limited liability companies, there is no legal separation between the owner and the business. Therefore, if the business incurs debts or faces legal issues, the owner's personal assets can be at risk. This can be a significant disadvantage as it exposes the owner to potential financial loss and puts their personal assets in jeopardy.

Being incorporated provides limited liability for its owners because when a business is incorporated, it becomes a separate legal entity from its owners. This means that the owners, also known as shareholders, are not personally responsible for the company's debts or legal obligations. Their liability is limited only to the amount of money they have invested in the company. Therefore, if the company faces financial difficulties or legal issues, the personal assets of the owners are protected, providing them with limited liability.

Partnerships provide the advantage of having access to more capital and money. This means that the partners can pool their resources and contribute more funds to the business. This increased capital can be used for various purposes such as expanding operations, investing in new equipment, or funding research and development. Having access to more capital and money gives partnerships a financial edge and flexibility to pursue growth opportunities and meet their financial obligations.

A sole proprietorship is a type of business entity where an individual owns and operates the business alone. In this form of business, the owner has complete control over decision-making and enjoys all the profits. It is the simplest and most common form of business ownership, offering flexibility and minimal legal formalities. As a sole proprietor, you have the freedom to make your own decisions and keep all the profits, making it an ideal choice for those who want to be their own boss.

A sole proprietorship is taxed only once because it is not considered a separate legal entity from its owner. The income and expenses of the business are reported on the owner's personal tax return, and the owner is responsible for paying taxes on the business profits. This means that the business itself does not pay separate taxes like a corporation or partnership would. Therefore, the statement "A sole proprietorship is taxed only once" is true.

The statement "A partnership is made up of 2 people" is false. A partnership is a business structure where two or more individuals agree to share profits, losses, and responsibilities. While it is common for partnerships to have two partners, it is not a requirement. Partnerships can have more than two partners, depending on the agreement between the parties involved. Therefore, the statement is incorrect.