1. Chapter 3 How to Form a Business Pre-Study
Quiz #5
Chapter 3
How to Form a Business
Pre-Study

2. 1) The __________ is the most common form of business ownership.
A. partnership B. corporation C. joint venture D. sole proprietorship

3. 2) ____________ comprise about 20% of all businesses but account for about 81% of U.S. business receipts.
A. Corporations B. Partnerships C. Sole proprietorships D. Limited liability companies

4. 3) To many businesspeople, one of the major attractions of a sole proprietorship is:
A. the ability to obtain additional financial resources. B. the protection of limited liability. C. an unlimited lifespan. D. the chance to be their own boss.

5. 4) One of the major disadvantages of a sole proprietorship is the:
A. possibility of disagreements between owners. B. unlimited liability the owner has for the debts of the firm. C. fact that any income earned by this type of business is taxed twice. D. high cost of starting or ending the company.

6. 5) Starting a new business as a sole proprietorship:
A. requires retaining the services of an attorney. B. is simple, but the proprietorship fee is very expensive in some states. C. is usually simpler and less expensive than starting other forms of ownership. D. is very similar to starting a business as a corporation.

7. Answers:
1. D 2. A 3. D 4. B 5. C