Chapter 8 Test Lists

Question 1

Name the 5 forms of businesses/ ownership

Answer 1

1) sole proprietorship (simplest)
2) partnership (most common)
3) corporations
4) limited liability company (LLC’s)
5) Franchise

Question 2

Name 3 factors of sole proprietorship

Answer 2

1) owned and run by 1 person
2) entitled to all profits
3) is responsible for all debts and losses

Question 3

Name 2 types of partnership

Answer 3

1) general partnership- all parties have equal responsibility and are liable for debts
2) limited partnership- 1 partner is a general partner and 1 or more partners are limited (not active in running day to day operations)

Question 4

Name 4 factors of corporations (incorporated)

Answer 4

1) businesses are owned by shareholders who elect a board of directors who oversee the daily operation of the business
2) shareholders have stock/share(partial ownership)
3) they can be government or privately owned
4) they can be profit or non profit

Question 5

Name the 6 factors of Limited liability company (LLC’s)

Answer 5

1) are a combination of a corporation and partnership
2) give personal liability protection
3) no tax on the company / only the individual
4) mainly owned by 1 or 2 individuals
5) most do not have stockholders
6) usually small companies(unincorporated)

Question 6

List the 2 factors of a franchise

Answer 6

1) is a business investment that involves renting or leasing another corporation/ business
2) they act as an agent for a company’s product

Question 7

List the 4 factors of a franchisee

Answer 7

1) they must pay a franchise fee(rights) plus 5 to 10% of profit
2) pay for start-up costs
3) sign a contract for 3to5 years
4) buy products from franchisor

Question 8

Name 3 pros of a franchise

Answer 8

1) piggyback on the successful model
2) no business experience needed
3) earn a decent income

Question 9

Name the 3 cons of a franchise

Answer 9

1) fee can be High
2) time consuming
3) you share your profits