1 Exam Prep
Business Procedures
Business Management Practice Test
1. Which type of business organization is taxed like a partnership but provides limited liability to the
owner/operators of the business?
A. Any type
B. Limited partnership
C. Subchapter "S" corporation
D. Corporation
2. A business that desires to be successful, stay alive, and show profits needs to develop a clear plan of action.
Such a plan starts with ______.
A. An organization chart.
B. A business environment.
C. A business blueprint.
D. Goals.
3. The form of business ownership in which the owner has all the legal rights to make the decisions for the
business is called a
.
A. Sole proprietorship.
B. Partnership.
C. General partnership.
D. Corporation.
4. One of the greatest disadvantages of sole proprietorships in the financial management of a company
is
.
A. The owner has unlimited personal liability.
B. Keeping business and personal funds in separate accounts.
C. Maintaining a full set of books and records.
D. Operating a business under a separate Federal I.D. number.
5. Which of the following is not a disadvantage of the corporation form of ownership?
A. Possible double taxation
B. Start-up costs
C. Maintenance costs
D. Exposure to personal liability
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6. In a limited partnership organization, the
business.
is legally responsible for the day-to-day operation of the
A. Business manager
B. General partner
C. Limited partner
D. Sub-partner
7. Which is not a purpose of a business plan?
A. To show how to implement the goals of the company.
B. To decide what form of business you want to be in.
C. To set a budget for the company.
D. To set goals for the company.
8. Pooling talents, raising capital, sharing of responsibilities and single taxation are typical advantages of
a
.
A. Sole proprietorship.
B. General Partnership.
C. Limited partnership.
D. Corporation.
9. Which of the following is not a disadvantage of a sole proprietorship?
A. Unlimited personal liability
B. Business profits are taxed as ordinary income to owner.
C. The owner is in direct control.
D. Exposure to personal liability.
10. Which of the following is not an advantage to a sole proprietorship?
A. Low start-up costs
B. Minimal working capital requirements
C. Limitation of liability to investment
D. Minimum amount of regulation
11. Which is not true of an "S" corporation?
A. "S" corporations are treated like partnerships.
B. "S" corporations share most of the pros and cons of regular corporations.
C. Shareholder choose to be taxed s individuals or through the corporation.
D. It is limited to large-volume companies.
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12. Which is true of a limited partnership?
A. The limited partner is responsible for day-to-day operations
B. The limited partner is compensated at the same rate as the general partner
C. The limited partner is compensated in proportion to his/her investment
D. The limited partner can never become a general partner
13. Which of the following statements is not true concerning the various types of businesses in construction
contracting?
A. Limited partners stay involved in day to day operations
B. Sole proprietorship is terminated upon the owners death
C. A corporation is unaffected by a shareholders death
D. General partners have unlimited personal liability
14. A person may engage in a contracting business under a fictitious name by registering the name
with
.
A. Professional Registration Agency
B. The Department of Revenue
C. Bureau of Occupation Registration
D. The Division of Corporations
15. If a business qualifies to be a corporation, yet decides it wants to be taxed as a partnership, it must be
a/an
.
A. Free enterprise
B. Joint venture
C. Sole proprietorship
D. "S" corporation
16. The difference between a Partnership and a Joint Venture is
.
A. the joint venture is usually limited to a single activity
B. partnerships offer tax deductible fringe benefits
C. an oral agreement for a joint venture is recommended
D. joint ventures are governed differently than partnerships
1 Exam Prep – Business Procedures (Business Management)
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1 Exam Prep
Business Procedures
Business Management Practice Test Answers
1. C
2. D
3. A
4. A
5. D
6. B
7. B
8. B
9. C
10. C
11. D
12. C
13. A 16. A
14. D
15. D
EXPLANATIONS OF ANSWERS
1. Ans C. Chapter 9, Pg 359, "S"
Corporation
2. Ans D. Chapter 9, Plan, Pg 360.
3. Ans A. Chapter 9, Pg 358, Sole Corporations.
Proprietorship.
4. Ans A. Chapter 9, Pg 358, Sole Partnership.
Proprietorship.
5. Ans D. Chapter 9, Pg 358-359,
Corporations.
6. Ans B. Chapter 9, Pg 360, Limited
Partnership.
7. Ans B. Chapter 9. Pg 360, Plan.
8. Ans B. Chapter 9, Pg 359, General
Partnership.
1 Exam Prep – Business Procedures (Business Management)
9. Ans C. Chapter 9, Pg 358, Sole
Proprietorship.
10. Ans C. Chapter 9, Pg 358, Sole
Proprietorship.
11. Ans D. Chapter 9, Pg 359, "S"
Corporations.
12. Ans C. Chapter 9, Pg 360, Limited
Partnership.
13. Ans A. Chapter 9, Pgs 358-359.
14. Ans D. Chapter 9, Pg 358, Sole
proprietorship.
15. Ans D. Chapter 9, Pg 359, "S"
Corporations.
16. Ans A. Chapter 9, Pg 359.
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