Learning Objective 1-1
1) The ownership structure of a business includes the following forms ________.
A) individual, group, and corporate
B) sole proprietorship, partnership, and corporation
C) service, manufacturing, and financial
D) debtors, creditors, and owners
2) Which of the following is true about a sole proprietorship?
A) A sole proprietorship is a company owned by two or more individuals.
B) The owner's liability is limited to the amounts invested in the business.
C) Income from a sole proprietorship is distributed to the owner in the form of a dividend.
D) The income from a sole proprietorship is taxed on the owner's personal income tax return.
3) A partnership agreement ________.
A) exempts partners from unlimited liability
B) establishes the partnership as a separate legal entity
C) details how much work partners will do and how they will split up the profits
D) defines how many shares of stock the partnership may sell to investors
4) The two types of merchandising businesses include ________.
A) wholesale and retail
B) service and financial
C) manufacturing and retail
D) service and wholesale
5) The inputs of a firm include ________.
A) revenues
B) liabilities
C) inventory and supplies
D) All of these are correct.
6) A corporation ________.
A) is a legal entity separate from the owners
B) is a manufacturer and not a service organization
C) may cause unlimited liability for its shareholders
D) provides goods or services for the sole purpose of helping people
7) Corporations are ________.
A) for-profit businesses only
B) manufacturers and not service organizations
C) owned by shareholders
D) exempt from legal liability
8) Advantages of the corporate form of business organization include ________.
A) double taxation
B) limited liability for shareholders
C) separation of ownership and management
D) Two or more of these are correct.
9) Disadvantages of the corporate form of business organization include ________.
A) double taxation
B) limited liability for shareholders
C) separation of ownership and management
D) two or more of these
10) Which of the following is legally a separate entity from its owner(s)?
A) sole proprietorship
B) partnership
C) corporation
D) Two of these are correct.