ECONOMICS - 2nd Q - Chapter 7

true

A corporation is more likely to obtain low-interest loans than a partnership. true false

true

A sole proprietor is responsible to pay all obligations of the firm, even if it requires him to use his own funds. true false

unlimited personal financial liability

A sole proprietor is responsible to pay all obligations of the firm, even if it requires him to use his own funds. This responsibility is referred to as _____

true

An LLC combines the benefits of a partnership and a corporation. true false

true

An advantage of a partnership is greater sources of financing. true false

false

An advantage of sole proprietorship is unlimited personal financial liability. true false

true

Approximately one-half of all new businesses fail within five years. true false

greater management skills greater chance of keeping competent employees greater sources of financing ease of formation freedom to manage

Give 4 advantages of a partnership form of business ownership. greater management skills greater chance of keeping competent employees greater sources of financing ease of formation freedom to manage limited financial liability of the partners

false

Historically, sole proprietorships have the shortest lifespan of the three business types. true false

100,000

If a corporation has one million shares outstanding and you wish to own one-tenth of the firm, how many shares must you purchase? 1000 10,000 100,000 100,001

false

Legally, partnerships always require a written contract. true false

sole proprietorship

Most American business firms are of this type sole proprietorship partnership corporation

true

One becomes a partial owner of a corporation by buying shares of its stocks. true false

corporation

Out of all the types of businesses, a _________________________ is most open to government regulation.

true

Surety is the act of becoming security for or pledging to undertake another's debt. true false

75%

The sole proprietorship is a very popular form of business ownership. Currently, about _____ of America's businesses are sole proprietorships. 75% 80% 85% 90% 95%

partnership

This type claims the fewest number of American business firms sole proprietorship partnership corporation

true

To become a surety for someone is to become security for or to pledge to undertake his debt. true false

general partnership and limited partnership

What are the 2 forms of partnership?

limited personal liability

What is the chief advantage of incorporating a company? secrecy of business information limited personal liability freedom from excessive taxes ease of formation

freedom from outside control

Which of the following is an advantage of a sole proprietorship? management and employee skills availability of money freedom from outside control limited financial liability

limited liability company

a form of business organization that combines the benefits of a corporation with those of a partnership corporation general partnership limited liability company limited partnership sole proprietorship

limited partner

an investor with no liability and few or no duties in the company

surety

becoming security for another's debt

CEO

president of a corporation

creditor

someone to whom a debt is owed

consigner

someone who agrees to pay back a loan if the original borrower cannot

sole proprietorship

there is only one owner sole proprietorship partnership corporation

public

A corporation that is owned by the public and managed by the government is called ____ public government private limited

true

A general partner in a business is somewhat the same as being a surety when a general partner is liable to pay all debts of the business, whether or not he incurred them or was even aware of its existence. true false

true

A general partner in a business is somewhat the same as being a surety when he is consigning every obligation to which his partner binds the business. true false

true

A subchapter S corporation is a corporate status for small businesses that allows them to continue being taxed at the lower personal income tax rates. true false

true

According to John Marshall, Chief Justice of the Supreme Court, there are 2 important properties of a corporation --- immortality and individuality. true false

false

Corporations usually borrow money at higher interest rates than proprietorships or partnerships. true false

corporation

Every owner's financial liability is limited to his investment. sole proprietorship partnership corporation

sole proprietorship

If the owner dies, the business dies as well. sole proprietorship partnership corporation

general

In a _____ partnership, all partners have unlimited personal financial liability and an equal say in running the business. general limited

true

In a limited partnership at least one of the partners is a limited partner, whose personal financial liability is limited to the amount he has invested in the business and who has no management responsibilities for authority to make business decisions. true false

corporation

Owners own shares of the business sole proprietorship partnership corporation

true

Private corporations are owned by private citizens whereas public corporations are owned by the general public and managed by the government. true false

sole proprietorship

The owner is totally liable for the debts of the firm sole proprietorship partnership corporation

greater management skills greater retention of competent employees greater sources of financing ease of formation freedom to manage

What are the advantages of a partnership? greater management skills greater retention of competent employees greater sources of financing ease of formation freedom to manage unlimited personal financial liability uncertain life potential conflicts between partners

freedom to enter and exit the market easily freedom from outside control freedom to retain information freedom to pay excessive taxes freedom from being an employee

What are the advantages of a sole proprietor? freedom to enter and exit the market easily freedom from outside control freedom to retain information freedom to pay excessive taxes freedom from being an employee unlimited personal financial liability limited management and employee skills limited life limited availability of money

limited personal financial liability experienced management and specialized employees continuous life ease in raising financial capital

What are the advantages of incorporation? limited personal financial liability experienced management and specialized employees continuous life ease in raising financial capital higher taxes greater governmental regulation lack of secrecy impersonality rigidity

unlimited personal financial liability limited management and employee skills limited life limited availability of money

What are the disadvantages of a sole proprietor? unlimited personal financial liability limited management and employee skills limited life limited availability of money freedom to enter and exit the market easily freedom from outside control freedom to retain information freedom to pay excessive taxes freedom from being an employee

higher taxes greater governmental regulation lack of secrecy impersonality rigidity

What are the disadvantages of incorporation? higher taxes greater governmental regulation lack of secrecy impersonality rigidity limited personal financial liability experienced management and specialized employees continuous life ease in raising financial capital

unlimited personal financial liability uncertain life potential conflicts between partners

What are the disdvantages of a partnership? unlimited personal financial liability uncertain life potential conflicts between partners greater management skills greater retention of competent employees greater sources of financing ease of formation freedom to manage

total personal financial liability for each partner

What is probably the greatest disadvantage of a partnership? a limited ability to raise money a difficulty in exiting the market total personal financial liability for each partner too much control of outsiders

greater financial resources

What is the primary advantage of partnerships over sole proprietorships? greater longevity greater financial resources greater flexibility greater liability protection

true

When speaking of partnership, one is usually referring to a general partnership. true false

no more than fifty shareholders

Which of the following is not an accurate criterion for an LLC? no more than fifty shareholders governed by an operating agreement foreign partners allowed no regular shareholder meetings required

unlimited financial liability

Which of the following is not an advantage of the sole proprietorship form of ownership? unlimited financial liability ease in entering and exiting the market freedom to bee one's boss ability to keep business information secret

What is the degree of financial responsibility each partner will bear?

Which of the following is not answered by a general partnership agreement? Who are the partners? What is each partner responsible to do? How are the profits to be divided? What is the degree of financial responsibility each partner will bear?

b. stockholders-->board of directors-->president-->senior vice presidents

Which of the following most correctly follows the corporate organizational structure? a. board of directors-->stockholders-->president-->senior vice presidents b. stockholders-->board of directors-->president-->senior vice presidents c. stockholders-->president-->board of directors-->senior vice presidents d. board of directors-->president-->senior vice president-->stockholdersame

John Marshall

Who gave the definition of a corporation? A corporation is an artificial being, invisible, intangible, and existing only in the contemplation of the law. Jhonny Marshall Jhonny Marsh John Marshall John Marsh

corporation

a business entity recognized by the government as separate from its owners or stockholders corporation general partnership limited liability company limited partnership sole proprietorship

general partnership

a business firm owned by two or more people corporation general partnership limited liability company limited partnership sole proprietorship

sole proprietorship

a business firm that is owned by one person corporation general partnership limited liability company limited partnership sole proprietorship

limited partnership

a partnership in which there is at least one general partner who has unlimited personal financial liability and decision-making responsibility and at least one limited partner corporation general partnership limited liability company limited partnership sole proprietorship