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Questions and Answers
Which characteristic is unique to a proprietorship compared to other business forms?
Which characteristic is unique to a proprietorship compared to other business forms?
- Legal entity created by law
- Complete control over business decisions (correct)
- Owned by multiple persons
- Distinction from its owners
What defines a limited partnership?
What defines a limited partnership?
- All partners have equal control
- Only one partner manages the business
- Some partners have limited liability (correct)
- At least one partner is fully liable
Which statement accurately describes a corporation?
Which statement accurately describes a corporation?
- A business owned solely by a single individual
- A separate legal entity distinct from its owners (correct)
- A legal arrangement for profit-sharing among partners
- A type of business that cannot be sued
In which form of business organization do all members contribute to management?
In which form of business organization do all members contribute to management?
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Which of the following is NOT a characteristic of a corporation?
Which of the following is NOT a characteristic of a corporation?
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Study Notes
Proprietorship
- A business structure owned by one individual.
- The owner has total control over decision-making processes.
- Full liability for business debts falls on the owner.
Partnership
- A legal framework involving two or more individuals who contribute capital or services.
- Profits and losses are shared among partners.
- Types of partnerships include:
- General Partnership: All partners share equal responsibility and liability for management and debts.
- Limited Partnership: Comprises at least one general partner with unlimited liability and one or more limited partners, whose liability is restricted to their investment.
Corporation
- A legal entity that exists independently of its owners.
- Created under state law, allowing it to own assets, incur liabilities, and enter contracts.
- Shareholders enjoy limited liability, protecting personal assets from business debts and liabilities.
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Description
Test your knowledge on the various types of business organizations including proprietorships, partnerships, and corporations. Understand the characteristics and legal implications of each form, and how they differ from one another. Perfect for students studying business law or entrepreneurship.
