17. An engineer runs a consulting practice alone and is
personally responsible for all debts.
This structure
is:
A. Corporation
B. Partnership
C. Sole proprietorship
D. Limited liability partnership
Ans. C
18. Two engineers share ownership and profits of a firm but
have unlimited liability.
This structure
is:
A. Corporation
B. Partnership
C. Joint venture
D. Cooperative
Ans B
The correct answer is: B. Partnership
Why B. Partnership is correct:
A partnership is defined by:
· Shared ownership and profits
· Unlimited personal liability (especially in a general partnership)
· Each partner can be personally responsible for debts and even the actions of the other partner
This matches the question exactly.
Why the other options are incorrect:
A. Corporation
·
Provides limited liability,
not unlimited
❌ Opposite of what the question states
C. Joint venture
· Typically a temporary collaboration for a specific project
·
Not necessarily a full profit-sharing firm
structure with ongoing liability
❌ Doesn’t match the general business structure described
D. Cooperative
· Owned and operated for the benefit of members
·
Liability structure is different and not
typically described this way
❌ Not a standard engineering firm ownership model in this context
Quick NPPE shortcut:
đ “Shared profits + unlimited liability” = Partnership
If you see “limited liability”, switch immediately to Corporation.
19. A consulting engineering firm wants to limit personal
liability of its owners.
Which structure
is most suitable?
A. Corporation
B. Sole proprietorship
C. Partnership
D. Informal association
The correct answer is: A. Corporation
Why A. Corporation is correct:
A corporation is a separate legal entity from its owners (shareholders). This means:
· Owners generally have limited liability
· Their personal assets are protected
· Liability is usually limited to the assets of the corporation
For consulting engineering firms, this is especially important due to professional risk exposure (e.g., negligence claims).
Why the other options are incorrect:
B. Sole proprietorship
· No legal separation between owner and business
·
Owner has unlimited personal
liability
❌ Worst option for liability protection
C. Partnership
· Partners are typically personally liable
·
In general partnerships, liability can be joint
and several (you may be responsible for your partner’s actions)
❌ Still exposes personal assets
D. Informal association
· Not a recognized legal structure for liability protection
·
Offers no meaningful legal
shield
❌ No protection at all
Quick NPPE takeaway:
đ If the question says “limit personal
liability”, think immediately:
→ Corporation =
protection
20. A corporation differs from a partnership because it:
A. Cannot enter
contracts
B. Has separate legal identity
C. Cannot employ engineers
D. Cannot be sued
Ans B
