Business Management: Chpt. 10

Corporations usually have a tax advantage over partnerships.

False

Each stockholder has only one vote regardless of the number of shares owned.

False

An employee who is given funds and freedom to create a special unit or department within a company in order to develop a new product, process, or service.

Intrapreneur

A written agreement between two or more people identifying how the partners will add capital, labor, or other assets and divide any profits.

Partnership agreement

The most common form of business organization is the a. proprietorship b. partnership c. cooperative d. corporation

a

An official document giving power to run a corporation is a a. document certificate b. charter c. proxy d. shareholder certificate

b

Which of the following statements is true about entrepreneurs? a. entrepreneurs would rather work for others b. entrepreneurs prefer to assign the decision-making responsibility to employees c. entrepreneurs usually work hard and for long hours d. entrepreneurs usually give up quickly when their businesses are not immediately successful.

c

Limited liability companies have a. higher income tax rates than partnerships and unlimited liability b. lower income tax rates than partnerships and unlimited liability c. higher income tax rates than partnerships and limited liability. d. lower income tax rates than partnerships and limited liability.

d

The type of business that can be operated suitably as a proprietorship is one that a. requires a great amount of capital b. usually does not provide personal services c. usually operates on a large scale d. can be managed by the proprietor or by persons hired by the proprietor

d

Which activities are corporations allowed to practice? a. make contracts but not borrow money b. make contracts but now own property c. make contracts but not be sued d. make contracts, borrow money, and be sued.

d

Ruling body of a corporation

Board of directors

A nonprofit corporation is an organization that a. pays taxes and exists to make a profit b. pays taxes and does not exist to make a profit c. does not pay taxes and does not exist to make a profit d. pays dividends to shareholders

C

Official document through which a state grants the power to operate as a corporation.

Charter

A corporation can be owned by as few as one person and as many as thousands of people.

False

A nonprofit corporation pays dividends to shareholders.

False

A partnership continues even after one partner dies.

False

A stockholder has the same financial responsibility as a partner.

False

New businesses do not usually fail for financial reasons.

False

Stockholders decide when dividends are to be distributed.

False

The most common form of business ownership is the partnership.

False

The stockholders make up the ruling body of a corporation.

False.

Organization that does not pay taxes and does not exist to make a profit.

Nonprofit corporation

Top executive who is hired to manage a business.

Officer

Corporation that offers its shares of stock for public sale.

Open corporation

Person who owns and manages a business and often performs the day-to-day tasks, with the help of hired employees

Proprietor

A corporation can make contracts and borrow money.

True

If the corporation fails, stockholders are responsible for a. only the amount invested in the corporation b. only the value of the assets of the corporation c. all of the debts of the corporation d. only the amount owed in dividends.

a

A shareholder cannot a. transfer ownership to others b. vote for members of the ruling body of the corporation c. share in the net proceeds should the corporation go out of business d. create contracts for the corporation

d

An advantage of corporations in relation to partnerships is that a. corporations have a tax advantage b. corporations have limited life c. shareholders have unlimited financial liability d. shareholders can transfer ownership easily.

d

An advantage of partnerships when compared to proprietorships is a. if one partner disagrees with a change, the partnership cannot make the change b. all partners are bound by all contracts made be the partnership c. operations are usually less efficient because of shared management d. more capital is usually available.

d

If assets are valued at $500,000 and capital amounts to $350,000, the liabilities of the business are a. $850,000 b. $500,00 c. $350,000 d. $150,000

d

If the assets of a corporation amount to $900,000, and its debts amount to $550,000, what is the value of the capital stock? a. $1,450,000 b. $900,000 c. $550,000 d. $350,000

d

Agreement among two or more businesses to work together to provide a good or service

Joint venture

Owners of a corporation.

Stockholders

Corporation that does not offer its shares of stock for public sale.

Close corporation

Person or business to which money is owed.

Creditor

A business with a balance sheet showing assets valued at $100,000 and capital valued at $100,000 is in a weak financial position.

False

Situation when an agent, or someone who works for another, pursues their own interest over their employers.

Agency dilemma

Approximately how many new businesses fail within the first five to six years? a. 5 percent b. 25 percent c. 50 percent d. 75 percent

C

Business owned and operated by its user-members for the purpose of supplying themselves with goods and services.

Cooperative

Business that is important to society but lacks the profit potential to attract private investors is often operated by local, state, or federal government.

Quasi-public corporation

A business plan helps entrepreneurs see the risks and responsibilities involved in starting a business.

True

A cooperative provides members with both cost and profit advantages they would not have individually.

True

A disadvantage of a partnership that fails is that a partner can lost personal assets in addition to the amount of money invested in the business.

True

A partnership could be owned by as many as ten or more partners.

True

Financing the business is one of the responsibilities of the business owner.

True

If a partner enters into a contract against the wishes of the other partners, the other partners are legally responsible for the contract.

True

If one partner is unable to pay his or her portion of the business's debts, the other partners must pay it.

True

It is difficult to withdraw from a partnership.

True

In which type of partnership is the liability of a partner limited to the amount of the partner's investment? a. limited partnership b. unlimited partnership c. restricted partnership d. unrestricted partnership

a