Refer to Chapter 11-1A, page 619: Characteristics of sole proprietorships, partnerships, and corporations Required The three primary types of business organization are proprietorship, partnership, and corporation. Each type has characteristics that distinguish it from the other types. In the left column of the following table write the name of the type of business organization that is most likely to possess the characteristic that is described in the right column of the table. The first item is shown as an example. Business Type Characteristic Proprietorship Owned and operated by a single individual Subject to double taxation Has a retained earnings account on its balance sheet One owner may be held personally liable for actions taken on behalf of the business by different owner Profits benefit a single individual Frequently uses legal agreements to define profit distribution for two or more owners Most highly regulated form of business The business dissolves with the death of its only owner Offers the least capacity to raise capital Provides the best opportunity to benefit a few people Has only one capital account on its balance sheet Provides for easy transfer of ownership Offers the highest level of control over operating decisions Has multiple capital accounts but no retained earnings account on its balance sheet Provides the greatest capacity to raise capital Least regulated form of business Usually operated by a professional management team that is separated from the owners Has two or more owners who are not stockholders
Refer to Chapter 11-1A, page 619: Characteristics of sole proprietorships, partnerships, and corporations
Required
The three primary types of business organization are proprietorship,
Business Type
Characteristic
Proprietorship
Owned and operated by a single individual
Subject to double
Has a
One owner may be held personally liable for actions taken on behalf of the business by different owner
Profits benefit a single individual
Frequently uses legal agreements to define profit distribution for two or more owners
Most highly regulated form of business
The business dissolves with the death of its only owner
Offers the least capacity to raise capital
Provides the best opportunity to benefit a few people
Has only one capital account on its balance sheet
Provides for easy transfer of ownership
Offers the highest level of control over operating decisions
Has multiple capital accounts but no retained earnings account on its balance sheet
Provides the greatest capacity to raise capital
Least regulated form of business
Usually operated by a professional management team that is separated from the owners
Has two or more owners who are not stockholders
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