General Commerce Past Questions
Question 1
Which of the following statements best describes a public corporation:
- A. It is an organ of government responsible for executing the policies of government
- B. It is a local body that renders services on a local basis
- C. It is a legal body established by an act of state to provide essential services
- D. It is a body owned by members of the public
Question 2
The single most important advantage of a sole proprietorship is
- A. the ease of incorporation
- B. the ability to finance expansion through stock sales
- C. limited liability
- D. unlimited liability
- E. the independence it affords the owners
Question 3
In a partnership, liability is _______________ and __________ partner can be held liable for the business’ entire debt.
- A. limited; neither
- B. limited; each
- C. high; all
- D. unlimited; each
- E. unlimited; neither
Question 4
A shareholder’s liability is limited to the value of his or her shares because a corporation
- A. is less risky than a proprietorship or partnership
- B. exists as a legal entity independent of its owners
- C. provides liability insurance for shareholders
- D. can never go bankrupt
- E. can issue stocks
Question 5
One disadvantage to the corporate form of business organization is that
- A. corporate dividends are taxed twice, once as corporate income and once as personal income
- B. decision making is complicated by the large number of shareholders
- C. the threat of a takeover looms large most of the time
- D. bondholders have first claim to a corporation’s profits
- E. stockholders demand and get large dividends if any profits are made
