Lee Wants to Go into the Business of Construction Contracting

question 26

Multiple Choice

Lee wants to go into the business of construction contracting. Among the reasons that would probably convince Lee to set up his business as a sole proprietorship would be

• A) its greater organizational flexibility.
• B) its limited liability.
• C) its perpetual existence.
• D) the ease of transferring the business to other family members.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, which can own assets, incur liabilities, and sell stocks.

Organization Chart

A visual representation of the hierarchical structure of an organization, showing relationships between different positions and departments.

Delegation of Authority

The process by which authority is distributed to lower levels of management within an organization to make decisions and complete tasks.

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership interests and typically rights to dividends and a vote in corporate matters.