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D432 Questions and Correct Answers
Sole Proprietorship Ans: a business owned and managed by a
single individual
Benefits of Sole Proprietorship Ans: Easy and inexpensive to form,
few legal requirements
Profits all go to owner
Direct control of the business
No special taxation- do not pay corporate taxes
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Freedom form govt regulation-
Ease of dissolution- can sell business at any time
Disadvantages of Sole Proprietorship Ans: Unlimited liability-
business owner is responsible for all debt
Difficulty raising capital- unprotected against claims of creditors
so must use their personal funds
Limited managerial expertise
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Trouble finding qualified employees- hard to offer same pay and
benefits as big companies
Personal time commitment - long days and sacrifices
Unstable business life
Losses are owners responsibility
Partnerships Ans: An assosiation of two or more individuals who
agree to operate a business together for profit
General Partnership Ans: All partners share in the management
and profits, they co own the assets and can act on behalf of the
firm
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limited partnership Ans: Two types of partners: one or more
general partners who have unlimited liability and own or more
limited partners whose liability is limited to the amount of their
investment. Limited partners agree to not take part in day to day
management but they help finance the business
Limited liability partnerships Ans: Partners are not held
responsible for the business debt and liabilities
Limited liability limited partnership Ans: Limited partnership with
addition of limited liability hence protecting the general partner
from the debt and liabilities of the partnership
Advantages of partnership Ans: Ease of formation- easy to form
Availability of capital- can raise funds more easily
© 2025 All rights reserved
D432 Questions and Correct Answers
Sole Proprietorship Ans: a business owned and managed by a
single individual
Benefits of Sole Proprietorship Ans: Easy and inexpensive to form,
few legal requirements
Profits all go to owner
Direct control of the business
No special taxation- do not pay corporate taxes
© 2025 All rights reserved
, 2 | Page
Freedom form govt regulation-
Ease of dissolution- can sell business at any time
Disadvantages of Sole Proprietorship Ans: Unlimited liability-
business owner is responsible for all debt
Difficulty raising capital- unprotected against claims of creditors
so must use their personal funds
Limited managerial expertise
© 2025 All rights reserved
, 3 | Page
Trouble finding qualified employees- hard to offer same pay and
benefits as big companies
Personal time commitment - long days and sacrifices
Unstable business life
Losses are owners responsibility
Partnerships Ans: An assosiation of two or more individuals who
agree to operate a business together for profit
General Partnership Ans: All partners share in the management
and profits, they co own the assets and can act on behalf of the
firm
© 2025 All rights reserved
, 4 | Page
limited partnership Ans: Two types of partners: one or more
general partners who have unlimited liability and own or more
limited partners whose liability is limited to the amount of their
investment. Limited partners agree to not take part in day to day
management but they help finance the business
Limited liability partnerships Ans: Partners are not held
responsible for the business debt and liabilities
Limited liability limited partnership Ans: Limited partnership with
addition of limited liability hence protecting the general partner
from the debt and liabilities of the partnership
Advantages of partnership Ans: Ease of formation- easy to form
Availability of capital- can raise funds more easily
© 2025 All rights reserved
