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Questions and Answers
Which of the following is an advantage of sole proprietorship?
A general partner has limited liability in a partnership.
False
What is a partnership?
An association of two or more business partners who co-own a business for profit.
Which type of partner contributes knowledge or personal services to the partnership?
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The maximum income form for business is ______.
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Which of the following is a disadvantage of a corporation?
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Limited partners are active participants in the management of the firm.
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Match the following types of partners with their definitions:
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What is one advantage of incorporating a business?
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Study Notes
Ownership and Organization
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Sole Proprietorship:
- Single owner who manages the business.
- Advantages: Easy to set up and dissolve, direct owner control, all profits go to the owner, flexible, minimal regulations and taxes.
- Disadvantages: Unlimited liability, limited capital access, relies on owner's skills and abilities.
Partnership
- Definition: A business owned and run by two or more individuals.
- Partnership Agreement: Documents how the partners share assets, liabilities, and profits.
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Types of Partners:
- General Partner: Shares ownership and management, unlimited liability.
- Limited Partner: Limited financial liability, no active management role.
- Silent Partner: Not active in operations, but known publicly as partner.
- Dominant Partner: Not active, but generally known to be associated with the business.
- Capitalist Partner: Contributes money/property.
- Managing Partner: Manages operations.
- Industrial Partner: Contributes knowledge/services.
- Secret Partner: Active but undisclosed to the public.
- Nominal Partner: Not a real partner but presented as one.
Corporation
- Definition: Legal entity separate from its owners, formed by following specific legal procedures.
- Owners: Stockholders who can sell shares without affecting the business's continuity.
- Advantages: Limited liability, legal entity, easy transfer of ownership, access to capital, employee benefits.
- Disadvantages: Legal formalities and costs, time-consuming incorporation, potential loss of control by founders, taxation.
Cooperative
- Definition: A registered association of individuals with a common interest, defined by Republic Act 6938, the Cooperative Code of the Philippines.
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Description
Test your knowledge on different types of business ownership, including sole proprietorships and partnerships. Learn about their advantages, disadvantages, and the roles of various partners in a business structure. This quiz will help reinforce your understanding of how businesses are organized.
