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

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

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

   Use the picture in question 1.

   • The forms differ in whose personal savings can be used when the business cannot pay
   • A sole proprietorship has one owner, which makes it the simplest form
   • A partnership has more owners, so it must owe more than a sole proprietorship
   • A corporation is the better form for any business, since it limits what owners can lose
6. 4.

   Zee wants to say which form suits the bakery. Which missing fact would help most?

   Use the picture in question 1.

   • What color the ovens are, because a bakery owner picks the form that matches its ovens
   • How risky the bakery's debts are compared with the savings its owners would stake
   • Whether a corporation has shareholders
   • How many ovens the bakery sold, since each oven sale changes who must pay the debts

7. 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.

8. 5.

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

   • $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
   • $90,000, which is the money from customers
   • $24,000, which is $90,000 less the $66,000 of rent, supplies and wages
9. 6.

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

   • It breaks even, since the shop paid $66,000 and took in $90,000
   • It gains $54,000, since $24,000 plus the owner's $30,000 are both income to the owner
   • It gains $24,000, since the pay given up is not paid to anyone
   • It loses $6,000: the $24,000 shown is $6,000 short of the $30,000 the owner gave up
10. 7.

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

    • The shop earned little because the owner took no wages
    • The shop is a failure, because the owner would have earned more in a job elsewhere
    • The shop makes money in dollars, yet the owner would have earned more in a job
    • The shop is a success, because it earns more than it paid out
11. 8.

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

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

12. 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.

13. 9.

    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
14. 10.

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

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