Business: Types of Companies and Sole Proprietorship

3751 Words Sep 21st, 2011 16 Pages
Chapter 05
Choosing a Form of Business Ownership

True / False Questions 1. The corporation is the most common form of business ownership.
True False 2. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.
True False 3. Few people today start their own business.
True False
4. Once a business is established, it's almost impossible to change from one form of business ownership to another.
True False 5. When two or more people legally agree to become co-owners of a business, the form of business is called a partnership.
True False

6. A legal entity with authority to act and have liability separate from its owners is called a partnership.
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Unfortunately, the type of business he wants to start would require a fairly high initial investment and Rocky has a poor credit rating and very little personal wealth. Rocky would be unlikely to find success if he organized his business as a sole proprietorship.
True False 25. A general partner takes an active role in the management of the business.
True False

26. All partners in a general partnership have limited liability for the debts of their firm.
True False

27. In a general partnership, all partners share in management of the business and in the liability for the firm's debts.
True False

28. In a general partnership, all partners are entitled to an equal share of the firm's profits.
True False

29. Limited partnerships are just like general partnerships, except that they are partners for a limited time period.
True False

30. A limited partner is an owner who assumes no management responsibility and has no liability for losses beyond the amount invested.
True False
---------------------------------------------------------------------------------------------------------------------Multiple Choice Questions

1. The __________ is the most common form of business ownership.
A. partnership
B. corporation
C. joint venture
D. sole proprietorship

2. A ___________ is a form of business that is owned, and usually managed, by one person.
A. closed corporation
B. subchapter S corporation
C. sole proprietorship
D. limited partnership

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