Chapter 4 Quiz

A merger that takes place between firms in completely different industries is called a ______________ A. Conglomerate Merger. B. Vertical Merger. C. Horizontal Merger. D. Joint Venture.

A. Conglomerate Merger.

A person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership is a _____________ A. Limited Partner. B. Proxy. C. Stockholder. D. General Partner.

A. Limited Partner.

A voluntary association of two or more persons to act as co-owners of a business for profit is a ____________ A. Partnership. B. Sole Proprietorship. C. Corporation. D. S-Corporation.

A. Partnership.

A corporation that is taxed as though it were a partnership is called a _____________ A. S-corporation. B. Not-for-profit corporation. C. Limited Liability Company. D. B Corporation.

A. S-corporation.

An agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time is called a ______________ A. Conglomerate Merger. B. Joint Venture. C. Vertical Merger. D. Horizontal Merger.

B. Joint Venture.

Which of the following is not a disadvantage of sole proprietorships? A. Unlimited Liability. B. No special taxes. C. Limited Management Skills. D. Lack of Money (Capital).

B. No special taxes.

Disadvantages of corporations include all of the following except A. Difficulty and expense of formation. B. Specialized Management. C. Government regulation and increased paperwork. D. Double taxation.

B. Specialized Management.

The shares of ownership of a corporation is called ______________ A. Common Stock. B. Stock. C. Preferred Stock. D. Dividend.

B. Stock.

A person who owns a corporation's stock is a _____________ A. Proxy. B. Stockholder. C. Limited Partner. D. General Partner.

B. Stockholder.

__________ is a legal concept that holds a business owner personally responsible for all the debts of the business. A. Dividend B. Unlimited liability C. Limited liability D. Not-for-profit corporation

B. Unlimited liability

The top governing body of a corporation, the members of which are elected by the stockholders is the _______________ A. Corporation. B. Proxy. C. Board of Directors. D. Syndicate.

C. Board of Directors.

A ____________ is an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts. A. Syndicate B. Stockholder C. Corporation D. Board of Directors

C. Corporation

A _________________ is a distribution of earnings to the stockholders of a corporation. A. Common Stock B. Stock C. Dividend D. Preferred Stock

C. Dividend

A merger between firms that make and sell similar products or services in similar markets is called a ______________ A. Joint Venture. B. Vertical Merger. C. Horizontal Merger. D. Conglomerate Merger.

C. Horizontal Merger.

__________ is a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock. A. Not-for-profit corporation. B. Dividend. C. Limited liability. D. Unlimited liability.

C. Limited liability.

Which of the following is not an advantage of a partnership? A. Availability of capital and credit. B. Combined business skills and knowledge. C. Management disagreements. D. All of the above are advantages of partnerships.

C. Management disagreements.

A corporation organized to provide a social, educational, religious, or other service rather than to earn a profit is called a _____________ A. B Corporation. B. S-corporation. C. Not-for-profit corporation. D. Limited Liability Company.

C. Not-for-profit corporation.

Stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners is called ______________ A. Common Stock. B. Stock. C. Preferred Stock. D. Dividend.

C. Preferred Stock.

Which of the following is true regarding S-Corps? A. No more than 100 stockholders are allowed. B. Stockholders must be individuals, estates, or certain trusts. C. There can be no partnerships, corporations, or nonresident-alien stockholders. D. All of the above are true regarding S-corps.

D. All of the above are true regarding S-corps.

Stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others is called ______________ A. Preferred Stock. B. Dividend. C. Stock. D. Common Stock.

D. Common Stock.

A person who assumes full or shared responsibility for operating a business is a _____________ A. Proxy. B. Stockholder. C. Limited Partner. D. General Partner.

D. General Partner.

Advantages of corporations include all of the following except A. Perpetual Life. B. Ease of raising capital. C. Limited liability. D. Government regulation and increased paperwork.

D. Government regulation and increased paperwork.

A form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership is called a _____________ A. Not-for-profit corporation. B. B Corporation. C. S-corporation. D. Limited Liability Company.

D. Limited Liability Company.

A business that is owned (and usually operated) by one person is a ____________ A. Partnership. B. Corporation. C. S-Corporation. D. Sole Proprietorship.

D. Sole Proprietorship.

A merger between firms that operate at different but related levels in the production and marketing of a product is called a ______________ A. Conglomerate Merger. B. Joint Venture. C. Horizontal Merger. D. Vertical Merger.

D. Vertical Merger.

When should you seek legal help when starting your business? A. When you are purchasing an existing business or real estate. B. When you are registering a corporation's stock. C. When you are obtaining a trademark, patent, or copyright. D. You should seek legal help in any of the above circumstances.

D. You should seek legal help in any of the above circumstances.

Which of the following is not an advantage of sole proprietorships? A. Ease of start-up and closure (dissolution). B. Pride of ownership. C. Retention of all profits. D. No special taxes. E. Flexibility of being your own boss. F. All of the above are advantages of sole proprietorships.

F. All of the above are advantages of sole proprietorships.