BUS 311 WEEK 4 MULTIMEDIA ACTIVITY – BUSINESS ORGANIZATION
|| 2025/2026 FULL SOLUTIONS & VERIFIED ANSWERS ||
GUARANTEED A+ <NEW UPDATE>
Q1.
Which of the following is considered a primary advantage of a sole proprietorship?
A. Unlimited liability
B. Ease of formation and full control by the owner
C. Ability to raise large amounts of capital
D. Perpetual existence regardless of owner’s death
Answer: B. Ease of formation and full control by the owner
Sole proprietorships are simple to establish and give the owner full control over decisions.
However, they come with unlimited liability and limited capital-raising ability. They also dissolve
upon the owner’s death.
Q2.
A general partnership differs from a limited partnership mainly because:
A. General partners have limited liability, while limited partners have unlimited liability
B. General partners share profits, while limited partners do not
C. General partners manage the business and assume unlimited liability, while limited partners
invest without daily management and have limited liability
D. Both types of partners are excluded from taxation
Answer: C. General partners manage the business and assume unlimited liability, while
limited partners invest without daily management and have limited liability
In partnerships, general partners run the business and bear risk. Limited partners are
investors whose liability is restricted to their contribution.
Q3.
Which of the following is a disadvantage of forming a corporation?
,A. Limited liability of owners
B. Ability to raise capital through stock issuance
C. Double taxation of corporate profits
D. Perpetual life of the organization
Answer: C. Double taxation of corporate profits
Corporations face double taxation: the company pays corporate income tax, and
shareholders pay tax again on dividends. The other options are advantages of corporations.
Q4.
A limited liability company (LLC) combines which of the following characteristics?
A. Corporate taxation and sole proprietorship liability
B. Partnership tax benefits and corporation’s limited liability
C. Partnership unlimited liability and corporate double taxation
D. Sole proprietorship control and partnership liability
Answer: B. Partnership tax benefits and corporation’s limited liability
LLCs allow profits to “pass through” to owners for taxation like partnerships while providing
liability protection like corporations.
Q5.
Which business structure is best suited for entrepreneurs who want to attract investors but
retain limited liability without double taxation?
A. Sole Proprietorship
B. C Corporation
C. LLC
D. General Partnership
Answer: C. LLC
LLCs avoid double taxation and allow members to raise funds while keeping liability limited,
making them ideal for modern startups.
Q6.
When comparing a C Corporation and an S Corporation, which statement is most accurate?
, A. Both face double taxation on earnings
B. C Corporations have restrictions on number and type of shareholders, while S Corporations
do not
C. S Corporations allow profits to pass through to shareholders, avoiding double taxation, while
C Corporations do not
D. Both can issue unlimited classes of stock
Answer: C. S Corporations allow profits to pass through to shareholders, avoiding double
taxation, while C Corporations do not
The IRS allows S Corporations to pass income directly to shareholders’ personal tax returns.
C Corporations, however, face corporate tax first, then dividend tax.
Q7.
Which of the following is true about franchises?
A. Franchisees always maintain complete independence from the franchisor
B. Franchising allows quick expansion of business with reduced capital risk for the franchisor
C. Franchisees do not pay fees or royalties
D. Franchises cannot operate under established brand names
Answer: B. Franchising allows quick expansion of business with reduced capital risk for the
franchisor
Franchises expand brand presence while franchisees provide the capital. Franchisees pay
fees/royalties and must follow brand rules.
Q8.
Which business form provides the highest level of control and independence to its owner but
also the highest level of personal risk?
A. Corporation
B. LLC
C. Sole Proprietorship
D. Partnership
Answer: C. Sole Proprietorship
The sole proprietor makes all decisions independently but faces unlimited liability for debts.
|| 2025/2026 FULL SOLUTIONS & VERIFIED ANSWERS ||
GUARANTEED A+ <NEW UPDATE>
Q1.
Which of the following is considered a primary advantage of a sole proprietorship?
A. Unlimited liability
B. Ease of formation and full control by the owner
C. Ability to raise large amounts of capital
D. Perpetual existence regardless of owner’s death
Answer: B. Ease of formation and full control by the owner
Sole proprietorships are simple to establish and give the owner full control over decisions.
However, they come with unlimited liability and limited capital-raising ability. They also dissolve
upon the owner’s death.
Q2.
A general partnership differs from a limited partnership mainly because:
A. General partners have limited liability, while limited partners have unlimited liability
B. General partners share profits, while limited partners do not
C. General partners manage the business and assume unlimited liability, while limited partners
invest without daily management and have limited liability
D. Both types of partners are excluded from taxation
Answer: C. General partners manage the business and assume unlimited liability, while
limited partners invest without daily management and have limited liability
In partnerships, general partners run the business and bear risk. Limited partners are
investors whose liability is restricted to their contribution.
Q3.
Which of the following is a disadvantage of forming a corporation?
,A. Limited liability of owners
B. Ability to raise capital through stock issuance
C. Double taxation of corporate profits
D. Perpetual life of the organization
Answer: C. Double taxation of corporate profits
Corporations face double taxation: the company pays corporate income tax, and
shareholders pay tax again on dividends. The other options are advantages of corporations.
Q4.
A limited liability company (LLC) combines which of the following characteristics?
A. Corporate taxation and sole proprietorship liability
B. Partnership tax benefits and corporation’s limited liability
C. Partnership unlimited liability and corporate double taxation
D. Sole proprietorship control and partnership liability
Answer: B. Partnership tax benefits and corporation’s limited liability
LLCs allow profits to “pass through” to owners for taxation like partnerships while providing
liability protection like corporations.
Q5.
Which business structure is best suited for entrepreneurs who want to attract investors but
retain limited liability without double taxation?
A. Sole Proprietorship
B. C Corporation
C. LLC
D. General Partnership
Answer: C. LLC
LLCs avoid double taxation and allow members to raise funds while keeping liability limited,
making them ideal for modern startups.
Q6.
When comparing a C Corporation and an S Corporation, which statement is most accurate?
, A. Both face double taxation on earnings
B. C Corporations have restrictions on number and type of shareholders, while S Corporations
do not
C. S Corporations allow profits to pass through to shareholders, avoiding double taxation, while
C Corporations do not
D. Both can issue unlimited classes of stock
Answer: C. S Corporations allow profits to pass through to shareholders, avoiding double
taxation, while C Corporations do not
The IRS allows S Corporations to pass income directly to shareholders’ personal tax returns.
C Corporations, however, face corporate tax first, then dividend tax.
Q7.
Which of the following is true about franchises?
A. Franchisees always maintain complete independence from the franchisor
B. Franchising allows quick expansion of business with reduced capital risk for the franchisor
C. Franchisees do not pay fees or royalties
D. Franchises cannot operate under established brand names
Answer: B. Franchising allows quick expansion of business with reduced capital risk for the
franchisor
Franchises expand brand presence while franchisees provide the capital. Franchisees pay
fees/royalties and must follow brand rules.
Q8.
Which business form provides the highest level of control and independence to its owner but
also the highest level of personal risk?
A. Corporation
B. LLC
C. Sole Proprietorship
D. Partnership
Answer: C. Sole Proprietorship
The sole proprietor makes all decisions independently but faces unlimited liability for debts.
