Ortega ch 8 - Chapter8:BusinessLegalForms 1.

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Chapter 8: Business Legal Forms 1. The oldest, most common form of private business ownership in the United States is the ____. a. Corporation b. Nonprofit corporation c. Sole proprietorship d. Partnership ANS: C The oldest, most common form of private business ownership in the United States is the sole  proprietorship. 2. A ____ is a business owned and managed by one individual. a. Partnership b. Sole proprietorship c. Nonprofit corporation d. Corporation ANS: B A sole proprietorship is a business owned and managed by one individual. 3. A small roadside service station, a bakery or a restaurant are all typical examples of ____. a. Limited liability company b. Nonprofit corporation c. Community service d. Sole proprietorship ANS: D Typically the sole proprietor owns a small service or retail operation—such as a roadside produce  stand, hardware store, bakery, or restaurant—that frequently caters to a group of regular customers. 4. Who normally provides the capital needed to start a sole proprietorship? a. Charitable institutions b. Owner of the business c. International banks d. Insurance companies ANS: B The owner normally provides the capital (money) needed to start and operate the business through  personal savings or borrowed money.
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5. Jim owns a hardware shop. He single-handedly set up this shop using his savings. All decisions are  taken by him and he manages the business on his own. What kind of a business does he own? a. Partnership b. Corporation c. Limited liability company d. Sole proprietorship ANS: D The sole proprietor is usually an active manager, employing only a few people and working in the  business every day. He or she controls the operations, supervises the staff, and makes the decisions.  The managerial ability of the owner usually accounts for the success or failure of the business. 6. What are the advantages of owning a sole proprietorship? a. Ease of starting, sole control over the business, no profit and no loss, business  can be dissolved easily b. Difficulty in starting, sole control over the business, sole participation in profits and  losses, business can be dissolved easily c. Ease of starting, sole control over the business, sole participation in profits and  losses, business can be dissolved easily d. Sole control over the business, profits for the boss and losses for the employees,  business can be dissolved easily ANS: C Advantages of owning a sole proprietorship include: ease of starting, control, sole participation in profits  and losses, and ease of dissolving. 7.
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This note was uploaded on 06/15/2010 for the course INTB INTB 3352 taught by Professor Ortega during the Spring '10 term at University of Houston.

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Ortega ch 8 - Chapter8:BusinessLegalForms 1.

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