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Exam 4: Choosing a Form of Business Ownership

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Question 81

True/False

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Since someone must be responsible for a partnership's debts, a limited partnership must have at least one general partner.

A) True
B) False

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Question 82

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Which of the following is a disadvantage of the corporate form of organization?

A) Both the corporation and its stockholders are taxed on profits retained and distributed.
B) Ownership of stock is easy to transfer.
C) More capital can be raised by the corporate form.
D) Corporations can hire better managers.
E) The organization survives its owners.

F) None of the above
G) C) and D)

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Question 83

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Which of the following states offers the lowest organizational costs for corporations?

In your own words, explain the differences among a horizontal merger, a vertical merger, and a conglomerate merger.

What is an owner of a corporation called? What is the difference between a closed corporation and an open corporation?

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

The purchase of one corporation by another is referred to as a

A vertical merger is a merger between firms that operate at different but related levels in the production and marketing of a product.

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?

After Flora has gotten all the money she can from the bank and still cannot keep up with her fast-growing business, what is she most likely to do next if she wants her company to continue growing?

The Smithsonian Institution exists to preserve historical and cultural items of value and to share those items with the public; it does not exist to maximize the wealth of any shareholders. This entity is organized as a(n)

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 United States. 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?

The most effective form of business organization for raising capital is the

A ____ invests money in the business but has no management responsibility.

Describe the ownership, operation, and size of a sole proprietorship.

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

Compare and contrast common stock and preferred stock. Which would you rather own? Why?

The form of business organization that experiences double taxation is the

An S-corporation can have no more than twenty stockholders.

The form of business organization most heavily regulated by the government is the