Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

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Prepare for the FBLA Entrepreneurship Test with our quiz. Use flashcards and multiple-choice questions to enhance your knowledge and readiness for the exam. Achieve success with comprehensive study materials!

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Which of the following business models allows for individual liability of the owners?

  1. Corporation

  2. Partnership

  3. Limited Liability Partnership

  4. Limited Liability Company

The correct answer is: Partnership

The correct choice identifies the partnership as a business model where owners have individual liability. In a partnership, two or more individuals share ownership and operate a business, and each partner is personally liable for the debts and obligations arising from the business activities. This means that if the business incurs debts or faces legal issues, creditors can pursue the personal assets of the partners to satisfy those debts. In contrast, corporations, limited liability partnerships, and limited liability companies provide some degree of liability protection for their owners. In these structures, the owners (shareholders or members) are generally not personally responsible for the company's debts beyond their initial investment. This limited liability protects personal assets from being targeted in business-related legal actions.

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