Business Ownership Knowledge Test! Quiz

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| By Laura Kellow

Laura Kellow

Community Contributor

Quizzes Created: 1 | Total Attempts: 517

Questions: 12 | Attempts: 541 | Updated: Mar 21, 2023

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Business Ownership Knowledge Test! Quiz - Quiz

Do you know anything about business ownership? Do you suppose you could pass this quiz? A business owner is the legal proprietor of a business. Owning a business is a huge responsibility. Whether it’s alone or with others, you will have many tasks to perform. There are three types of ownership, including a sole proprietor, partnership, and corporation. If you are interested in business or business ownership, take this quiz and see how much you know.

Questions and Answers

1.

What is the largest risk of being a sole proprietor?
- A.
  
  Disputes with colleagues
- B.
  
  Limited skills
- C.
  
  Unlimited liability
Correct Answer
C. Unlimited liability

Explanation
As a sole proprietor, one of the biggest risks 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, there is no legal separation between the business and the owner. Therefore, if the business incurs debts or faces legal issues, the owner's personal assets can be seized to satisfy those obligations. This can put the owner's personal finances and assets at risk, making unlimited liability a significant concern for sole proprietors.

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2.

When a corporate owner dies, the corporation ceases to trade.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
When a corporate owner dies, the corporation does not cease to trade. A corporation is a separate legal entity from its owners, and it can continue to operate and trade even if the owner passes away. The ownership of the corporation may be transferred to the owner's heirs or beneficiaries, allowing the business to continue functioning. Therefore, the statement is false.

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3.

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

Correct Answer
capital, money, advice

Explanation
A partnership offers the advantage of having access to more capital, money, and advice. This means that the partners can contribute their own funds to the business, increasing the available financial resources. Additionally, partners can bring in their expertise and experience, providing valuable advice and guidance in decision-making processes. This combination of increased capital and diverse perspectives can contribute to the growth and success of the partnership.

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4
4.

A disadvantage of a franchise is ___________________________.
- A.
  
  Time consuming
- B.
  
  High cost to purchase and fees
- C.
  
  Name recognition
Correct Answer
B. High cost to purchase and fees

Explanation
A disadvantage of a franchise is the high cost to purchase and fees. Franchises often require a significant investment to buy into the business and ongoing fees to maintain the franchise agreement. This can be a barrier for individuals or small businesses with limited financial resources. The high costs can limit the accessibility of franchises to a wider range of potential entrepreneurs.

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5.

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

Explanation
A partnership is not always made up of 2 people. A partnership can be formed by two or more individuals or entities who agree to work together and share the profits and losses. It is not limited to just two people, and can involve multiple partners depending on the agreement made between them. Therefore, the statement that a partnership is always made up of 2 people is false.

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6.

All businesses are required to pay ___________ on their profits.

Correct Answer
tax, taxes

Explanation
All businesses are required to pay tax or taxes on their profits. This is a legal obligation imposed by the government to generate revenue. Taxes are used to fund public services, infrastructure development, and social welfare programs. By paying taxes, businesses contribute to the overall functioning of the economy and society. The specific amount of tax paid by a business depends on factors such as the tax rate, the type of business, and the jurisdiction in which it operates.

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4
7.

A sole proprietorship has limited liability for the owner.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
A sole proprietorship does not have limited liability for the owner. In fact, one of the main characteristics of a sole proprietorship is that the owner has unlimited personal liability for the business's debts and obligations. This means that if the business cannot pay its debts, the owner's personal assets can be used to satisfy those debts. Therefore, the correct answer is False.

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8.

Franchises are a free and easy way to trade.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
This statement is incorrect. Franchises are not a free and easy way to trade. In fact, starting a franchise involves significant costs such as franchise fees, royalties, and initial investments. Additionally, operating a franchise requires following strict guidelines and regulations set by the franchisor, which may limit the freedom of the franchisee to make independent business decisions. Therefore, the statement is false.

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9.

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, sole trader, sole trader company

Explanation
A sole proprietorship, sole trader, or sole trader company is the business structure that allows an individual to be their own boss, make their own decisions, and keep all of the profits to themselves. In this type of business, there is no legal distinction between the owner and the business entity, meaning the owner has unlimited liability for any debts or legal issues. This structure is suitable for small businesses or individuals who want complete control and ownership of their business.

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4
10.

Select all examples of a UK franchise.
- A.
  
  Subway
- B.
  
  Debenhams
- C.
  
  KFC
- D.
  
  McDonalds
Correct Answer(s)
A. Subway
C. KFC
D. McDonalds

Explanation
The correct answer includes Subway, KFC, and McDonald's. These are all examples of UK franchises because they are international fast food chains that have established locations in the UK. Franchises are businesses that operate under a parent company's brand and business model, and these three chains have successfully expanded their operations in the UK through franchising.

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11.

All companies must register with the Companies House.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Not all companies are required to register with the Companies House. The Companies House is the official registrar of companies in the UK, and while most companies are indeed required to register with them, there are certain exceptions. For example, some partnerships and sole traders may not need to register. Therefore, it is not true that all companies must register with the Companies House.

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1
0
12.

Company types are optional.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The given statement is "Company types are optional." The correct answer is False. This means that company types are not optional, indicating that they are required or mandatory.

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Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

Current Version
Mar 21, 2023

Quiz Edited by
ProProfs Editorial Team
Nov 28, 2017

Quiz Created by
Laura Kellow

Business Ownership Knowledge Test! Quiz

What is the largest risk of being a sole proprietor?

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

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

A disadvantage of a franchise is ___________________________.

A partnership is always made up of 2 people.

All businesses are required to pay ___________ on their profits.

A sole proprietorship has limited liability for the owner.

Franchises are a free and easy way to trade.

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 ____________________________________________.

Select all examples of a UK franchise.

All companies must register with the Companies House.

Company types are optional.