Lesson 3 Business Organization

Which of the following is a key characteristic of a sole proprietorship?

A) The business has multiple owners

B) The business has a separate legal identity from the owner

C) The owner has unlimited liability for business debts

D) The business is managed by a board of directors

In a partnership, the partners share:

A) Responsibility for management, profits, and liabilities

B) Limited liability

C) Tax benefits for each partner separately

D) None of the above

Which of the following is a disadvantage of a corporation?

A) Limited liability for shareholders

B) Difficulty in raising capital

C) Double taxation on income

D) Easier management due to fewer regulations

In a cooperative, the primary goal is to:

A) Maximize profit for shareholders

B) Provide services and benefits to members

C) Offer tax advantages to the business owners

D) Operate as a private entity with limited membership

Which of the following best describes a general partnership?

A) Partners have limited liability for business debts

B) Partners share equal responsibility for management and debts

C) One partner is responsible for the day-to-day operations

D) Partners do not share profits from the business

Which type of business organization provides the most protection against personal liability for its owners?

A) Sole Proprietorship

B) Partnership

C) Corporation

D) Cooperative

One major advantage of a sole proprietorship is:

A) Easy to form and manage

B) Limited liability for the owner

C) Ability to raise large amounts of capital

D) Tax-exempt status

In a partnership, how is the business income typically taxed?

A) The partnership itself pays taxes

B) Each partner is taxed individually on their share of the income

C) Partners pay taxes only on dividends received

D) The partnership is not taxed

A corporation can raise capital by:

A) Issuing shares of stock

B) Taking loans from banks only

C) Selling its own assets

D) Raising capital through cooperative membership fees

The owners of a cooperative are called:

A) Shareholders

B) Members

C) Partners

D) Investors

Which of the following is true about corporations?

A) The owners are personally liable for the company’s debts

B) The business has a separate legal identity from its owners

C) Corporations are only taxed once on profits

D) Corporations are not allowed to issue stock

In a limited partnership, which partner has limited liability?

A) The general partner

B) The limited partner

C) Both partners

D) Neither partner

Which business structure would be most appropriate for a group of people coming together to purchase goods and services for mutual benefit?

A) Sole Proprietorship

B) Partnership

C) Corporation

D) Cooperative

Which of the following is an advantage of a corporation over a sole proprietorship?

A) A corporation can raise funds by issuing stock

B) A corporation does not have to comply with regulations

C) A corporation has unlimited liability

D) A corporation has simpler tax reporting

In a cooperative, profits are typically:

A) Distributed according to the amount of investment each member has made

B) Reinvested into the business without member participation

C) Shared among members based on usage or participation

D) Sent to external investors