Professional Practice Architecture Practice Test

Which type of business organization is formed as a single proprietorship?

1. Corporation

2. Partnership

3. Conglomeration

4. Single Proprietorship

The correct answer is: Single Proprietorship

A single proprietorship, also known as a sole proprietorship, is a type of business organization that is owned and operated by one individual. This structure is characterized by the fact that there is no legal distinction between the owner and the business itself. The owner has complete control over all aspects of the business and is personally responsible for its debts and obligations. This direct connection between the owner and the business allows for straightforward tax treatment, where business income is reported on the owner's personal tax return. In contrast, the other options represent different types of business structures: a corporation involves a separate legal entity distinctly separate from its owners; a partnership involves two or more individuals sharing ownership and responsibilities; and a conglomeration typically refers to a large corporation that owns smaller companies in different industries. These differences highlight that the hallmark of a single proprietorship is its singular ownership and absence of a legal entity separate from the owner.