Test on Business Ownership Structures and Types
Business Ownership Structures and Types: A Student Guide
Test: Business Ownership and Liability, Types of Business Companies (Private, Public, Personal Liability), Types of Business Entities (Co-operatives, State-Owned, Non-Profit)
20 questions
Question 1: In a partnership, all partners must contribute an equal amount of capital in cash.
A. Ano
B. Ne
Explanation: The study materials indicate that a disadvantage of partnerships is 'Unequal inputs as some partners put in expertise instead of cash', meaning capital contributions are not always equal or solely in cash.
Question 2: According to the study materials, what is a specific disadvantage concerning taxation for a Close Corporation (CC)?
A. Members only pay tax on profits in their personal capacity, avoiding business-level taxation.
B. The business experiences double taxation, which has a negative impact, especially on financially struggling companies.
C. Withdrawal of cash to reduce the tax burden can cause significant cash flow problems for the CC.
D. The compulsory financial officer requirement leads to extra expenses and higher tax payments.
Explanation: The study materials explicitly state under the 'TAXATION' criteria for Close Corporations that there is 'Double taxation - negative impact on financially struggling company.'
Question 3: Directors' fees in a Public Company do not impact the company's net profit.
A. Ano
B. Ne
Explanation: Directors' fees increase a Public Company's expenses, which reduces its net profit.
Question 4: Companies can obtain tax rebates if they are involved in CSI projects.
A. Ano
B. Ne
Explanation: The study materials state under the 'TAXATION' section for all company types (Private, Public, and Personal Liability) that they 'Can obtain tax rebates if they are involved in CSI projects'.
Question 5: According to the study materials, what is the financial implication of double taxation for a company?
A. It reduces the company's expenses, leading to higher net profit.
B. It has a negative impact on a company that is already struggling financially.
C. It helps the company obtain tax rebates for CSI projects.
D. It encourages new investors by ensuring consistent dividend payouts.
Explanation: The study materials state under the 'TAXATION' section for Private, Public, and Personal Liability Companies that 'Double taxation has a negative impact on a company that is already struggling financially.' This directly addresses the financial implication of double taxation.