Forms of Business Ownership - Problem Set for Exams

Forms of Business Ownership - Problem Set

Q. In which form of business ownership do owners have limited liability and can participate in management?

Solution

In an LLC, owners have limited liability and can actively participate in the management of the business.

Correct Answer: D — Limited liability company

Q. In which form of business ownership do owners share management responsibilities?

Solution

In a partnership, owners share management responsibilities and decision-making.

Correct Answer: C — Partnership

Q. What is a franchise?

Solution

A franchise is a business model where one party licenses the use of its brand and business model to another party.

Correct Answer: B — A business model where one party licenses the use of its brand

Q. What is a key feature of a general partnership?

Solution

In a general partnership, all partners typically share equal management responsibilities unless otherwise agreed.

Correct Answer: B — Equal management responsibilities

Q. What is a major disadvantage of a sole proprietorship?

Solution

A major disadvantage of a sole proprietorship is that the owner has unlimited personal liability for business debts.

Correct Answer: B — Unlimited personal liability

Q. Which business structure allows for the easiest transfer of ownership?

Solution

A corporation allows for the easiest transfer of ownership through the sale of stock.

Correct Answer: C — Corporation

Q. Which form of business ownership is characterized by a single owner with unlimited liability?

Solution

A sole proprietorship has a single owner who is personally liable for all business debts.

Correct Answer: B — Sole proprietorship

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