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Exam 4: Choosing a Form of Business Ownership

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Question 91

Multiple Choice

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When Alyssa decides that she no longer wants her Radio Shack stock, she will discover that a related benefit of a corporation is

A) the ease of transfer of ownership.
B) its perpetual life.
C) limited liability.
D) specialized management.
E) avoiding double taxation.

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

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Question 92

Multiple Choice

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All of the following are advantages of the partnership form of organization except

A) unlimited liability.
B) retention of profits.
C) combined skills and knowledge.
D) better access to capital and credit.
E) ease of start-up.

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

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Question 93

Multiple Choice

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Daniel, Thomas, and Lucas are partners in a law firm under a typical partnership agreement in which each owns an equal share of the business. Thomas dies suddenly of a heart attack. What will most likely become of the partnership?

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. Based on the information provided, what type of business does Samantha's aunt operate?

The amount paid for stock is the most a shareholder can lose in the corporate form of ownership.

All not-for-profit corporations rely solely on volunteers to perform services of the organization.

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

Before Troy can incorporate his advertising business in Champaign, Illinois, he must have a(n) ____ approved by the ____.

All of the following are disadvantages of corporations except

When starting a corporation, people submit articles of incorporation to

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

Surplus funds of a not-for-profit organization are distributed to members of the board of directors.

The citizens of a number of small rural towns have decided to form an association that will allow them to purchase electricity at a much cheaper rate than they are currently paying. This alliance is referred to as a(n)

Laura wants to start a business, but she is unsure of the legal form best for her. Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation. Which would you recommend?

Local residents have always thought the small store on the corner of Locust and Congress was a partnership between John and Joe, two brothers from the neighborhood. But Joe is the real owner. This probably means that the store is a

Corporate officers are elected by the stockholders.

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

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

The form of business organization that accounts for just over 80 percent of all sales revenues in the United States is the

Jack has been saving his excess funds for several years and has contemplated entering a partnership with a friend from college. Jack hesitates because he knows that it is ____ to invest money in a partnership and ____ to get the money back out.