Worksheet – Business Organization

Multiple Choice Questions

I. Choose the best answer.

1. The most important function of entrepreneur is,

ATo bear the risk of production
B To make production decisions
C To organize the other factors of production
D To provide goods and services to the public

2. Sole proprietorship is common and popular in developing countries. What might be the possible reason
for establishing a sole proprietorship instead of a partnership?

AIt is easy to form and the owner can enjoy more capital.
BPrompt decisions and unlimited liability.
C Easy formation and sole proprietor can enjoy all profits.
D Easy to raise capital and business secrets can be maintained.

3. The major disadvantage of sole trader is,

AUnlimited liability because of which the owner is liable for debts
BThe obstacles to obtain fund for expansion
CGreater degree of risk for the sole trader
DThe fear of causing an end to the continuity

4. Why might an entrepreneur prefer partnership with others instead of one-man business?
APartnership can enjoy more capital.
BSole trade is difficult to manage.
CTo share profit with others.
DTo operate the business in harmony.

5. Which of the following is likely to be the most suitable form of business organization for a group four
doctors?

APartnership
BPrivate company
CPublic company
DPublic corporation

6. A business has limited liability. Its shares are not sold on the stock exchange. But they must be
registered with the registrar of companies. What type of business is this?

A partnership
B private limited company
C public corporation
D public limited company
 7. Which of the following is not an advantage of being a multinational company? AIt
carries out large scale production
BIts profit is taxed by the government.
CIt can secure a greater market size.
DIt can reduce the costs on transport.

8. Which of the following is correct regarding limited partnership?

ACapital is only contributed by limited partners.
BAll the partners are general partners.
CThe liability of all partners is limited.
DThe business is managed by general partners.

9. What makes a co-operative business organization different from others?

Alimited liability
Bdistribution of profit
Cshareholders are the owners
Done man one vote

10. The public corporations are enterprises owned by government. The main aim of these enterprises is : A To
maximize profit
B To sell the shares and earn revenue
C To protect the welfare of the people
D To increase competition

1) Business organizations

a) Define the following.

i) Firm
ii) Industry
i) Multinational companies
ii) Unlimited liability
iii) Sole trade
b) Distinguish between the following.
i) limited liability and unlimited liability
ii) Ordinary shares and preferences shares
i) Active partners and sleeping partners
ii) Limited partners and general partners
c) Explain the advantages and disadvantages of a public limited company.
d) Explain the advantages and disadvantages of MNCs to host countries.
e) Distinguish between a public limited company and a public corporation.
f) Explain the arguments for and against privatization.
g) How is private limited company different from public limited company on the basis of share
transferability?
h) Why limited companies are often described as Joint stock companies?
i) Mention any four advantages and disadvantages of sole proprietorship.
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