Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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In a partnership
a. | a tax is paid on all profits | b. | a federal income tax return is
filed | c. | partners pay no personal income tax | d. | the business as taxed the same way a
corporation is |
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2.
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The process of starting a business begins with a
a. | lease | c. | contract | b. | business plan | d. | balance sheet |
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3.
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Approximately how many new businesses fail within the first five to six
years?
a. | 5 percent | c. | 75 percent | b. | 25 percent | d. | 50 percent |
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4.
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The type of business that can be operated suitably as a proprietorship is one
that
a. | can be managed by the proprietor or by persons hired by the
proprietor | b. | usually operates on a large scale | c. | usually does not provide personal
services | d. | requires a great amount of capital |
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5.
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One feature of a sole proprietorship is
a. | taxes are higher than for a corporation | b. | there is no
payroll | c. | business activities require many legal documents and formalities | d. | business activities
can be begun or ended without legal formalities |
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6.
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Which one of the following statements is true about entrepreneurs?
a. | Entrepreneurs usually give up quickly when their businesses are not immediately
successful. | b. | Entrepreneurs prefer to assign the decision-making responsibility to
employees. | c. | Entrepreneurs would rather work for others. | d. | Entrepreneurs
usually work hard and for long hours. |
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7.
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An advantage of partnerships when compared to proprietorships is
a. | more capital is usually available | b. | all partners are bound by all contracts made by
the partnership | c. | if one partner disagrees with a change, the partnership cannot make the
change | d. | operations are usually less efficient because of shared
management |
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8.
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The most common form of business organization is the
a. | partnership | c. | cooperative | b. | corporation | d. | proprietorship |
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9.
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If assets are valued at $500,000 and capital amounts to $350,000, the
liabilities of the business are
a. | $350,000 | c. | $850,000 | b. | $500,000 | d. | $150,000 |
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10.
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In a sole proprietorship,
a. | creditors have first claim against assets | b. | there are no
employees | c. | assets are safe from creditors | d. | employees share in the
liabilities |
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11.
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In what kind of partnership is each partner personally liable for all the
business's debts?
a. | general partnership | c. | limited partnership | b. | restricted partnership | d. | unrestricted
partnership |
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Matching
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Match each item with the correct statement below. a. | assets | g. | goodwill | b. | balance sheet | h. | liabilities | c. | business
plan | i. | limited
partnership | d. | capital | j. | partnership | e. | creditors | k. | proprietor | f. | entrepreneurs | l. | unlimited financial liability |
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12.
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The owner of a business.
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13.
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Each partner’s liability is restricted to the amount of his or her
investment.
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14.
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Parties who have first claim against assets.
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15.
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Money owed by a business.
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16.
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All partners are fully responsible for all business debts.
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17.
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A statement of financial position.
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18.
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A business owned by two or more people.
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19.
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Difference between assets and liabilities.
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20.
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A written document that describes how to achieve the goals of a
business.
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21.
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Property owned by a business.
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True/False
Indicate whether the statement is true or
false.
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22.
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A partnership could be owned by as many as ten or more partners.
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23.
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Most successful entrepreneurs start their businesses when they are about 30
years old.
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24.
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In a proprietorship, the owner is entitled to all profits earned by the
business.
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25.
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In a sole proprietorship, creditors have a legal claim to the business’s
assets before the owner.
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26.
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A business plan helps entrepreneurs see the risks and responsibilities involved
in starting a business.
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27.
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The form of ownership selected does NOT depend on the financial responsibility
the owner is willing to assume.
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28.
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A disadvantage of a partnership that fails is that a partner can lose personal
assets in addition to the amount of money invested in the business.
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29.
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Corporations usually have a tax advantage over partnerships.
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30.
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The most common form of business ownership is the partnership.
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31.
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If one partner is unable to pay his or her portion of the business’s
debts, the other partners must pay it.
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32.
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New businesses do not usually fail for financial reasons.
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33.
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Since a new business has not yet made a profit, a financial plan should not be
included in the business plan.
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34.
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Financing the business is one of the responsibilities of the business
owner.
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35.
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If a partner enters into a contract against the wishes of the other partners,
the other partners are legally responsible for the contract.
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