True/False
Indicate whether the
statement is true or false.
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1.
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Sole proprietorship is relatively
rare.
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2.
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Sole proprietorships give the owners the greatest
degree of flexibility in running their businesses.
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3.
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The choice of business model can have profound
impact on how the business is run.
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4.
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It is important for business owners to understand
the limitations imposed on them by local ordinances and business permits.
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5.
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Limited liability companies and limited
partnerships are not the same thing.
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6.
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One of the biggest hurdles faced by sole
proprietors is how to finance their businesses.
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7.
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Tax losses from a sole proprietorship can be passed
through to the individual owner’s income tax return.
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8.
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Dissolving a sole proprietorship is often difficult
and time-consuming.
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9.
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Attorneys often conduct trademark
searches.
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10.
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Sole proprietors can legally avoid personal
liability for business debts and judgments.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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11.
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The business model that gives an individual owner
the greatest degree of flexibility and also the highest level of personal liability.
a. | Corporation | b. | Partnership | c. | Limited
partnership | d. | Sole
proprietorship |
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12.
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Each of the following questions is important for
the creation of a sole proprietorship except:
a. | Who will own the business? | b. | What is the owner’s potential income tax
liability? | c. | How will the
business be perceived by others? | d. | How can or should
the business be transferred to others? |
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13.
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A business that is composed of two or more
individuals working in a joint business venture.
a. | Partnership | b. | Limited partnership | c. | Corporation | d. | Sole
proprietorship |
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14.
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This type of business model combines features of a
partnership with the concept of limited liability.
a. | General partnership | b. | Limited liability venture | c. | Limited partnership | d. | All of the
above |
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15.
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A legal concept that provides that a person’s
liability in a business is limited to the extent of his or her investment.
a. | Unlimited coverage | b. | Limited liability | c. | Personal
conjecture | d. | Limited
response |
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16.
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A business model that combines elements of a
corporation and a partnership but is run more like a corporation.
a. | Limited liability company | b. | General partnership | c. | Sole
proprietorship | d. | None of the
above |
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17.
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These business models are only available to certain
types of professions.
a. | Limited liability company | b. | Professional corporation | c. | For-profit
corporation | d. | Quasi-governmental
entity |
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18.
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This type of business is considered the artificial
person.
a. | Limited partnership | b. | Limited liability company | c. | Sole proprietorship | d. | Corporation |
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19.
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Government documentation is often required to run
business.
a. | Registered Web domain | b. | Statement of inventory | c. | Business
license | d. | All of the above |
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20.
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An emblem that is associated with a particular
business.
a. | Copyright | b. | Business permits | c. | Trademark | d. | None of the
above |
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