MGMT 2150- Quiz 2 with 100% correct
answers 2025/2026
L4: 3 types of ownership - correct answer ✔✔sole proprietorship, partnership, corporation
L4: What is a sole proprietorship? - correct answer ✔✔A business that is owned and operated
by one person
L4: What are the advantages of a sole proprietorship? - correct answer ✔✔Easy to form, easy to
dissolve, pride of ownership, flexible, retention of all profits, relative freedom of government
regulation, no special taxes (treated as personal income)
L4: What are the disadvantages of a sole proprietorship? - correct answer ✔✔Unlimited liability,
responsibility for all losses, lack of continuity if something happens to owner, difficulty obtaining
capital (only assets of owner), lack of different skills, large time commitment to one owner,
difficulty attracting high qualified employees
L4: What is unlimited liability? - correct answer ✔✔The owner is personally and fully
responsible for all losses and debts of the business
L4: What is a general partner? - correct answer ✔✔someone who shares responsibility for
operating a business and unlimited liability for debts of business
L4: What is a partnership? - correct answer ✔✔Association of two or more persons to carry on,
as co-owners, a business for profit
, L4: What is a limited partner? - correct answer ✔✔A person who invests money in a business
but who has no management responsibility or liability for losses beyond his or her investment in
the partnership
L4: What are the advantages of a partnership? - correct answer ✔✔Easy to start, greater
availability of capital and credit, combined skills and knowledge, spread of workload, relative
freedom from government, no special taxed.
L4: What are the disadvantages of a partnership? - correct answer ✔✔Unlimited liability,
management disagreements, frozen investment (difficult to exit out of company).
L4: What is a corporation? - correct answer ✔✔An artificial person created by law with most of
the legal rights of a real person, including the rights to start and operate a business, to buy or
sell property, to borrow money, to sue or be sued, and to enter into binding contracts
L4: What is a public corporation? - correct answer ✔✔A corporation whose shares are widely
held and available to general public.
L4: What is a private corporation? - correct answer ✔✔A corporation whose number of
shareholders is limited; normally restricts the transfer of shares to third parties, shares do not
trade on a recognized stock exchange.
L4: What are advantages of a corporation? - correct answer ✔✔Limited liability, availability of
capital and credit, ease of transferring ownership, perpetual life, attraction of highly qualified
management.
L4: What are the disadvantages of a corporation? - correct answer ✔✔Difficulty and expense of
formation, government regulation and increased paperwork, conflict within the corporation,
double taxation, lack of secrecy
answers 2025/2026
L4: 3 types of ownership - correct answer ✔✔sole proprietorship, partnership, corporation
L4: What is a sole proprietorship? - correct answer ✔✔A business that is owned and operated
by one person
L4: What are the advantages of a sole proprietorship? - correct answer ✔✔Easy to form, easy to
dissolve, pride of ownership, flexible, retention of all profits, relative freedom of government
regulation, no special taxes (treated as personal income)
L4: What are the disadvantages of a sole proprietorship? - correct answer ✔✔Unlimited liability,
responsibility for all losses, lack of continuity if something happens to owner, difficulty obtaining
capital (only assets of owner), lack of different skills, large time commitment to one owner,
difficulty attracting high qualified employees
L4: What is unlimited liability? - correct answer ✔✔The owner is personally and fully
responsible for all losses and debts of the business
L4: What is a general partner? - correct answer ✔✔someone who shares responsibility for
operating a business and unlimited liability for debts of business
L4: What is a partnership? - correct answer ✔✔Association of two or more persons to carry on,
as co-owners, a business for profit
, L4: What is a limited partner? - correct answer ✔✔A person who invests money in a business
but who has no management responsibility or liability for losses beyond his or her investment in
the partnership
L4: What are the advantages of a partnership? - correct answer ✔✔Easy to start, greater
availability of capital and credit, combined skills and knowledge, spread of workload, relative
freedom from government, no special taxed.
L4: What are the disadvantages of a partnership? - correct answer ✔✔Unlimited liability,
management disagreements, frozen investment (difficult to exit out of company).
L4: What is a corporation? - correct answer ✔✔An artificial person created by law with most of
the legal rights of a real person, including the rights to start and operate a business, to buy or
sell property, to borrow money, to sue or be sued, and to enter into binding contracts
L4: What is a public corporation? - correct answer ✔✔A corporation whose shares are widely
held and available to general public.
L4: What is a private corporation? - correct answer ✔✔A corporation whose number of
shareholders is limited; normally restricts the transfer of shares to third parties, shares do not
trade on a recognized stock exchange.
L4: What are advantages of a corporation? - correct answer ✔✔Limited liability, availability of
capital and credit, ease of transferring ownership, perpetual life, attraction of highly qualified
management.
L4: What are the disadvantages of a corporation? - correct answer ✔✔Difficulty and expense of
formation, government regulation and increased paperwork, conflict within the corporation,
double taxation, lack of secrecy
