10 Questions
What is the most common type of firm in the world?
Sole proprietorships
What is the principal limitation of a sole proprietorship?
Unlimited personal liability for the owner
Why do many new businesses use sole proprietorships as their organizational form?
Ease of setup
Which type of firm can have only one owner?
Sole proprietorships
What is a characteristic shared by sole proprietorships?
No separation between firm and owner
What type of firm is owned and run by one person?
Sole proprietorships
What is the principal limitation of a sole proprietorship?
No separation between the firm and the owner
Which type of firm has unlimited personal liability for the owner?
Sole proprietorships
Which type of firm can have only one owner?
Sole proprietorships
What type of firm is straightforward to set up, leading many new businesses to use this form?
Sole proprietorships
Study Notes
Characteristics of Firms
- The most common type of firm in the world is a sole proprietorship.
Sole Proprietorships
- The principal limitation of a sole proprietorship is unlimited personal liability for the owner.
- Many new businesses use sole proprietorships as their organizational form because it is straightforward to set up.
- A characteristic shared by sole proprietorships is that they are owned and run by one person.
- Sole proprietorships can have only one owner.
- This type of firm is often used by new businesses due to its ease of setup.
This quiz covers the different types of firms in corporate finance including sole proprietorships, partnerships, limited liability companies, and corporations. It also discusses ownership versus control of corporations and the stock market.
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