Question 1

In the United States,________ percent of all firms are sole proprietorships.

Accepted Answer

Sole proprietorships account for approximately 72 percent of all businesses in the United States, making them the most common form of business ownership.

Question 2

Juliana,Gabrielle,and Marcela want to start a business they are the only owners and the company does not issue stock.The type of business they want to start is a

Accepted Answer

The best choice for a business owned by three individuals who do not issue stock is a partnership. A sole proprietorship is owned by only one person, and a corporation typically involves shareholders who can buy and sell stock in the company.

Question 3

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

Accepted Answer

Unlimited liability means that the owners are personally responsible for all debts and obligations of the business, including the potential loss of their personal wealth. This is a characteristic of a partnership. Limited liability, on the other hand, means that the owners' personal wealth is protected and they are only liable for the amount of capital they have invested in the business. Therefore, option B is the correct choice.

Question 4

A ________ is owned by its stockholders.

Accepted Answer

Only a corporation is owned by its stockholders, as they own shares of stock that represent ownership in the company. A sole proprietorship is owned by one individual, while a partnership is owned by a group of individuals.

Question 5

The owner or owners control the day-to-day activities of which of the following types of business?

Accepted Answer

In a sole proprietorship, the owner is the only person involved in the day-to-day activities of the business. In a partnership, the partners jointly control the day-to-day activities. However, in a corporation, the day-to-day activities are typically controlled by a board of directors and the CEO, not the owners (shareholders).

Question 6

How do a partnership and a corporation differ?

Accepted Answer

The answer of How do a partnership and a corporation...

Question 7

In a partnership,the owners of the business and the business are ________,and in a sole proprietorship,the owner of the business and the business are ________.

Accepted Answer

In a partnership and a sole proprietorship, the owners and the business are not considered separate legal entities. This means the owners are personally liable for the debts and obligations of the business.

Question 8

________ of people work at firms that have 50 or more employees.

Accepted Answer

According to the Bureau of Labor Statistics, as of March 2020, about 70 percent of employed people in the United States work at firms that have 50 or more employees.

Question 9

Arturo wants to start a business where he is the chief executive officer and the company does issue stock.The type of business Arturo wants to start is a

Accepted Answer

A corporation is the only type of business that allows for the issuance of stock and has a CEO. Sole proprietorships and partnerships do not issue stock and may not have a CEO position.

Question 10

A partnership is limited to how many owners?

Accepted Answer

There is no limit to the number of owners in a partnership. Partnerships can have as few as two owners or even hundreds of owners, known as a limited partnership or a limited liability partnership.

Question 11

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a sole proprietorship.What is one disadvantage to Torrie of setting up her business as a sole proprietorship?

Accepted Answer

The disadvantage of setting up a business as a sole proprietorship is that the owner has unlimited liability, meaning they are personally responsible for all debts and legal issues incurred by the business. This puts their personal assets at risk. Option A is incorrect as sole proprietors are only taxed once on their personal income tax returns. Option B is incorrect as sole proprietors have complete control of their business. Option D is incorrect as sole proprietorships have fewer regulations than other business structures.

Question 12

In a typical year,new small firms create ________ jobs.

Accepted Answer

According to the Small Business Administration (SBA), new small firms create about 3.3 million jobs in a typical year.

Question 13

Which of the following is not an advantage of starting a new business as a sole proprietorship?

Accepted Answer

The answer of Which of the following is not an...

Question 14

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a sole proprietorship.What is one advantage to Torrie of setting up her business as a sole proprietorship?

Accepted Answer

As a sole proprietor, Torrie would have both ownership and control over the business. While sole proprietors do not have limited liability and cannot share risks with shareholders, they do have complete control over the business and its profits.

Question 15

A corporation is limited to how many owners?

Accepted Answer

There is no limit to the number of owners in a corporation. A corporation can have any number of shareholders, from just a few to millions of investors.

Question 16

What does unlimited liability mean?

Accepted Answer

Unlimited liability means that the owners of the business are personally responsible for paying expenses incurred by the business, even if it means using their personal assets to do so.

Question 17

Which of the following is an advantage of starting a new business as a partnership?

Accepted Answer

Partnerships generally face fewer government rules and regulations compared to corporations, making them simpler and less costly to operate in terms of compliance.

Question 18

A sole proprietorship is the type of business that has ________ government rules and regulations affecting it.

Accepted Answer

Sole proprietorships are subject to fewer government rules and regulations compared to other business structures, such as corporations or partnerships, because they are owned and operated by a single individual and are not considered separate legal entities.

Question 19

A sole proprietorship is limited to how many owners?

Accepted Answer

A sole proprietorship is owned and operated by one individual, hence the term "sole". It is not possible for there to be more than one owner in a sole proprietorship.

Question 20

As a form of business,a sole proprietorship

Accepted Answer

A sole proprietorship is a business owned and operated by a single individual. As such, this type of business entity cannot issue stock because there are no other owners or shareholders.

Quiz 6: Firms, The Stock Market, and Corporate Governance