1) Which form of business organization would be most appropriate in each of the
ID: 2528354 • Letter: 1
Question
1) Which form of business organization would be most appropriate in each of the following cases. Sole proprietorship, Partnership, Corporation, Co-operative, Government enterprise or Non-profit Organization. Explain your choice short and concisely.
a) a three-person law firm
b) a corner convenience store owned and operated by a single owner
c) a savings and loan organization for school district employees only
d) a chain of 12 restaurants with 60 owners
e) an enterprise providing inexpensive public transport to the residents of a community2
2) Explain the difference between each of the following pairs of terms
a) a general partner and a limited partner
b) a public corporation and a private corporation
c) dividends and patronage
Explanation / Answer
1.
a. Partnership. Reason - limited number of people coming together to work together.
b. Sole proprietorship. Reason - single owner running a business.
c. Non-profit organisation. Reason - limited number of people included in the business for the benefit of their community only and not for profit.
d. Corporation. Reason - running a business at multiple locations having multiple owners.
e. Government enterprise. Reason - government enterprise works for the welfare of the public in general.
2.
a. A general partner is a partner whose liability towards the partnership is severe and unlimited. Whereas, a limited partner's liability is limited.
b. A public corporation means a company funded by the public and listed on a stock exchange. People can trade a public company's stock freely in the market. Whereas, public at large cannot freely buy or sell a private corporation's stock.
c. Dividend is given by public or private companies. Whereas patronage is given by a co-operative.
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