Sam,Alfredo,and Juan Want to Start a Small U

question 13

Multiple Choice

Sam,Alfredo,and Juan want to start a small U.S.business.Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations.Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business.Alfredo will be involved as an active consultant and manager and will also contribute funds.Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so.All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum.Which form of business entity should these individuals adopt?

• A)sole proprietorship
• B)joint stock company
• C)limited partnership
• D)general partnership
• E)corporation

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Definitions:

Commission

A fee or percentage of a sale paid to a salesperson, intermediary, or agent for their services in facilitating the transaction.

Profits

The financial gain obtained when revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Payday Loan

A type of short-term borrowing where an individual borrows a small amount at a high rate of interest, typically due on their next paycheck.

Profitable Stores

Retail outlets that generate more revenue than the expenses incurred in their operation.