Chapter 8.2, Problem 2R

To determine

To ascertain: The four kinds of business in the order of risk, with the highest risk at the top.

Explanation of Solution

Some of the given business forms are a partnership, limited liability company, a sole proprietorship.

After analyzing the features of business structure, at the top comes sole proprietorship. It is the type of business where an individual has to carry all the tasks and is liable for all debt. A limited partnership is the second form of business. Under such kinds of business structure, not all the partners are equal. One partner is called the partner that performs all the management duties and is fully responsible for all debts and the other is only a contributor of the funds but not liable for any loss. The third is the partnership where tasks are divided among the partners and have to pay a lower tax. The fourth is a limited liability company. Under such kinds of business, organization members are not worried about losing their personal wealth in the case of business failure due to high debt. It is similar in terms of some features with the corporation.

Economics Concept Introduction

Introduction: Not only is every business situation unique in the best form of a legal framework but also personal condition, such as the factor of risk avoidance and the net earning outside the company, is also a significant aspect to consider.Even when selecting the structure of an organization, there are a variety of different variables to analyze and measure.