Question

a. key terms and concepts
directions: match the terms with the descriptions. write the letter of the correct answer in the
blank provided. not all of the choices will be used.

1. a business owned and managed by a single

a. fringe benefits
individual
b. sole proprietorship

1. an authorization from the local government to

c. zoning laws
carry on an enterprise
d. business license

1. regulations cities and towns use to designate

e. liability
separate areas for businesses
f. business organization

1. the legal obligation to pay debts

g. regulations

1. payments to employees other than wages or

h. debt forgiveness
salaries

1. the ownership structure of a company

b. main ideas
directions: write the letter of the correct answer in the blank provided.

1. if a sole proprietorship fails, the owner of the business

a. must pay all the business debts.
c. must pay off the investors.
b. has to do a lot of legal work to
d. must wait 10 business days before
close the business.
starting another business.

1. which of the following is true of sole proprietorships?

a. they have only one employee.
c. they must have a business license.
b. they are owned and managed
d. they dont pay fringe benefits to
by an individual.
employees.

1. a major disadvantage of the sole proprietorship is that

a. the business cannot be sold off if it does well.
b. the business can be difficult to relocate.
c. the sole proprietor may have problems borrowing money from a bank.
d. no one can work for the business owner.

1. a major advantage of a sole proprietorship is that

a. the owner has full authority over business decisions.
b. the owner has no liability for the debts of the business.
c. human capital is unlimited.
d. it is relatively easy to find and keep good employees.

Explanation:

• Question 1: A sole proprietorship is defined as a business owned and managed by a single individual.
• Question 2: A business license is an authorization from the local government to carry on an enterprise.
• Question 3: Zoning laws are regulations cities and towns use to designate separate areas for businesses.
• Question 4: Liability is the legal obligation to pay debts.
• Question 5: Fringe benefits are payments to employees other than wages or salaries.
• Question 7: In a sole proprietorship, if the business fails, the owner has unlimited liability, meaning they must pay all the business debts.
• Question 8: Sole proprietorships are owned and managed by one individual.
• Question 9: One major disadvantage of a sole proprietorship is that the sole proprietor may have problems borrowing money from a bank (due to limited resources in many cases compared to larger business structures).
• Question 10: A major advantage of a sole proprietorship is that the owner has full authority over business decisions.

Answer:

1. b. sole proprietorship
2. d. business license
3. e. zoning laws
4. f. liability
5. a. fringe benefits
6. a. must pay all the business debts.
7. b. They are owned and managed by an individual.
8. c. the sole proprietor may have problems borrowing money from a bank.
9. a. the owner has full authority over business decisions.