MIE 201 Exam 2: Chapters 4, 5, 8
Makanui NCSU 2026 Questions and
Answers
3 types of business ownership - Correct answer-- sole propreitorship
- partnership
- corporation
sole proprietorships - Correct answer-- businesses owned by one individual
- the most common form of business organization in the United States
- easiest and least expensive form of business to start
- ex: tutoring/bookkeeping/landscaping etc...
sole proprietorship advantages - Correct answer-- simplicity
- single layer of taxation - taxed at individual rates
- privacy
- flexibility and control
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,- personal satisfaction
- fewer limitations on personal income
-complete ownership of the profits
sole proprietorship disadvantages - Correct answer-- unlimited liability
- finite life span
- resource limitations
- limited managerial experience
- demands on owner
- no employee benefits for the owner
-lack of qualified employees (can't match wage demands)
Many sole proprietors will focus on ______ - Correct answer-services (like child
care, salons, etc) rather than on the manufacture of goods
unlimited liability - Correct answer-- means that the owner is personally and fully
responsible for all losses and debts of the business
- major drawback to a sole proprietorship or a partnership
- from a legal standpoint the owner and business are one and the same
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,definition of a partnership - Correct answer-an association of two or more persons
to carry on, as co-owners, a business for profit; profits will be divided as specified
in the agreement
types of partnerships - Correct answer-- general partnerships
- limited partnerships
- MLP
- LLP
general partnerships - Correct answer-- partners are considered equal by law and
all are liable for the business's debts
- partners share ownership and both have unlimited liability
ex) lawyers, accountants, etc.
limited partnerships - Correct answer-- one or more persons act as general partners
who run the business while the remaining partners are passive investors (not
involved in managing the business)
- called this because their liability (amount of money they can lose) is limited to
the amount of the capital they invested at the beginning of their partnership
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, - passive investors and have limited liability
articles of partnership - Correct answer-legal documents that set forth the basic
agreement between partners
-list the money or assets that each partner contributed
-states each partner's individual management role/duty
- defines the steps a partner must take to sell his or her partnership interest or what
will happen if one of the patterns dies
MLP (master limited partnership) - Correct answer-- allowed to raise money by
selling units of ownership to the general public in the same way that corporations
sell shares of stock to the public
- gives MLPs the fundraising capabilities of corporations without the double-
taxation disadvantage
- mainly oil and gas companies
LLP (limited liability partnership) - Correct answer-- form of business was created
to help protect individual partners in certain professions from major mistakes (such
as errors that trigger malpractice lawsuits) by other partners in the firm
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Makanui NCSU 2026 Questions and
Answers
3 types of business ownership - Correct answer-- sole propreitorship
- partnership
- corporation
sole proprietorships - Correct answer-- businesses owned by one individual
- the most common form of business organization in the United States
- easiest and least expensive form of business to start
- ex: tutoring/bookkeeping/landscaping etc...
sole proprietorship advantages - Correct answer-- simplicity
- single layer of taxation - taxed at individual rates
- privacy
- flexibility and control
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,- personal satisfaction
- fewer limitations on personal income
-complete ownership of the profits
sole proprietorship disadvantages - Correct answer-- unlimited liability
- finite life span
- resource limitations
- limited managerial experience
- demands on owner
- no employee benefits for the owner
-lack of qualified employees (can't match wage demands)
Many sole proprietors will focus on ______ - Correct answer-services (like child
care, salons, etc) rather than on the manufacture of goods
unlimited liability - Correct answer-- means that the owner is personally and fully
responsible for all losses and debts of the business
- major drawback to a sole proprietorship or a partnership
- from a legal standpoint the owner and business are one and the same
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,definition of a partnership - Correct answer-an association of two or more persons
to carry on, as co-owners, a business for profit; profits will be divided as specified
in the agreement
types of partnerships - Correct answer-- general partnerships
- limited partnerships
- MLP
- LLP
general partnerships - Correct answer-- partners are considered equal by law and
all are liable for the business's debts
- partners share ownership and both have unlimited liability
ex) lawyers, accountants, etc.
limited partnerships - Correct answer-- one or more persons act as general partners
who run the business while the remaining partners are passive investors (not
involved in managing the business)
- called this because their liability (amount of money they can lose) is limited to
the amount of the capital they invested at the beginning of their partnership
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, - passive investors and have limited liability
articles of partnership - Correct answer-legal documents that set forth the basic
agreement between partners
-list the money or assets that each partner contributed
-states each partner's individual management role/duty
- defines the steps a partner must take to sell his or her partnership interest or what
will happen if one of the patterns dies
MLP (master limited partnership) - Correct answer-- allowed to raise money by
selling units of ownership to the general public in the same way that corporations
sell shares of stock to the public
- gives MLPs the fundraising capabilities of corporations without the double-
taxation disadvantage
- mainly oil and gas companies
LLP (limited liability partnership) - Correct answer-- form of business was created
to help protect individual partners in certain professions from major mistakes (such
as errors that trigger malpractice lawsuits) by other partners in the firm
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
