📐 SAT
📝 ACT
🎓 AP Exams
About Contact Blog Privacy Policy

What Is a Business and Organizational Roles Drill 1

Drill 1 ·

0 / 5
0/5 correct

Nice work!

Review your answers above to learn from any mistakes.

← More Drills
Next drill
Drill 2
→

About This Drill

What Is a Business and Organizational Roles Drill 1 is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.

Three founders compare ownership structures for a new coffee-roasting venture; uses an invented company and original figures.

Passage

Three friends are starting Wrenfield Coffee Roasters and must choose an ownership structure. The table compares four common forms on three attributes. Below it, the founders list how much cash each is contributing.

Wrenfield Coffee Roasters: Ownership Structure Comparison

StructureOwner liabilityTaxationAbility to raise capital
Sole proprietorshipUnlimitedPersonal (pass-through)Lowest
PartnershipUnlimited (shared)Personal (pass-through)Limited
LLCLimitedPass-through (default)Moderate
CorporationLimitedCorporate (can be taxed twice)Highest

Founder cash contributions: Avery 30,000; Ben 30,000; Cara 15,000. The founders plan to assign ownership shares in proportion to each person's contribution.

Questions in This Drill

  1. According to the table, which structure offers both limited owner liability and the highest ability to raise capital?
  2. 'Unlimited liability,' shown for the sole proprietorship and partnership, means that:
  3. Using the contribution amounts, what ownership share will Cara receive?
  4. Why might the three founders choose an LLC over a general partnership for Wrenfield?
  5. As Wrenfield grows, Avery will run daily store operations, Ben will manage roasting and supply, and Cara will keep the books and handle payroll. Dividing the work this way is an example of: