Sole proprietorships, partnerships, corporations, and why entrepreneurs take risks

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

1. Read this first

   Use this

   Cards A and B on forms of business. Card A. Compare chart "Three ways to own a business" (summarized in our words, read Nov 14, 2026), columns Form | Owners | Who must cover the business's debts: Sole proprietorship | one person | the owner, including personal savings; Partnership | two or more people | each partner, including personal savings; Corporation | shareholders | the corporation; a shareholder loses at most the money paid for shares. Note: general rules in our words; details vary by state. Some owners also sign personal guarantees for loans. Card B, "A bakery that closes" (made up). The bakery owes $60,000 and has $40,000 of ovens, tables and cash to sell. Three friends own it, in whichever form the card names.

3. 1.

   Pia reads cards A and B. If the bakery is a sole proprietorship, who covers the $20,000 it cannot pay?

   • The owner, from personal savings, because the sole proprietor answers for the debts
   • The bank, because it lent the money and carries the risk of a loan
   • No one, because the bakery sold its ovens and tables and that ends the matter for its owner
   • The bakery's customers, because they bought the cakes that made the debt
4. 2.

   Ren compares forms for the same bakery. If it is a corporation, how much can a shareholder lose?

   Use the picture in question 1.

   • No loss whatever, because a corporation cannot lose money
   • At most the money paid for the shares, so personal savings are safe
   • The whole $20,000 shortfall, divided among the shareholders by their share
   • The shareholders' homes, because the business borrowed money to buy ovens
5. 3.

   Tala reads both cards. Which claim about the three forms is best supported?

   Use the picture in question 1.

   • A partnership has more owners, so it must owe more than a sole proprietorship
   • A sole proprietorship has one owner, which makes it the simplest form
   • A corporation is the better form for any business, since it limits what owners can lose
   • The forms differ in whose personal savings can be used when the business cannot pay

6. Use this

   Card A. Compare chart "A small shop's year" (made up for practice), columns Line | Amount: Money from customers | $90,000; Rent | $24,000; Supplies | $30,000; Wages paid to helpers | $12,000; Pay the owner gave up by not taking a job elsewhere | $30,000. Note: invented shop, made up for practice. The owner works full time in the shop and takes no wages.

7. 4.

   Ari reads the shop's card. What profit does the shop show before counting the pay the owner gave up?

   • $24,000, which is $90,000 less the $66,000 of rent, supplies and wages
   • $90,000, which is the money from customers
   • $30,000, which is the pay the owner gave up by not working in a job elsewhere
   • $60,000, which is $90,000 less the $30,000 of supplies
8. 5.

   Bo counts the owner's $30,000 of pay given up as a cost too. What does the shop's year look like?

   • It loses $6,000: the $24,000 shown is $6,000 short of the $30,000 the owner gave up
   • It breaks even, since the shop paid $66,000 and took in $90,000
   • It gains $24,000, since the pay given up is not paid to anyone
   • It gains $54,000, since $24,000 plus the owner's $30,000 are both income to the owner
9. 6.

   Esme writes one claim from the shop's card. Which claim is best supported?

   • The shop is a failure, because the owner would have earned more in a job elsewhere
   • The shop is a success, because it earns more than it paid out
   • The shop earned little because the owner took no wages
   • The shop makes money in dollars, yet the owner would have earned more in a job
10. 7.

    Jun wants to know if staying in the shop is a good choice. Which missing fact would help most?

    • The number of customers served on a single day, which shows how busy the shop is
    • The price of the shop's supplies
    • Whether the owner worked full time
    • What the owner values in being the boss, apart from money

11. Use this

    Card A. Compare chart "Extra cost of each cake" (made up for practice), columns Cake | Extra cost of baking it: 1st | $8; 2nd | $9; 3rd | $11; 4th | $15; 5th | $22. Note: invented bakery, made up for practice. Each cake sells for $14.

12. 8.

    Kira reads the bakery's card. Each cake sells for $14. How many cakes should the baker make?

    • Three: the 3rd costs $11 more to bake, but the 4th costs $15, above the $14 price
    • Five: the 5th is the last cake the bakery has a cost listed for, so five cakes pay
    • Two: stop once the extra cost passes $9
    • Four: the 4th still comes to nearly the $14 price
13. 9.

    Milo writes one claim from the bakery's card. Which claim is best supported?

    • The first cake costs $8, which is less than the $14 price
    • The cakes cost more because the baker raised the price to $14
    • Each extra cake costs more, so the baker should stop when the next one costs more than its $14 price
    • The baker should make as many cakes as possible, since each cake sold brings in money at the $14 price
14. 10.

    Noah wants to be sure the 3rd cake adds to profit. Which missing fact would help most?

    • Whether the price is $14 for each cake
    • What the first cake costs in flour, since that is where most of the cost comes from
    • Whether anyone will buy the 3rd cake at $14 on the day
    • How many cakes the bakery can bake in a day