The biggest disadvantage of the sole proprietorship is
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CHAPTER THREE (TEST – True or False)
A. PLEASE ANSWER TRUE OR FALSE. WRITE THE COMPLETE WORD TRUE OR FALSE.
1. __________ A sole proprietorship is the most popular type of business organization in the United States.
2. __________ Employment taxes include Social Security taxes, Medicare taxes, and federal unemployment taxes.
3. __________ An entrepreneur is a person who decides how to combine resources to create goods and services.
4. __________ A business license is the legal obligation to pay debts.
5. __________ The least common type of business partnership is the general partnership.
6. __________ Fringe benefits are payments to employees of wages or salaries.
7. __________ The biggest disadvantage of sole proprietorship is unlimited personal liability.
8. __________ One advantage of sole proprietorships is that they are exempt from zoning laws.
9. __________ A partnership is the most popular type of business organization in the United States.
10. __________ Partnerships are a good choice of business organization if owners are willing to share both the responsibility of running the business and the economic right to enjoy the profits it earns.
11. __________ Federal law requires a written partnership agreement for a limited liability partnership.
12. __________ General partnerships have fewer disadvantages than limited liability partnerships.
13. __________ In a sole proprietorship, the partners have the burden of making all business decisions.
14. __________ Partnerships are subject to little government regulation.
15. __________ A limited partnership must have at least one general partner.
16. __________ The Articles of Partnership is a legal document that spells out each partner’s economic rights and responsibilities in the partnership.
17. __________ In a partnership only the main partner contributes assets, or money and other valuables to the partnership.
18. __________ One of the advantages of franchises is centralized buying power.
19. __________ In a business franchise agreement, the parent company is called a franchiser.
20. __________ Management training and support is one of the advantage of franchises.
21. __________ Each person who owns stock is a part-owner of a corporation.
22. __________ A corporation has a legal identify separate from the identities of its owners.
23. __________ A corporation that has many shareholders who can buy or sell stock on the open market is called a publicly held corporation.
24. __________ A corporation that issues stocks to only a few people, often family members, who rarely trade their stock on the open market, is called a closely held corporation.
25. __________ Businesses that wish to incorporate must first file for a state license known as a Certificate of Incorporation, or Corporate Charter with state officials.
26. __________ Corporations are exempt from paying taxes on their income.
27. __________ Individual stockholders do not carry personal responsibility for the corporation’s actions.
28. __________ Multinational corporations must obey laws in each country in which they operate.
29. __________ A corporation can grow by selling stocks or bonds, merging, or
combining, with another corporation.
30. __________ Sole proprietorships are subject to little government regulation.
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