INTRO TO BUSINESS - CH 4: FORMS OF BUSINESS OWNERSHIP LATEST 2026/2027 ACTUAL EXAM QUESTIONS WITH CORRECT ANSWERS 100% VERIFIED GRADED A+

INTRO TO BUSINESS - CH 4: FORMS
OF BUSINESS OWNERSHIP LATEST
2026/2027 ACTUAL EXAM QUESTIONS
WITH CORRECT ANSWERS 100%
VERIFIED GRADED A+
Sole Proprietorship -
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CORRECT ANSWER a business that is established, owned, operated, and often financed by one p
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erson



Why is sole proprietorship a popular form of business organization? - CORRECT ANSWER -
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Easy and inexpensive to form
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-Profits all go to the owner
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-Direct control of the business
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-Freedom from government regulation m m m




-No special taxation
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-Ease of dissolution
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What are the drawbacks to being a sole proprietor? - CORRECT ANSWER -Unlimited liability
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-Difficulty raising capital m m




-Limited managerial expertise
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-Trouble finding qualified employees
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-Personal time commitment m m




-Unstable business life m m




-Losses are the owner's responsibility
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, Partnerships - m




CORRECT ANSWER an association of two or more individuals who agree to operate a business to
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gether for profit m m




written partnership agreement -
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CORRECT ANSWER spelling out the terms and conditions of the partnership is recommended to
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prevent later conflicts between the partners
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general partnership - CORRECT ANSWER all partners share in the management and profits
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limited partnership -
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mCORRECT ANSWER one or more general partners and on or more limited partners. Limited partn
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ers agree not to take part in the day-to-
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day management of the firm. They help to finance the business, but the general partners maintai
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n operational control.
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general partners - CORRECT ANSWER who have unlimited liability
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limited partners - m m




mCORRECT ANSWER liability is limited to the amount of their investment of the firm.
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corporation - m




mCORRECT ANSWER a legal entity subject to the laws of the state in which it is formed, where the
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right to operate as a business is issued by state charter
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Stockholders (or shareholders) - m m m




mCORRECT ANSWER are the owners of a corporation, holding shares of stock that provide them w
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ith certain rights.
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