1. Which of the following elements is necessary to form a

legally binding contract?

a) Offer and acceptance

b) Consideration

c) Legal capacity

d) All of the above

Answer: d) All of the above

Rationale: In order for a contract to be legally binding, it

must include all three elements: offer and acceptance,

consideration, and legal capacity. These elements ensure

that both parties have willingly entered into the contract

with a mutual understanding of their rights and obligations.

2. Which type of business entity provides its owners with

limited liability protection?

a) Sole proprietorship

b) Partnership

c) Corporation

d) Limited liability company

Answer: c) Corporation

Rationale: A corporation is a separate legal entity from its

owners, which means the owners (shareholders) have

limited liability for the debts and obligations of the

corporation. This provides a layer of protection for the