Chapter 5: Understanding Business Latest Test Guide 2025.

Sole Proprietorship - Answer A business that is owned, and usually managed, by one person. Partnership - Answer A legal form of business with two or more owners. Corporation - Answer A legal entity with authority to act and have liability separate from its owners. Unlimited Liability - Answer Responsibility of business owners for all of the debts of the business. General Partnership - Answer A partnership in which all owners share in operating the business and in assuming liability for the business's debts. Limited Partnership - Answer A partnership with on or more general partners and one or more limited partners. General Partner - Answer An owner/partner who has unlimited liability and is active in managing the firm. Limited Partner - Answer An owner who invests money in the business but doesn't have any management responsibility or liability for losses beyond investment. Limited Liability - Answer Responsibility of a business's owners for losses only up to the amount they invest; (limited partners and shareholders) Limited Liability Partnership (LLP) - Answer Partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision. Convential (C) Corporation - Answer State-chartered legal entity with authority to act and have liability separate from its owners. S Corporation - Answer Unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.