Entrepreneurship - Types of Business Ownerships

1.

1 point

Which of the following is not a characteristic of a corporation?

Shareholders are subject to personal liability for corporate debts

None of the answers are correct

May be subject to double taxation

Board of directors oversee the entity

Officers run the daily operations

2.

1 point

How many shareholders may a S-corporation have and still be eligible for S-corporation status?

1

50

5

100

75

3.

1 point

A sole proprietor is liable for which of the following?

Negligence from business activities

Contracts of the business

All of the answers are correct

Debts of the business

Wrongful acts from business activities

None of the answers are correct

4.

1 point

Which one of the following do LPs, LLPS, and LLLPs have in common but is not a characteristic of a general partnership?

None of the answers are correct

Income taxes can pass through the partnership to the individual partners so there is one level of income tax

General partnerships don’t typically have to register with the state’s secretary of state, but the other types of partnerships do

All partners have limited liability

5.

1 point

What does someone have to file to form a limited liability company?

Certificate of existence

None of these answers are correct

Organization certificate

Articles of incorporation

Articles of organization

6.

1 point

Which of the following is the best explanation of the main difference or differences between a limited partner and a general partner?

Limited partners don’t invest money or assets into the partnership

Limited partners have limited liability

None of the answers are right

Limited partners do not manage

General partners manage and are subject to personal liability, while limited partners do not manage hand have limited liability

7.

1 point

Who can manage an LLC?

Partners

Members

managers

members or managers

None of the answers are correct

8.

1 point

A sole proprietorship must register with which of the following?

None of the answers are correct

State small business association

US Small Business Administration

The Agency regulating business organizations

Secretary of state

9.

1 point

What type of partnership has general partners who have full liability and limited partners whose liability is limited to their investment in the partnership?

None of the answers are correct

Limited liability partnership

Limited Partnership

All partnerships have this characteristic

10.

1 point

Which one of the following is the partnership document that governs the rights and responsibilities of the partners?

Articles of agreement

Bylaws

Partnership agreement

Certificate of partnership

Operating agreement

11.

1 point

What type of partnership offers no protection from personal liability for the partners?

All partnerships provide limited liability

None of the answers are correct

A limited partnership

An LLP

A general partnership

12.

1 point

Which of the following describes the income tax treatment for a sole proprietorship?

Income and losses are reported on the owner's personal income tax return

No losses generated by the business are recognized

The business is taxed on profits and the owner is then taxed on any profits distributed to her

No tax is paid on income generated from the business

None of the answers are correct

13.

1 point

What happens if a sole proprietorship takes on a second owner?

Nothing

The business must become a corporation or limited liability company

None of the answers are correct

The business must become a partnership

The business ceases to be a sole proprietorship

14.

1 point

What do you call the document that governs the corporation’s activities?

None of the answers are correct

Operating agreement

Articles of incorporation

Shareholder agreement

Bylaws

15.

1 point

Which one of the following is not a way that an LLC is like a partnership?

Pass-through taxation

Limited liability

All the answers are correct

Flexibility in structure and management

One of the answers are correct

16.

1 point

How many owners can own a sole proprietorship?

unlimited

1

10

2

none of these answers are correct

17.

1 point

What’s the primary difference between an S-corporation and a C-corporation?

A S-corporation is organized under state law and a C-corporation is registered under federal law

There is no difference

The level of liability protection afforded shareholders

None of the answers are correct

A C-corporation is subject to double income taxation, while a S-corporation is not

18.

1 point

What is the best explanation of pass-through taxation?

Income is passed through the entity and is reported by individual owners but losses are taken at the entity level

Income is ignored at the entity level and passes through to the individual owners

Both income and losses pass through the entity and are reported on the tax returns of the individual owners

Individuals are not subject to taxation, but the entity is taxed on the income

None of the answers are correct

19.

1 point

What is the document that governs the operations of a limited liability company?

Bylaws

Articles of organization

None of the answers are correct

Member agreement

Operating agreement

20.

1 point

Which one of the following is not a disadvantage of a corporation

Shareholder liability

Double taxation

None of the answers are correct

Complexity

Expensive