T4-1

Question 1

sole proprietorship

Answer 1

i. single owner-manager, small companies, most common type of business organization
ii. owner pays personal income taxes on income
iii. unlimited liability exists
iv. company has limited life

Question 2

Partnership

Answer 2

i. Two or more owners, partnership agreement
ii. Partners pay tax on income
iii. Unlimited liability exists
iv. Partners have agency authority
v. Limit life exists
vi. Partners have partner equity accounts

Question 3

Corporation

Answer 3

i. Stockholders have separate identity from company, capital stock, greatest volume of business
ii. Owners can easily transfer or sell interest
iii. Corporations hire professional managers
iv. Limited liability exists
v. Corporations pay tax on income
vi. Unlimited life exists
vii. Owners investment called stockholders equity