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Exam 4: Types of Business Ownership

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Question 1

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In all states besides the one in which it is incorporated, a business is known as a(n)

A) S-corporation.
B) resident corporation.
C) public corporation.
D) foreign corporation.
E) domestic corporation.

F) B) and C)
G) A) and E)

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Question 2

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The partner who can lose only what he or she has invested in a business is the

A) general partner.
B) sole trader.
C) manager.
D) employee.
E) limited partner.

F) A) and B)
G) A) and C)

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Question 3

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Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

A syndicate is a temporary association of individuals or firms organised to perform a specific task that requires a large amount of capital.

Samantha's Dilemma Samantha graduated from college and needed to decide where she wanted to work.She had several options.Her aunt Julie owned and operated a small business that she started about twenty years ago.Julie, an individual owner of her business, informed Samantha that she could work for her.On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired.On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education.Her other option would be to work for a company that a friend and her husband had started and jointly owned.It was a rapidly growing company with plenty of opportunity for advancement.However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends.Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the UK. After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her.She wanted to prove how motivated and hard-working she was.Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself. -Refer to Samantha's Dilemma.What type of company does Samantha's friend operate?

To gain access to one another's markets, several U.S.and Japanese automobile manufacturers (for example, Chrysler and Mitsubishi) are engaging in temporary alliances to manufacture and market certain models of cars.These types of partnerships are known as

Preferred stockholders receive dividends before dividends are paid to ordinary shareholders.

A tender offer is an offer to purchase stock from existing stockholders.

The form of business organisation that comprises about 19 percent of western businesses is the

Amy owns 100 shares of General Electric preferred stock.She wants to attend the annual stockholder meeting to cast her vote on company issues.Based on your knowledge from school, you caution Amy that

A corporation organised to provide a social, educational, religious, or other nonbusiness service is known as a(n)

A master limited partnership is also known as a closed corporation.

Susan has a commercial laundry service that has been growing rapidly.She wants to continue to grow the business, but she needs access to more money and does not want to risk her personal assets.Susan contacts her lawyer to see if all the legal requirements are met to start the process of

With regard to limited-liability companies, which of the following statements is false?

Which of the following is not a disadvantage of sole traders?

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors.They also want to avoid double taxation.Which type of business ownership would you recommend?

The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

B&G, Inc. A year ago, Kevin went to work for B&G, Inc.He has worked for the finance department ever since he started.He noticed that the corporation was only taxed as though it were a partnership.This was something that he found very odd when he first started working for the company, but he later realised it was a fairly common practice.He recognised that this was one of the advantages of this type of corporation. While the job was challenging, Kevin was not happy.He wanted to work for a company whose main goal was to provide service to the community, not to make a profit.However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc.A week later, Kevin discovered there was going to be a merger between B&G, Inc.and one of its major competitors.Kevin's boss informed him that he would be getting a promotion and a raise.While he was excited about making more money, he still was not happy.He knew then that he would not be working for the company for long. -Refer to B&G, Inc.What type of organisation is B&G, Inc.?

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.