Sole proprietorship Quiz-1

Sole proprietorship Quiz-1

Quiz

 

1. Which of the following is a type of business that is similar to a sole proprietorship?
   1.   Partnership
   2.   Corporation
   3.   Trust
   4.   Sole trader
2. Which of the following is true about the ownership of assets in a sole proprietorship?
   1.   The assets are owned collectively by the shareholders.
   2.   The assets are owned by the sole proprietor personally.
   3.   The assets are owned by a separate legal entity.
   4.   The assets are owned by a board of directors.
3. What happens to the sole proprietorship business if the owner becomes incapacitated or passes away?
   1.   The business is dissolved.
   2.   The business continues under the control of a designated successor.
   3.   The business automatically becomes a partnership.
   4.   The business is taken over by the government.
4. Which of the following is not a characteristic of a sole proprietorship regarding personal liability?
   1.   Unlimited personal liability for the debts of the business.
   2.   Personal assets can be at risk to satisfy business obligations.
   3.   Limited personal liability for the debts of the business.
   4.   Personal and business assets are not legally separate.
5. Which of the following is not a characteristic of a sole proprietorship?
   1.   It is the simplest and oldest form of business.
   2.   The owner is personally liable for the debts of the business.
   3.   The owner has unlimited control over the business.
   4.   It is required to be registered with the government.
6. Which of the following statements best describes the legal status of a sole proprietorship?
   1.   It is a separate legal entity from its owner.
   2.   It has a distinct legal identity, similar to a corporation.
   3.   It is not recognized as a legal business structure.
   4.   It is an extension of the owner and lacks separate legal existence.
7. Can a sole proprietorship be converted into a different business structure, such as a corporation?
   1.   Yes, conversion to a different structure is straightforward and common.
   2.   No, once established as a sole proprietorship, it cannot be converted.
   3.   Conversion requires approval from all shareholders.
   4.   Conversion is possible, but it is a complex and lengthy process.
8. What is the level of formal legal requirements for establishing a sole proprietorship?
   1.   Extensive legal documentation is required
   2.   No formal legal documentation is required
   3.   A partnership agreement is necessary
   4.   A shareholders' agreement is required
9. What happens to the business assets of a sole proprietorship in the event of bankruptcy?
   1.   The assets are divided among the shareholders.
   2.   The assets are liquidated to pay off the business debts.
   3.   The assets are transferred to a government agency.
   4.   The assets are protected and cannot be seized.
10. How is the ownership of a sole proprietorship structured?
    1.   Owned by multiple individuals
    2.   Owned by a single person
    3.   Owned by shareholders
    4.   Owned by a partnership
11. Can a sole proprietorship easily transfer ownership to another individual?
    1.   Yes, through the sale of shares
    2.   Yes, through a partnership agreement
    3.   No, sole proprietorships cannot be transferred to others
    4.   Yes, through legal documentation
12. Which of the following statements is true about taxation in a sole proprietorship?
    1.   The business is taxed separately from the sole proprietor
    2.   The sole proprietor's personal income is taxed, not the business itself
    3.   The business is exempt from all taxes
    4.   The business is taxed based on its revenue, not profits
13. How are profits and losses of a sole proprietorship typically handled?
    1.   Distributed equally among shareholders
    2.   Shared with partners
    3.   Solely retained by the sole proprietor
    4.   Distributed among employees
14. What is the main disadvantage of a sole proprietorship?
    1.   Limited control and decision-making power.
    2.   Difficulty in raising capital and resources.
    3.   High administrative and legal requirements.
    4.   Limited liability protection.
15. Which of the following statements is true regarding record-keeping and financial reporting in a sole proprietorship?
    1.   Extensive record-keeping is required, similar to a corporation.
    2.   Financial reporting is optional and not necessary.
    3.   Simple record-keeping is sufficient for tax purposes.
    4.   The sole proprietorship must undergo an annual audit.
16. Can a sole proprietorship hire employees?
    1.   No, sole proprietorships are not allowed to have employees.
    2.   Yes, sole proprietorships can hire employees.
    3.   Yes, but only family members can be employed.
    4.   Yes, but only independent contractors can be hired.
17. Which of the following statements is true about the continuity of a sole proprietorship?
    1.   It continues indefinitely, even after the death of the sole proprietor
    2.   It automatically ceases to exist upon the death of the sole proprietor
    3.   It can only continue if a new sole proprietor is appointed
    4.   It can only continue if converted into a partnership or corporation
18. What is the liability of a sole proprietor for the debts and obligations of the business?
    1.   Unlimited personal liability
    2.   Limited liability
    3.   No liability
    4.   Liability limited to business assets
19. What is the most common reason for individuals to choose a sole proprietorship as a business structure?
    1.   Limited liability protection.
    2.   Access to more resources and capital.
    3.   Ease of formation and operation.
    4.   Tax advantages over other business structures.
20. Which of the following is not a common characteristic of a sole proprietorship?
    1.   Easy decision-making process
    2.   Unlimited personal liability
    3.   Separation of personal and business assets
    4.   Direct control and management by the owner