CHAPTER 5, 7, 8, 10 BUSINESS 2000
FINAL EXAM QUESTIONS AND
ANSWERS GRADED A+ 2025/2026
Sole Proprietorship - ANS A business owned and usually managed by one person with full
control and full personal liability
Unlimited Liability - ANS The owner's personal responsibility for all business debts and
obligations
Partnership - ANS A business owned by two or more people who share profits, losses, and
responsibilities
General Partnership - ANS A partnership where all owners share in operations and have
unlimited liability
Limited Partnership - ANS A partnership with at least one general partner (full liability) and
one limited partner (limited liability, no management role)
Advantages of Partnerships - ANS More financial resources, shared skills, longer survival, no
special taxes
Disadvantages of Partnerships - ANS Unlimited liability (general partners), disagreements,
profit division, difficult termination
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Corporation - ANS A legal entity separate from its owners with the ability to own assets,
enter contracts, and be taxed
Limited Liability - ANS Shareholders are only responsible for the amount they invested in the
company
Advantages of Corporations - ANS Limited liability, ability to raise capital, perpetual life, ease
of ownership transfer, ability to hire talent
Disadvantages of Corporations - ANS High start-up cost, paperwork, double taxation, two tax
returns, conflicts between owners and management
S Corporation - ANS A corporation taxed like a partnership—profits pass directly to
shareholders to avoid double taxation
Limited Liability Company (LLC) - ANS A flexible structure offering limited liability, choice of
taxation, and fewer corporate regulations
Merger - ANS The combining of two firms into one company
Acquisition - ANS One company purchases and absorbs another company
Vertical Merger - ANS A merger between companies at different stages of the same industry
Horizontal Merger - ANS A merger between firms in the same industry
Conglomerate Merger - ANS A merger between companies in completely unrelated industries
Franchise - ANS A licensing arrangement allowing a franchisee to operate a business using
the franchisor's name and system
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
FINAL EXAM QUESTIONS AND
ANSWERS GRADED A+ 2025/2026
Sole Proprietorship - ANS A business owned and usually managed by one person with full
control and full personal liability
Unlimited Liability - ANS The owner's personal responsibility for all business debts and
obligations
Partnership - ANS A business owned by two or more people who share profits, losses, and
responsibilities
General Partnership - ANS A partnership where all owners share in operations and have
unlimited liability
Limited Partnership - ANS A partnership with at least one general partner (full liability) and
one limited partner (limited liability, no management role)
Advantages of Partnerships - ANS More financial resources, shared skills, longer survival, no
special taxes
Disadvantages of Partnerships - ANS Unlimited liability (general partners), disagreements,
profit division, difficult termination
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Corporation - ANS A legal entity separate from its owners with the ability to own assets,
enter contracts, and be taxed
Limited Liability - ANS Shareholders are only responsible for the amount they invested in the
company
Advantages of Corporations - ANS Limited liability, ability to raise capital, perpetual life, ease
of ownership transfer, ability to hire talent
Disadvantages of Corporations - ANS High start-up cost, paperwork, double taxation, two tax
returns, conflicts between owners and management
S Corporation - ANS A corporation taxed like a partnership—profits pass directly to
shareholders to avoid double taxation
Limited Liability Company (LLC) - ANS A flexible structure offering limited liability, choice of
taxation, and fewer corporate regulations
Merger - ANS The combining of two firms into one company
Acquisition - ANS One company purchases and absorbs another company
Vertical Merger - ANS A merger between companies at different stages of the same industry
Horizontal Merger - ANS A merger between firms in the same industry
Conglomerate Merger - ANS A merger between companies in completely unrelated industries
Franchise - ANS A licensing arrangement allowing a franchisee to operate a business using
the franchisor's name and system
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
