Question

business organization
directions: true/false in the blank, indicate whether the statement is true (t) or false (f).

1. the easiest type of business to start is a sole proprietorship.
2. unlimited liability is one of the main advantages of a sole proprietorship.
3. partnerships are the most numerous form of business organization in the united states.
4. corporations have most of the rights of an individual, according to the law.
5. if a corporation goes out of business, common stockholders get their investment back before preferred stockholders do.

directions: multiple choice indicate the answer choice that best completes the statement or answers the question.

1. the government document that grants permission to establish a corporation is called a

a. charter.
b. stock certificate.
c. partnership agreement.
d. limited liability agreement.

1. a business run by a single person is a

a. partnership.
b. corporation.
c. sole proprietorship.
d. limited liability corporation.

1. in a retail business, the stock held in reserve is called

a. raw materials.
b. inventory.
c. capital.
d. profits.

1. which of the following phrases best defines the term limited partnership?

a. an organization that limits liability to the corporation rather than the individual owners
b. a partnership in which at least one partner has less responsibility in the business operations and less liability for business losses
c. a business that is limited to three or fewer investors
d. a business model that combines aspects of corporations and partnerships

1. a document carrying ownership of part of a corporation is a

a. charter.
b. stock certificate.
c. dividend check.
d. bond.

Explanation:

1. A sole - proprietorship is easy to start as it requires minimal legal formalities. So, the statement is true.
2. Unlimited liability is a disadvantage of a sole - proprietorship, not an advantage. So, the statement is false.
3. Sole - proprietorships are the most numerous form of business organization in the US, not partnerships. So, the statement is false.
4. Corporations have most of the rights of an individual according to the law, like the right to sue and be sued. So, the statement is true.
5. In case of a corporation going out of business, preferred stockholders get paid before common stockholders. So, the statement is false.
6. A charter is the government document that grants permission to establish a corporation.
7. A business run by a single person is a sole - proprietorship.
8. In a retail business, the stock held in reserve is called inventory.
9. A limited partnership is a partnership in which at least one partner has less responsibility in the business operations and less liability for business losses.
10. A stock certificate is a document carrying ownership of part of a corporation.

Answer:

1. T
2. F
3. F
4. T
5. F
6. A. charter
7. C. sole proprietorship
8. B. inventory
9. B. a partnership in which at least one partner has less responsibility in the business operations and less liability for business losses
10. B. stock certificate