Business Organization Lecture 1 Quiz

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Questions and Answers

What type of business structure do investors who purchase shares of a company belong to?

Shareholders

Which of the following is NOT an advantage of a corporation?

Harder and costly to set up

What type of business structure provides the limited legal liability of a corporation and the operational flexibility of a partnership or sole proprietorship?

Limited liability company

Which of the following is NOT an advantage of a limited liability company (LLC)?

Unlimited life Signup and view all the answers

What must owners of an LLC do that sole proprietorships do not have to do?

Keep their personal and business expenses separate, including any company records Signup and view all the answers

What is a disadvantage of starting an LLC?

Beginning an LLC has high costs due to legal and filing fees Signup and view all the answers

Which business form has the advantage of profits being taxed only once?

Sole Proprietorship Signup and view all the answers

What is a key disadvantage of a Sole Proprietorship in terms of liability?

Unlimited Liability Signup and view all the answers

In a Partnership, how is ownership shared?

Two or more people share ownership Signup and view all the answers

What factor causes the business to cease to exist in a Sole Proprietorship when the owner dies?

Dependence on the owner's decisions Signup and view all the answers

What is one of the potential downsides of working in a small start-up team according to the text?

Less opportunity to improve other skills Signup and view all the answers

What is one of the potential advantages of working in a small start-up team according to the text?

Your work has a more immediate impact on the business Signup and view all the answers

What does the text suggest about the atmosphere in a small start-up team?

The atmosphere is less familiar and dependent on your team Signup and view all the answers

What does the text suggest about the potential for financial success in a start-up?

You could theoretically become a millionaire with enough hard work Signup and view all the answers

What does the text suggest about the pace of work in a small start-up team?

The pace of work is fast moving and exciting Signup and view all the answers

What is one potential downside of working in a small start-up team?

The relationships in the small team can get intense Signup and view all the answers

What is a key advantage of a partnership business structure?

Shared control and broader range of skills and experience Signup and view all the answers

What is a potential disadvantage of a partnership business structure?

The partnership may be dissolved if a single partner decides to leave Signup and view all the answers

Which of the following is a recommended practice when forming a partnership?

Establish a legal agreement outlining decision-making, profit sharing, and dispute resolution Signup and view all the answers

What is a key difference between a partnership and a corporation?

Partnerships are considered separate legal entities, while corporations are not Signup and view all the answers

Which of the following is a common example of a business that may choose a partnership structure?

A small retail shop owned and operated by two or more individuals Signup and view all the answers

Which of the following is NOT a common perk offered by multinational corporations (MNCs)?

Paid overtime Signup and view all the answers

What is the key difference between multinational corporations (MNCs) and startups, as mentioned in the text?

Startups are led by entrepreneurs who put in more effort than MNC employees Signup and view all the answers

Which of the following is NOT one of the "Main Points to Think About" when considering a job at a startup or MNC?

Commute time Signup and view all the answers

Why does the text state that it is "unlikely" you will be satisfied with your job if you don't fit well into your new company?

Because it is difficult to change your personality to fit a company's culture Signup and view all the answers

Which of the following is NOT a potential disadvantage of working at a multinational corporation (MNC)?

Lack of job security Signup and view all the answers

What is the primary purpose of the section on "Start-ups" in the given text?

To highlight the innovative and entrepreneurial spirit of startup companies Signup and view all the answers

Study Notes

Business Organization Forms

A business organization's form affects taxes, costs of formation, operational costs, and legal liability.

Corporation

A corporation is a separate entity from its owners, with unlimited life and transfer of ownership.
Advantages: profits and losses belong to the corporation, better ability to raise capital, limited liability.
Disadvantages: harder and costly to set up, higher taxes, managerial demands, possible loss of control, corporate operations are costly.
Examples: Microsoft, IKEA.

Limited Liability Company (LLC)

A hybrid business structure that provides limited legal liability and operational flexibility.
Advantages: limits liability to company owners, profits shared by owners, flexible management.
Disadvantages: high costs due to legal and filing fees, agreements must be comprehensive and complex, separate records must be kept.
Examples: Google LLC, Amazon.com Services LLC.

Sole Proprietorship

A business owned and run by one person, with existence dependent on the owner's decisions.
Advantages: easy to set up, private, controlled by owner, profits taxed only once, flexible management.
Disadvantages: unlimited liability, few financial resources, limited managerial skills, limited life.
Examples: Private Tutor, Farms, Local Barber Shop, Auto-Repair Shop, Youtuber.

Partnership

A business owned by two or more people, with shared ownership and unlimited liability.
Advantages: easy to set up, more resources, cost sharing, broader skill and experience, shared control.
Disadvantages: unlimited liability, responsible for partner decisions, issues with expansion, success, and termination, partnership ends when any partner decides to end it.
Examples: Small Shops, Doctor Offices.

Start-ups

A business that is often characterized by innovation, creativity, and a fast-paced environment.
Pros: recognition of creativity, ideas are valued, work has a more immediate impact, comfortable and happy work environment.
Cons: high responsibility, low paid, high probability to fail, intense relationships.

Multinational Corporations (MNCs)

A business with branches, offices, or production facilities in more than one country.
Pros: better paid, numerous perks, less likely to lose job, multinational looks better on a CV.
Cons: hard to impress, recognition is rare, can feel useless.

Key Considerations

Responsibility and accountability
Recognition
Learning curve
Perks
Work-life balance
Time period
Job security
Working atmosphere

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