Forms Of Business Ownership Trivia Quiz

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| By DavidChapman

DavidChapman

Community Contributor

Quizzes Created: 1 | Total Attempts: 130

Questions: 10 | Attempts: 131 | Updated: Mar 21, 2023

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Forms Of Business Ownership

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. If the business fails or faces legal issues, the owner's personal assets can be at risk. Unlike other business structures, such as corporations or limited liability companies, there is no legal separation between the owner and the business, exposing the owner to potential financial loss.

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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 the death of a corporate owner does not cause the corporation to cease to exist. A corporation is a separate legal entity from its owners, and it can continue to operate even if the owner passes away. The ownership of the corporation may be transferred to the owner's heirs or beneficiaries according to the laws and provisions set in place.

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3.

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

Correct Answer
capital
money

Explanation
A partnership provides the advantage of having access to more capital and money. This means that the partners can pool their resources together, contributing more funds to the business. This increased capital can be used for various purposes such as investing in new equipment, expanding operations, or funding marketing campaigns. By having access to more capital and money, a partnership can have a stronger financial position and greater opportunities for growth and success.

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4
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 to buy into the business model and brand. This can be a barrier for potential franchisees who may not have the financial resources to afford the initial purchase. The high cost to purchase a franchise can limit opportunities for individuals who are interested in owning a franchise but cannot afford the upfront expenses.

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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 that involves two or more individuals or entities coming together to carry out a business venture. It does not necessarily have to be limited to only two people. Partnerships can have multiple partners, each contributing to the business with their skills, resources, and expertise. 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 they operate for charitable, educational, or social purposes, and their earnings are reinvested back into their mission rather than distributed to shareholders or owners. The exemption from taxes allows non-profit organizations to allocate more resources towards their designated cause and maximize their impact on society.

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4
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 to provide financial services to each other, such as savings accounts, loans, and other financial products. The cooperative structure ensures that the interests of the members are prioritized, and any profits are returned to the members in the form of lower fees and better rates.

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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, resulting in a single level of taxation.

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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
When a business is incorporated, it becomes a separate legal entity from its owners. This means that the owners, also known as shareholders, have limited liability for the debts and obligations of the company. In other words, their personal assets are protected and they are only liable for the amount they have invested in the company. This is one of the main advantages of incorporating a business, as it provides a level of financial protection for the owners. Therefore, the statement "Being incorporated provides limited liability for its owners" is true.

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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 business structure where an individual is the sole owner and operator of the business. In this type of business, the owner has complete control over decision-making and enjoys all the profits generated by the business. This form of business is suitable for individuals who want to have full autonomy and retain all the profits for themselves.

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4

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Current Version
Mar 21, 2023

Quiz Edited by
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Dec 16, 2015

Quiz Created by
DavidChapman

Forms Of Business Ownership Trivia 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 ____________________________________________.