BUSINESS EXAM 1 OWNERSHIP
QUESTIONS
What is a sole proprietorship? What are the advantages and disadvantages? - Answer-a business owned
and usually operated by one person and the simplest form of business to enter, control, and leave
advantages- ease of start ofup, pride of ownership, retention of all profits by the sole proprietor,
flexibility and possible tax advantages
disadvantages- unlimited liability, lack of continuity, lack of money, limited management skills, and
difficulty hiring employees
how does a partnership differ from a sole proprietorship? which disadvantages of sole proprietorship
does the partnership tend to eliminate or reduce? - Answer-partnership- 2 or more persons acts as co-
woners of the business for profit
sole prop.- only has 1 owner
b/c partners can pool their funds, partnership usually has more capital available
-also tends to limit the disadvantage of limited business skills and knowledge because a partner can add
knowledge
what is the difference between a general partner and a limited partner? - Answer-general- responsible
for running the business and for all the business debts
limited- has no management responsibility & is not responsible for business debts beyond the amount
he or she has invested in the business
