assessment

Business ownership quiz

  • From a legal point of view, which form of business ownership is the most complicated to set up?
    • Sole proprietorship
      • Incorrect. This is relatively simple because only one person is involved. Try again.
    • Partnership
      • Incorrect. It is useful to have a formal partnership agreement, but this is still not the most complicated form in legal terms.
    • Corporation
      • Correct. There are usually many laws governing the setting up and running of corporations, even for small businesses.
  • Which form of business entity involves shareholders?
    • Sole proprietorship
      • Incorrect. The owner owns the business directly, as an individual.
    • Partnership
      • Incorrect. The partners own the business directly, as individuals.
    • Corporation
      • Correct. The business is owned by shareholders, who may or may not include the founder or managing director.
  • If one partner decides to leave a partnership, the partnership continues and the remaining partners simply carry on running the business as before – true or false?
    • True
      • Incorrect. The partnership is dissolved when one partner leaves.
    • False
      • Correct. The partnership is dissolved when one partner leaves.
  • Which form of business ownership provides the most continuity if the founder leaves?
    • Corporation
      • Correct. The shareholders continue to own the company and can appoint new managers and officers to replace anyone who leaves.
    • Partnership
      • Incorrect. If the founder is a partner and chooses to leave the partnership, the partnership is dissolved.
    • Sole proprietorship
      • Incorrect. There is no legal structure to continue the business if the owner/founder decides to stop running the business.
  • Which form of business ownership gives the founder the most control and freedom over how to run their business?
    • Corporation
      • Incorrect. The Board of Directors and shareholders have ultimate control over the company.
    • Partnership
      • Incorrect. Although each individual partner is a principal and and agent of the partnership and can commit the partners by their actions, in practice a successful partnership requires consultation and agreement on important decisions affecting the business.
    • Sole proprietorship
      • Correct. A sole proprietor does not need to consult with anyone else when making decisions about the business. This can be a strength and a weakness of this form of business entity.