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Exam 4: Choosing a Form of Business Ownership

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Question 41

Multiple Choice

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The top governing body of a corporation is known as the

A) incorporators.
B) stockholders.
C) management.
D) officers.
E) board of directors.

F) A) and E)
G) B) and D)

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Question 42

Multiple Choice

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

A) he will get to keep all of the profits the business makes.
B) profit is guaranteed since he will be the only owner.
C) it will provide a steady income for him.
D) he has to split the profits with only one other person.
E) he has to pay small dividends to the other owners.

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

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Question 43

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Articles of partnership are a legal document issued by the secretary of state.

The weakness of one partner may be offset by another partner's strength.

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

Your friend Steve owns a considerable amount of common stock in Microsoft, a computer software company. He wants to cast his votes on various issues at the annual stockholders' meeting in Seattle, but he does not have the time to travel a great distance to the meeting. Instead of attending the meeting, Steve decides to register his votes by

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

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

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

What is the significance of the name preferred stock?

Suppose Bill Gates, founder of Microsoft, is interested in a small software company. He may offer to purchase the stock of this company at a price that is just high enough to tempt the current stockholders. This action would be called a

Nortons, Inc. is a hardware store that is owned by members of the Norton family as well as a few close friends of the family. This company is a(n)

Keisha Cook and Donnie Blackman decide to go into business together. They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities. Keisha and Donnie created a(n)

Which of the following has a restriction on the number of owners, members, or stockholders?

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total annual sales.

The form of business organization that comprises about 19 percent of all businesses in the United States is the

Anyone with the money can purchase shares of Coca-Cola's stock. This makes Coca-Cola a(n) ____ corporation.

Corporations account for about 82 percent of all sales revenues.

List at least three criteria a corporation must meet for the IRS to grant the business an S-corporation status.

In the United States, approximately 72 percent of all businesses are