Forms Of Business Ownership! Trivia Questions Quiz

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Questions: 10 | Attempts: 3,691 | Updated: Mar 22, 2023

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Forms Of Business Ownership! Trivia Questions Quiz - Quiz

Do you know that there are many forms of business ownership? A partnership is just one example. During this quiz, you should grasp what the main disadvantage of being a sole proprietor is, what is the disadvantage of a franchise, what are credit unions an example of what, what does it mean to be incorporated, and which type of business do you get to be your own boss. This quiz is all about the different forms of business ownership. Good luck to you.

Questions and Answers

1.

What is the main disadvantage of being a sole proprietor?
- A.
  
  High start up costs
- B.
  
  Limited skills
- C.
  
  Unlimited liability
Correct Answer
C. Unlimited liability

Explanation
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.

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2.

When a corporate owner dies, the corporation ceases to exit.
- A.
  
  True
- B.
  
  False
- C.
  
  Only if he/she is not married
Correct Answer
B. False

Explanation
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.

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3.

An advantage of a partnership is having access to more ___________________.

Correct Answer
capital
money

Explanation
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.

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4.

A disadvantage of a franchise is ___________________________.
- A.
  
  Name recognition
- B.
  
  High cost to purchase
- C.
  
  Limited market
Correct Answer
B. High cost to purchase

Explanation
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.

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5.

A partnership is made up of 2 people.
- A.
  
  True
- B.
  
  False
- C.
  
  If they agree
Correct Answer
B. False

Explanation
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.

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6.

Non-Profit corporations are not required to pay ___________ on their profits.

Correct Answer
tax
taxes

Explanation
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.

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7.

Credit Unions are an example of a ___________________.
- A.
  
  Cooperative
- B.
  
  Franchise
- C.
  
  Partnership
Correct Answer
A. Cooperative

Explanation
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.

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8.

A sole proprietorship is taxed only once.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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9.

Being incorporated provides limited liabilty for its owners.
- A.
  
  True
- B.
  
  False
- C.
  
  If they are of legal age
Correct Answer
A. True

Explanation
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.

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10.

If you want to be your own boss, make your own decisions, and keep all of the profits to yourself; you want to form a ____________________________________________.

Correct Answer
sole proprietorship

Explanation
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.

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Forms Of Business Ownership! Trivia Questions Quiz

What is the main disadvantage of being a sole proprietor?

When a corporate owner dies, the corporation ceases to exit.

An advantage of a partnership is having access to more ___________________.

A disadvantage of a franchise is ___________________________.

A partnership is made up of 2 people.

Non-Profit corporations are not required to pay ___________ on their profits.

Credit Unions are an example of a ___________________.

A sole proprietorship is taxed only once.

Being incorporated provides limited liabilty for its owners.

If you want to be your own boss, make your own decisions, and keep all of the profits to yourself; you want to form a ____________________________________________.