Question 1

A ________ is owned by its stockholders.

Accepted Answer

A corporation is owned by its stockholders, while sole proprietorship is owned by the individual owner and a partnership is owned by multiple partners. Therefore, option B is the correct answer.

Question 2

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. This includes any debts or legal liabilities that the business may have, and the owners may be required to use their personal assets to cover these expenses if necessary.

Question 3

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

One advantage of setting up a sole proprietorship is that the owner has complete ownership and control over the business, which can be beneficial for Torrie if she wants to maintain full decision-making power. However, she would not have limited liability, and there are no shareholders to share risk with, so options A and B are incorrect.

Question 4

A partnership is limited to how many owners?

Accepted Answer

A partnership can have any number of owners, as there is no legal limit to the number of partners involved.

Question 5

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

If the lawyer has informed you that you could each stand to lose your personal wealth if the business goes bankrupt, it means that the partnership faces unlimited liability. This is because in a partnership, the owners are personally liable for the debts and obligations of the business. Therefore, if the partnership is unable to pay its debts, the partners' personal assets may be used to satisfy those debts.

Question 6

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

Accepted Answer

According to the Bureau of Labor Statistics, as of March 2021, around 77 percent of employed people in the United States work at establishments with 50 or more employees.

Question 7

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

Since Juliana, Gabrielle, and Marcela are all owners of the business, the most appropriate choice would be a partnership. A sole proprietorship is a business owned by one individual, and a corporation typically involves issuing stocks to shareholders, which is not the case in this scenario. Therefore, the best choice would be a partnership.

Question 8

A sole proprietorship is limited to how many owners?

Accepted Answer

Sole proprietorship is a business structure where there is only one owner.

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

Arturo's desire to issue stock and be the CEO of the company means that he wants to create a corporation. A sole proprietorship has only one owner who is responsible for all the business's debts and liabilities, while a partnership has more than one owner who shares profits and losses. Only a corporation can issue stock and have a CEO. Therefore, the best choice for Arturo's business is a corporation.

Question 10

How do a partnership and a corporation differ?

Accepted Answer

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

Question 11

As a form of business,a sole proprietorship

Accepted Answer

As a sole proprietorship, there is only one owner of the business and they have complete control over it. Therefore, they cannot issue stock as there are no other shareholders to offer it to.

Question 12

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 13

A corporation is limited to how many owners?

Accepted Answer

There is no limit to the number of owners that a corporation can have. This is because a corporation is a separate legal entity from its owners, which allows for the ownership to be spread among many individuals, without affecting the corporation's ability to do business.

Question 14

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

Accepted Answer

According to the Small Business Administration, new small firms create approximately 3.3 million jobs in a typical year.

Question 15

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

Accepted Answer

A partnership generally has fewer government rules and regulations compared to corporations, making it easier to start and manage.

Question 16

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 17

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 18

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

Accepted Answer

In partnerships and sole proprietorships, the owner or owners are directly involved in the day-to-day operations and decisions of the business. Corporations, on the other hand, are managed by a board of directors and officers, not directly by the owners (shareholders).

Question 19

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 20

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 main disadvantage of setting up a business as a sole proprietorship is that the owner (in this case, Torrie) has unlimited liability. This means that she is personally responsible for all debts and obligations incurred by the business, and her personal assets may be used to satisfy any outstanding debts or legal claims against the business. This is a significant risk that could potentially put Torrie's personal financial well-being at stake.

Quiz 8: Firms,the Stock Market,and Corporate Governance