Business Ownership

Question 1

What is the primary difference between a private company and a public company?

Answer 1

A private company is owned by a small group of individuals and does not sell shares to the public, while a public company sells shares to the general public through stock exchanges.

Question 2

True or False: Public companies are required to disclose their financial statements to the public.

Answer 2

True

Question 3

Fill in the blank: A private company typically has __________ shareholders.

Answer 3

fewer

Question 4

What is one advantage of limited liability for business owners?

Answer 4

Owners are not personally responsible for the company’s debts beyond their investment in the company.

Question 5

Which type of company can raise capital by issuing shares to the public?

Answer 5

Public company

Question 6

True or False: Limited liability applies to both private and public companies.

Answer 6

True

Question 7

What is the main regulatory body that oversees public companies in the United States?

Answer 7

Securities and Exchange Commission (SEC)

Question 8

Short Answer: Name one disadvantage of being a public company.

Answer 8

Increased regulatory scrutiny and disclosure requirements.

Question 9

Fill in the blank: Private companies often have __________ ownership structures.

Answer 9

concentrated

Question 10

What does the term ‘limited liability’ mean?

Answer 10

It means that an owner’s financial responsibility is limited to their investment in the company.

Question 11

Multiple Choice: Which of the following is a characteristic of a public company? A) Limited shareholders B) Shares traded on stock exchanges C) No financial disclosure

Answer 11

B) Shares traded on stock exchanges

Question 12

True or False: Private companies can go public through an Initial Public Offering (IPO).

Answer 12

True

Question 13

What is a common reason for a private company to become a public company?

Answer 13

To raise capital for expansion.

Question 14

Fill in the blank: In a public company, the shareholders have the right to __________.

Answer 14

vote on major company decisions

Question 15

Short Answer: What is one advantage of owning a private company?

Answer 15

Greater control over business decisions.

Question 16

Multiple Choice: Which of the following is NOT a characteristic of private companies? A) Limited disclosure B) Fewer regulations C) Shares available to the public

Answer 16

C) Shares available to the public

Question 17

True or False: Limited liability can protect personal assets from business debts.

Answer 17

True

Question 18

What is one disadvantage of limited liability?

Answer 18

It may discourage lenders from providing loans due to perceived risk.

Question 19

Fill in the blank: In a public company, the ownership is __________.

Answer 19

divided among many shareholders

Question 20

Short Answer: What is the primary goal of a public company?

Answer 20

To maximize shareholder value.

Question 21

Multiple Choice: What is the key advantage of being a public company? A) Limited liability B) Access to capital C) Less regulatory oversight

Answer 21

B) Access to capital

Question 22

What is the term for the process of a private company becoming a public company?

Answer 22

Initial Public Offering (IPO)

Question 23

True or False: Public companies are typically more transparent than private companies.

Answer 23

True

Question 24

Fill in the blank: Limited liability is a key feature of __________ ownership structures.

Answer 24

corporate

Question 25

Short Answer: What can happen to shareholders in a public company if the company goes bankrupt?

Answer 25

They can lose their investment, but their personal assets are protected.

Question 26

Multiple Choice: Which type of company is generally more flexible in decision-making? A) Public company B) Private company

Answer 26

B) Private company