Podcast
Questions and Answers
What is a significant disadvantage of operating a sole proprietorship?
What is a significant disadvantage of operating a sole proprietorship?
- The owner has limited liability.
- The owner must share profits with partners.
- The owner may lose personal assets if the business incurs debt. (correct)
- The owner pays corporate taxes on profits.
Which of the following statements correctly describes a corporation?
Which of the following statements correctly describes a corporation?
- It must be a public corporation to be legally recognized.
- It provides limited liability for its shareholders. (correct)
- It is always owned by a single individual.
- It operates without any legal obligations or liabilities.
What is one advantage of forming a partnership?
What is one advantage of forming a partnership?
- Partners can individually claim all profits without sharing.
- Partners have no need for a partnership agreement.
- Partners share unlimited liability for the firm's debts. (correct)
- Partners can operate without any shared responsibilities.
What is a key characteristic of a co-operative?
What is a key characteristic of a co-operative?
What distinguishes private corporations from public corporations?
What distinguishes private corporations from public corporations?
Which of the following best describes a franchise?
Which of the following best describes a franchise?
How are dividends distributed in a corporation?
How are dividends distributed in a corporation?
What defines a general partnership?
What defines a general partnership?
What defines a co-operative as opposed to a traditional corporation?
What defines a co-operative as opposed to a traditional corporation?
How do shareholders relate to a public corporation?
How do shareholders relate to a public corporation?
Which of the following best describes a franchise operation?
Which of the following best describes a franchise operation?
What is a key difference between a public corporation and a private corporation?
What is a key difference between a public corporation and a private corporation?
What primary function do boards of directors serve in a co-operative?
What primary function do boards of directors serve in a co-operative?
Why might individuals choose to start their own business?
Why might individuals choose to start their own business?
What is a distinguishing characteristic of a crown corporation?
What is a distinguishing characteristic of a crown corporation?
How do the profits of a co-operative get distributed among its members?
How do the profits of a co-operative get distributed among its members?
Study Notes
Forms of Business Ownership
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Sole Proprietorship: Owned and operated by one person with unlimited liability.
- The owner bears full responsibility for the debts.
- Easier to set up compared to other forms of business.
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Partnership: Formed by two or more individuals sharing costs and responsibilities.
- General partnership is the most common, where all partners have unlimited liability for debts.
- Partners define their roles and responsibilities in a partnership agreement.
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Corporation: A distinct legal entity separate from its owners (shareholders).
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Shares (stocks) represent ownership.
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Dividends, a portion of the corporation's profits, are distributed to shareholders.
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Private Corporation: Owned by a small group of individuals, shares are not sold to the public.
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Public Corporation: Raises capital through public offering of shares on stock exchanges.
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Crown Corporation: Owned and operated by a provincial or federal government.
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Co-operative: Owned by workers or members who consume its products or services.
- Emphasizes service, not profit maximization.
- Profits are distributed among members based on their spending.
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Franchise: A business model where a franchiser licenses its brand and operating procedures to a franchisee.
- Franchisees pay an initial fee and ongoing monthly fees.
- The franchiser provides training, standardized operating procedures, and often controls supplies.
- Examples: McDonald's, Subway
Advantages and Disadvantages of Business Ownership
- Advantages:
- Financial independence
- Potential for higher earnings
- Control over decisions
- Disadvantages:
- Unlimited liability (sole proprietorship and general partnership)
- High initial investment
- Risk of failure
- Long hours and hard work
Types of Businesses
- Service Businesses: Provide intangible services, like accounting or consulting.
- Not-for-Profit Organizations: Focus on social impact, typically not profit-driven.
- Retail Businesses: Sell goods directly to consumers.
- Manufacturing Businesses: Produce goods, such as cars or electronic devices.
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Description
This quiz explores the various forms of business ownership including sole proprietorships, partnerships, and corporations. You will learn the key features, advantages, and disadvantages of each type. Test your understanding of how these entities operate and their legal implications.
