Chapter 5

Question 1

Sole proprietorship

Answer 1

business that is owned and usually managed by another person

Question 2

partnership

Answer 2

a legal form of business with two or more owners

Question 3

corporation

Answer 3

a legal entity with authority to act and have liability apart from its owners

Question 4

unlimited liability

Answer 4

the responsibility of business owners for all the debts of the business

Question 5

general partnership

Answer 5

a partnership in which all onwers share in operating the business and in assuming liability for the business’s debts

Question 6

limited partnership

Answer 6

a partnership which one or more general partners and one or more limited partners

Question 7

general partner

Answer 7

an owner (partner) who has unlimited liability and is active in managing the firm

Question 8

limited partner

Answer 8

an owner who invests money in the business but does not have any management responsibility