Multiple Choice: Types of Organizations and Entities Select the correct answer for each of the following questions:

1. Which of the following activities is most likely to be operated as a sole proprietorship?

a. A local motel.

b. A regional public accounting firm.

c. A large medical clinic.

d. A public school district.

2. Which of the following best describes the attributes of a partnership?

a. Limited ability to raise capital; unlimited personal liability of owners.

b. Ability to raise large amounts of capital; limited personal liability of owners.

c. Limited ability to raise capital; limited personal liability of owners.

d. Ability to raise large amounts of capital; unlimited personal liability.

3. Which of the following best describes a large corporation?

a. Run by owners; unlimited personal liability.

b. Run by professional managers; limited personal liability.

c. Run by owners; limited personal liability.

d. Run by professional managers; unlimited personal liability.
4. Which of the following is true?

a. Corporate shareholders are personally liable for the liabilities of the corporation if the company is unable to pay them.

b. Partners are personally liable for the liabilities of the partnership if the partnership is unable to pay them.

c. Normally, corporate shareholders can only sell their ownership interests when the corporation terminates.

d. Partners can normally transfer their partnership interests with ease.