Business Ownership and Finance
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Questions and Answers

What is a characteristic of a sole proprietorship that can lead to continuity problems?

  • The risk of financial loss being borne by the owner
  • The sole proprietor's ability to make all management decisions
  • The need to consider other opinions in management decisions
  • The owner's retirement or long-term illness (correct)

    • Which of the following is a benefit of a sole proprietorship in terms of finance?

  • Shared risk with other partners
  • Access to external financial sources
  • No financial requirements to start the business (correct)
  • Limited liability for the owner

    • What is the primary source of financial funds for a sole proprietorship?

  • The sole proprietor's personal financial capabilities (correct)
  • Revenue generated from the business
  • Borrowings from financial institutions
  • Investments from external partners

    • What is a characteristic of a sole proprietorship in terms of management decision-making?

    <p>The sole proprietor makes all management decisions</p> Signup and view all the answers

    What is a financial risk associated with a sole proprietorship?

    <p>The owner is personally responsible for business debts</p> Signup and view all the answers

    What is a characteristic of a sole proprietorship in terms of taxation?

    <p>The owner reports business profits on their personal income tax statement</p> Signup and view all the answers

    Which type of business ownership allows for more than one owner?

    <p>Partnership</p> Signup and view all the answers

    What is the primary difference between owner(s) and manager(s) in unincorporated businesses?

    <p>Owners and managers are the same person(s)</p> Signup and view all the answers

    What is the primary source of finance for a corporation?

    <p>Share capital</p> Signup and view all the answers

    What is a key consideration for a business when choosing a source of finance?

    <p>The business's current financial situation</p> Signup and view all the answers

    What is a type of short-term credit?

    <p>Bank overdraft</p> Signup and view all the answers

    What document reveals the sources of finance that a business has used?

    <p>Balance sheet</p> Signup and view all the answers

    What is a crucial factor in determining who is liable for the debts and obligations of a business?

    <p>The legal structure of the business</p> Signup and view all the answers

    Who might be interested in knowing the legal structure of a business?

    <p>Both customers and investors of the business</p> Signup and view all the answers

    What is a key consideration for founders and owners of a company?

    <p>The legal structure and implications for liability</p> Signup and view all the answers

    Who may own a business?

    <p>Either individuals or other businesses</p> Signup and view all the answers

    What is a key difference between various types of business ownership?

    <p>The level of liability for the owners</p> Signup and view all the answers

    What is a crucial consideration when raising financial resources for a business?

    <p>The business's legal structure</p> Signup and view all the answers

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