Business and Labor Unit Test
5 of 185 of 18 Items
Question
Determine whether each characteristic describes a sole proprietorship, a general partnership, or a corporation. Note that a characteristic may apply to more than one type of business structure.(2 points)
Sole Proprietorship General Partnership Corporation
There is 1 owner.
Sole Proprietorship – There is 1 owner.
General Partnership – There is 1 owner.
Corporation – There is 1 owner.
There is unlimited liability.
Sole Proprietorship – There is unlimited liability.
General Partnership – There is unlimited liability.
Corporation – There is unlimited liability.
There are 2 or more owners.
Sole Proprietorship – There are 2 or more owners.
General Partnership – There are 2 or more owners.
Corporation – There are 2 or more owners.
Stocks may be issued to generate income.
Sole Proprietorship – Stocks may be issued to generate income.
General Partnership – Stocks may be issued to generate income.
Corporation – Stocks may be issued to generate income.
General Partnership - Stocks may be issued to generate income.
Corporation - Stocks may be issued to generate income.
This question is asking you to determine whether each characteristic listed applies to a sole proprietorship, a general partnership, or a corporation.
To answer this question, you need to know the characteristics of each type of business structure.
A sole proprietorship is a business owned and operated by a single individual. Therefore, the characteristic "There is 1 owner" applies to a sole proprietorship.
A general partnership is a business owned by two or more individuals who share in the profits and liabilities. Therefore, the characteristic "There are 2 or more owners" applies to a general partnership.
A corporation is a type of business structure that is separate from its owners, who are called shareholders. Shares of stock can be issued to generate income for the corporation. Therefore, the characteristic "Stocks may be issued to generate income" applies to a corporation.
Lastly, the characteristic "There is unlimited liability" applies to all three types of business structures: sole proprietorship, general partnership, and corporation.
To summarize:
- Sole Proprietorship: There is 1 owner; There is unlimited liability; Stocks may be issued to generate income.
- General Partnership: There are 2 or more owners; There is unlimited liability.
- Corporation: There is 1 owner; There are 2 or more owners; Stocks may be issued to generate income; There is unlimited liability.
Based on this information, you can determine the correct answer for each characteristic.