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Exam 4: Choosing a Form of Business Ownership

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Question 21

True/False

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Corporations are forbidden by law to enter joint ventures.

A) True
B) False

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Question 22

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Shane is looking for ways to get more capital for his appliance sales and service business.He is very protective of his company's information and fears that it will get into the wrong hands.Shane would probably not want to

A) hire new employees.
B) incorporate his company.
C) get a loan from a bank.
D) take on a trustworthy friend as a partner.
E) use a computerized accounting system.

F) A) and B)
G) All of the above

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Question 23

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Kayla purchases shares of ownership in General Electric.These shares are referred to as _____.

Which of the following is necessary for starting a sole proprietorship?

A banker or lender is more likely to make sizable loans to a sole proprietor than to a partnership.

The Reader's Digest Association began as an open corporation and later changed to a closed corporation.

In the United States, slightly over 71 percent of all businesses are ______.

A cooperative provides a service more effectively than any single member acting alone.

A business can grow by expanding its current operations.It can also grow by completing a merger or acquisition.Which do you think is the best method for growing a company?

A contract between a business and a state recognizing the business as an artificial person is known as the _____.

A limited-liability company is taxed like a 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 _____.

The corporation, partnership, and sole proprietorship are the three most common forms of business ownership in the United States.

Assume that you are a corporate manager and that a corporate raider is trying to take over your company.What steps could you follow to avoid the takeover?

As with a sole proprietorship, one disadvantage of a partnership is a lack of continuity.

Recently there have been several mergers involving Big Four accounting firms.One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young.This is an example of a _____.

Thomas wants to make money, so he starts his own business as a sole proprietor.He likes this form of business because

A horizontal merger is a merger between firms in completely unrelated industries.

A business partnership that is owned and managed like a corporation but taxed like a partnership is called a(n) _____.

When the owner of a sole proprietorship dies, what becomes of the business?