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Exam 4: Choosing a Form of Business Ownership

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Question 111

Multiple Choice

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

A) articles of partnership.
B) articles of incorporation.
C) S-corporation.
D) stock certificate.
E) proxy.

F) B) and E)
G) None of the above

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Question 112

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Although a partnership pays no income tax, the Internal Revenue Service requires partnerships to file an annual information return that states the amount of distributions made to each partner.

A) True
B) False

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Question 113

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

Which of the following is not a disadvantage of the corporate form of ownership?

How would you go about incorporating a business?

A technique used to gather enough stockholder votes to control a targeted company is a

The form of business organization that experiences double taxation is the

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 realized it was a fairly common practic 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 rais -Refer to B&G, Inc. What type of organization is B&G, Inc.?

Joint ventures are created for a specific purpose and dissolved when that purpose is achieved.

Because of unlimited liability, it is easy for sole proprietors to borrow large sums of money.

How does an S-corporation differ from a limited-liability company? Does an LLC type of ownership appeal to you? Explain your answer.

Corporations are forbidden by law to enter joint ventures.

A corporation is perhaps the easiest form of business to organize.