Q. In a general partnership, how are decisions typically made?
-
A.
By majority vote of partners
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B.
By the partner with the most capital
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C.
By a designated managing partner
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D.
By consensus of all partners
Solution
In a general partnership, decisions are typically made by majority vote of the partners unless otherwise agreed.
Correct Answer:
A
— By majority vote of partners
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Q. In a general partnership, how are profits typically divided?
-
A.
Equally among partners
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B.
Based on investment percentage
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C.
As determined by a written agreement
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D.
All of the above
Solution
Profits in a general partnership can be divided equally, based on investment, or as per an agreement.
Correct Answer:
D
— All of the above
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Q. What is a key advantage of a corporation?
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A.
Simplicity in management
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B.
Limited liability for owners
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C.
Direct control by owners
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D.
No taxation on profits
Solution
A corporation provides limited liability protection to its owners, meaning they are not personally responsible for the company's debts.
Correct Answer:
B
— Limited liability for owners
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Q. What is a key feature of a C corporation?
-
A.
Pass-through taxation
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B.
Limited liability
-
C.
Single taxation
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D.
No formal structure required
Solution
A C corporation provides limited liability to its owners, protecting their personal assets from business debts.
Correct Answer:
B
— Limited liability
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Q. What is a key feature of a cooperative?
-
A.
Owned by shareholders
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B.
Operated for profit
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C.
Owned and operated by members for mutual benefit
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D.
Managed by a board of directors
Solution
A cooperative is owned and operated by its members for their mutual benefit, rather than for profit.
Correct Answer:
C
— Owned and operated by members for mutual benefit
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Q. What is a limited liability company (LLC)?
-
A.
A type of corporation with unlimited liability
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B.
A hybrid business structure that combines features of partnerships and corporations
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C.
A sole proprietorship with limited liability
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D.
A non-profit organization
Solution
An LLC is a hybrid business structure that provides the limited liability of a corporation with the tax benefits of a partnership.
Correct Answer:
B
— A hybrid business structure that combines features of partnerships and corporations
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Q. What is a sole proprietorship?
-
A.
A business owned by one person
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B.
A business owned by multiple partners
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C.
A corporation owned by shareholders
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D.
A non-profit organization
Solution
A sole proprietorship is a business owned and operated by a single individual.
Correct Answer:
A
— A business owned by one person
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Q. What is the primary disadvantage of a sole proprietorship?
-
A.
Limited control
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B.
Unlimited personal liability
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C.
Difficulty in raising capital
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D.
Complex tax structure
Solution
The primary disadvantage of a sole proprietorship is that the owner has unlimited personal liability for the business's debts.
Correct Answer:
B
— Unlimited personal liability
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Q. Which form of business ownership allows for the easiest transfer of ownership?
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A.
Sole proprietorship
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B.
Partnership
-
C.
Corporation
-
D.
Limited liability company
Solution
A corporation allows for the easiest transfer of ownership through the sale of stock.
Correct Answer:
C
— Corporation
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Q. Which of the following is a characteristic of a partnership?
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A.
Limited liability for all partners
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B.
Shared profits and losses
-
C.
Unlimited lifespan
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D.
Separate legal entity
Solution
In a partnership, profits and losses are shared among the partners according to their agreement.
Correct Answer:
B
— Shared profits and losses
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Q. Which of the following is NOT a form of business ownership?
-
A.
Sole proprietorship
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B.
Partnership
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C.
Corporation
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D.
Franchise
Solution
A franchise is a business model that allows individuals to operate a business under a brand, but it is not a form of ownership itself.
Correct Answer:
D
— Franchise
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