Chapter 03 Forms of Ownership of Small Businesses Answer Key
Multiple Choice Questions
1.
Which of the following factors should be considered while choosing the proper legal form
for a business?
2.
Which of the following is true about proprietorship?
3.
In the United States, finance, insurance, and real estate use the _____ form of business
more frequently than do the other industries.
4.
The _____ form of business generates significant revenues in services, trade, and
construction in the United States.
5.
Which of the following is an advantage of a proprietorship?
6.
Small business owners prefer a proprietorship over other forms of business because it:
7.
A partnership is a form of business that is:
8.
Which of the following is an advantage of partnerships?
9.
A disadvantage of a partnership is that:
10.
What is the purpose of the Uniform Partnership Act (UPA)?
11.
Which of the following is true of a limited partnership?
12.
What are articles of copartnership?
13.
A(n) _____ provides the protection of limited liability for shareholders, but its earnings are
taxed at both the corporate and shareholder levels.
14.
Which of the following is an advantage of a corporation?
15.
A disadvantage of a corporation is that:
16.
Which of the following best describes the purpose of articles of incorporation?
17.
What does a buy-sell agreement do?
18.
Which of the following best describes the work carried out by the board members in a
corporation?
19.
Which of the following is true of S corporations?
20.
Which form of business combines the advantages of a corporation with the benefits of a
partnership?
21.
Which of the following is true of a limited liability partnership?
22.
The most common type of industry for a _____ is agriculture.
23.
Which of the following is true of a family limited partnership?
24.
A corporation formed by a doctor for the sole purpose of providing his services for which
he is licensed is called a(n) _____.
25.
A _____ is formed for civic, educational, charitable, and religious purposes.
26.
Which of the following is a characteristic of a nonprofit corporation?
27.
A business that is owned by and operated for the benefit of patrons using its services is
called a _____.
28.
In an endeavor where neither party can achieve its purpose alone, a _____ becomes a
viable option.
29.
_____ is defined as a percentage share of an expensive asset and is most often used for
aircraft, sports cars, and real property.
30.
Which of the following is a requirement of a successful fractional ownership?
True / False Questions
31.
Once the choice of a legal form for a new business has been made, it cannot be changed
until the business is dissolved or sold.
32.
Proprietorship is the most popular form of business in the United States.
33.
Partnerships account for significant revenues in services, trade, and construction.
34.
Proprietorship is the oldest and most prevalent form of ownership in the United States.
35.
From a legal standpoint, in a proprietorship, a business and its owner are one and the
same and cannot be separated.
36.
A proprietorship legally ends with the owner’s death, and some legal action must be taken
to restart it.
37.
A cooperative is a business owned by two or more persons who have unlimited liability for
its debt and obligations.
38.
A partnership is easier to form, operate, and terminate than a proprietorship.