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Questions and Answers
What is a potential disadvantage of a sole proprietorship?
What is a potential disadvantage of a sole proprietorship?
- More resources and cost sharing
- Longevity
- Limited managerial perspective (correct)
- Ability to raise capital
In a general partnership, what is the characteristic of the partners' authority?
In a general partnership, what is the characteristic of the partners' authority?
- Unlimited liability
- Joint authority (correct)
- Limited liability
- Limited authority
What is a distinguishing feature of a public corporation?
What is a distinguishing feature of a public corporation?
- Owned by shareholders (correct)
- Limited liability
- Simplicity and single layer of taxation
- Finite life span
What is a potential drawback of a limited liability company (LLC)?
What is a potential drawback of a limited liability company (LLC)?
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An MLP raises money by selling units of ______
An MLP raises money by selling units of ______
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An S corporation has the advantage of ______
An S corporation has the advantage of ______
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A potential drawback of a sole proprietorship is the owner's ______ liability
A potential drawback of a sole proprietorship is the owner's ______ liability
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A private corporation is owned by a few individuals and the stock is not ______
A private corporation is owned by a few individuals and the stock is not ______
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Study Notes
Sole Proprietorship
- A potential disadvantage of a sole proprietorship is the owner's unlimited liability.
General Partnership
- Partners have mutual authority, with each partner having the authority to bind the partnership.
Public Corporation
- A distinguishing feature of a public corporation is that it is owned by a large number of people, and its stock is publicly traded.
Limited Liability Company (LLC)
- A potential drawback of an LLC is the complexity and formalities involved in its setup and operation.
Master Limited Partnership (MLP)
- An MLP raises money by selling units of ownership to the public.
S Corporation
- An S corporation has the advantage of pass-through taxation, where the business income is only taxed at the individual level.
Private Corporation
- A private corporation is owned by a few individuals, and its stock is not publicly traded.
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