Page 43 - Bisiness Studies
P. 43
Chapter summary Revision exercise
1. Sole proprietorship is a kind of In questions 1 to 5, choose the correct
business which is owned, managed answer among the given alternatives
and controlled by one person known and write its letter in your exercise
FOR ONLINE READING ONLY
as a sole proprietor. book.
2. Sole proprietorship is the simplest 1. Debora owns a soft drinks business.
form of business which requires only What form of business unit is this?
the business licence and permit from (a) Sole proprietorship
the local council to operate. Also, (b) Company
the sole proprietors are supposed to
register their business names with (c) Limited liability partnership
the respective organs. (d) Partnership
3. Sole proprietorship is flexible, 2. The following are the characteristics
requires small start-up capital, and of sole proprietorship EXCEPT:
has unlimited liability. The profi t
and loss of the business is incurred (a) Controlled by the owner
by the owner. (b) High start-up capital
4. The sole proprietorship is easy to (c) Owner takes all the risks
form and supervise; it facilitates (d) The business assets are not
quick decision making; and legally separated from the
the owner usually keeps direct owner’s assets
relationship with customers.
5. Some of the disadvantages 3. What is a key advantage of a sole
proprietorship?
or challenges faced by sole
proprietorships are unlimited (a) Easy to form a business
liability, owners' limited skills and (b) Limited liability of the owner
long working hours which may (c) Separate legal entity status
make them tired and unproductive, (d) Limited skills
and uncertainty in continuity of the
business. 4. In a sole proprietorship context, what
6. To solve some of the challenges does unlimited liability mean?
faced by the sole proprietorship it (a) The proprietor can invest
is important to insure the business, unlimited amount of money in
making the contractual hiring, the business
adopting succession planning, and (b) The business has unlimited
delegating some of the roles. potential for expansion
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Student’s Book Form One
