Q. In a limited partnership, who has limited liability?
-
A.
General partners
-
B.
Limited partners
-
C.
Both general and limited partners
-
D.
None of the partners
Solution
In a limited partnership, limited partners have limited liability, meaning they are only liable for the amount they invested.
Correct Answer:
B
— Limited partners
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Q. In a partnership, how is profit typically shared?
-
A.
Equally among partners
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B.
Based on capital contribution
-
C.
As per the partnership agreement
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D.
None of the above
Solution
Profits in a partnership are usually shared according to the terms set in the partnership agreement.
Correct Answer:
C
— As per the partnership agreement
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Q. What is a common reason for choosing a limited liability company (LLC) over a corporation?
-
A.
More complex tax structure
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B.
Less regulatory paperwork
-
C.
Unlimited liability
-
D.
Easier to raise capital
Solution
LLCs generally have less regulatory paperwork and are simpler to manage than corporations.
Correct Answer:
B
— Less regulatory paperwork
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Q. What is a cooperative primarily focused on?
-
A.
Maximizing profits for shareholders
-
B.
Providing services to members
-
C.
Competing with other businesses
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D.
Expanding market share
Solution
A cooperative is primarily focused on providing services to its members rather than maximizing profits.
Correct Answer:
B
— Providing services to members
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Q. What is the main disadvantage of a partnership?
-
A.
Limited capital
-
B.
Shared profits
-
C.
Complexity in decision-making
-
D.
Unlimited liability
Solution
Partners in a partnership typically face unlimited liability, meaning they are personally responsible for business debts.
Correct Answer:
D
— Unlimited liability
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Q. What is the main disadvantage of a sole proprietorship?
-
A.
Complex tax structure
-
B.
Limited capital raising ability
-
C.
Shared decision-making
-
D.
Limited liability
Solution
The main disadvantage of a sole proprietorship is the limited ability to raise capital, as it relies solely on the owner's resources.
Correct Answer:
B
— Limited capital raising ability
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Q. What is the primary advantage of a sole proprietorship?
-
A.
Limited liability
-
B.
Ease of formation
-
C.
Access to capital
-
D.
Shared decision-making
Solution
A sole proprietorship is easy to form as it requires minimal legal formalities.
Correct Answer:
B
— Ease of formation
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Q. What is the primary purpose of a business plan in entrepreneurship?
-
A.
To secure funding
-
B.
To outline business goals
-
C.
To attract partners
-
D.
All of the above
Solution
A business plan serves multiple purposes, including securing funding, outlining business goals, and attracting partners.
Correct Answer:
D
— All of the above
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Q. Which business structure is best suited for raising large amounts of capital?
-
A.
Sole proprietorship
-
B.
Partnership
-
C.
Corporation
-
D.
Cooperative
Solution
Corporations can issue stocks to raise capital, making them ideal for attracting large investments.
Correct Answer:
C
— Corporation
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Q. Which form of business ownership is most suitable for family-run businesses?
-
A.
Sole proprietorship
-
B.
Corporation
-
C.
Limited liability company
-
D.
Partnership
Solution
A sole proprietorship is often most suitable for family-run businesses due to its simplicity and control.
Correct Answer:
A
— Sole proprietorship
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Q. Which form of business ownership offers limited liability to its owners?
-
A.
Sole proprietorship
-
B.
Partnership
-
C.
Corporation
-
D.
Cooperative
Solution
A corporation offers limited liability, meaning owners are not personally responsible for the debts of the business.
Correct Answer:
C
— Corporation
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Q. Which form of business ownership offers the most protection against personal liability?
-
A.
Sole proprietorship
-
B.
Partnership
-
C.
Corporation
-
D.
Limited liability company (LLC)
Solution
Both corporations and LLCs provide limited liability protection, shielding owners' personal assets from business debts.
Correct Answer:
C
— Corporation
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Q. Which of the following is NOT a characteristic of a sole proprietorship?
-
A.
Single ownership
-
B.
Unlimited liability
-
C.
Separate legal entity
-
D.
Full control over business decisions
Solution
A sole proprietorship is not a separate legal entity; the owner and the business are legally the same.
Correct Answer:
C
— Separate legal entity
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