ICS 392: Chapter 9
In a limited partnership, the limited partners are equally liable for the debts of the partnership.
FALSE
In a partnership, the general partners usually share the amount of personal liability according to their capital contributions.
FALSE
Once the board of advisors have been hired, the entrepreneur should not question their advice.
FALSE
Shares of stock are issued to members of a limited liability company.
FALSE
Stockholders in a corporation share day-to-day control of the entrepreneur.
FALSE
The limited liability company is automatically taxed as a corporation.
FALSE
In the partnership, profit and loss distribution is determined by the partnership agreement
TRUE
Shareholders in an S corporation have the same liability protection as shareholders in a C corporation.
TRUE
The corporation can be created only by statute.
TRUE
The corporation has the most continuity of the forms of business.
TRUE
The corporation is considered a legal person that is taxable and absorbs liability
TRUE
The sole proprietorship form of ownership gives owners the most control of business operations.
TRUE
The standard term of a limited liability company is 30 years.
TRUE
Which type of ownership is the most expensive to start? A. Corporation B. General partnership C. Limited partner D. Sole proprietorship
A. Corporation
_____________ have unlimited liability for the actions of the business. A. Limited liability company members B. Corporate shareholders C. General partners D. Limited partners
C. General partners
A_____ can raise capital through bonds, stock and debt. A. sole proprietorship B. partnership C. corporation D. LLP
C. corporation
Corporations distribute profits to owners through: A. bonds. B. taxes. C. dividends. D. interest.
C. dividends.
In an S corporation, the transfer of interest can occur: A. only with the consent of the other shareholders. B. only if there is a charter provision for doing so. C. only as long as the buyer is an individual. D. depending on the agreement.
C. only as long as the buyer is an individual.
In an S corporation: A. gains or losses of the business are separate from the personal income of the shareholder. B. shareholders retain unlimited liability. C. only one class of stock is permitted. D. most fringe benefits for shareholders can be deducted.
C. only one class of stock is permitted.
In which form of organization would it be possible for individuals that don't have any ownership stake in the business to make decisions? A. Sole proprietorship B. Limited partnership C. General partnership D. Corporation
D. Corporation
In which of the legal forms of ownership is transferability of interest the easiest? A. Sole proprietorship B. Limited partnership C. General partnership D. Corporation
D. Corporation
The _________ imposes oversight responsibilities on members of the board of directors. A. Social Security Act B. Fair Labor Practices Act C. Taft-Hartley Act D. Sarbanes-Oxley
D. Sarbanes-Oxley
Which type of ownership is the least expensive to start? A. Corporation B. General partnership C. Limited partner D. Sole proprietorship
D. Sole proprietorship
Sole proprietorships: A. have no time limit on how long they may exist. B. are perpetual. C. continue even upon the death of the owner. D. allow a member of the deceased partner's family take over as a partner.
D. allow a member of the deceased partner's family take over as a partner.
. S corporation status means: A. shareholders do not have limited liability. B. the corporation is subject to a minimum tax of 34 percent. C. consent by a majority of shareholders is required for the election of this form of business. D. the corporation pays no tax.
D. the corporation pays no tax.
. In a partnership, the death of a general partner generally does not result in termination of the partnership.
FALSE
. The limited liability company is the only form of organization that allows members to share liability.
FALSE
Corporations are not able to distribute profits to shareholders.
FALSE
In a limited liability partnership (LLP), the death or withdrawal of a partner dissolves the partnership.
FALSE
The S corporation can deduct most fringe benefits for shareholders.
FALSE
The S corporation cannot have more than 75 shareholders.
FALSE
The Sarbanes-Oxley Act reduced the responsibilities of the board of directors.
FALSE
The board of directors should be an even number of members.
FALSE
The most expensive type of business to start is the partnership.
FALSE
The only source of capital for a corporation is the sale of shares of stock.
FALSE
The partnership is the most attractive type of business formation for raising capital.
FALSE
Transferability of interest is easiest in a limited partnership.
FALSE
. Both partnerships and proprietorships serve as nontaxable conduits of income for their owners.
TRUE
. In a limited liability company, every member has limited liability.
TRUE
. In an S Corporation, ownership can be freely transferred as long as the buyer is an individual.
TRUE
A board of advisors has less decision making authority than a board of directors does.
TRUE
Corporations distribute profits primarily through dividends.
TRUE
In an LLP, the transfer of interest of one limited partner is typically not allowed.
TRUE
In an S Corporation, ownership can be freely transferred as long as the buyer is an individual.
TRUE
In order for a corporation to be legally formed the owners have to register the name and articles of incorporation and meet statutory requirements.
TRUE
In a limited partnership, the limited partners: A. are liable only for the amount of their capital contributions. B. share the amount of personal liabilities equally. C. have only insurance as protection against liability suits. D. are allowed to decide on the amount of individual liabilities.
A. are liable only for the amount of their capital contributions
A board of directors should not: A. have members with unlimited terms. B. have an odd number of members. C. be comprised of external advisors. D. be compensated with anything other than stock.
A. have members with unlimited terms.
The board of directors: A. lacks voting authority. B. has responsibilities to represent all shareholders. C. is less objective than the entrepreneur. D. are always volunteers and need not be compensated.
A. lacks voting authority.
A limited liability corporation A. laws governing its formation differ from state to state. B. members may transfer their interests at any time. C. members are not allowed to share income, profit, expense, deduction, loss and credit among themselves. D. owners are called shareholders.
A. laws governing its formation differ from state to state.
In a ________ capital losses can be carried forward indefinitely. A. sole proprietorship B. partnership C. corporation D. LLP
A. sole proprietorship
The difference between a board of directors and a board of advisors is that: A. the board of advisors meets less frequently. B. the board of directors lacks voting authority. C. the board of directors is subject to less pressure of litigation. D. the board of advisors are compensated.
A. the board of advisors meets less frequently.
Which of the following types of ownership has the most continuity? A. General partnership B. Corporation C. Limited partner D. Sole proprietorship
B. Corporation
Liability is one of the most critical reasons for establishing a: A. limited liability company. B. corporation. C. partnership. D. sole proprietorship.
B. corporation.
A limited liability corporation A. has unlimited liability. B. is automatically taxed as a partnership. C. is decreasing in popularity among venture capitalists. D. had been the most popular choice of organization structure by new ventures and small businesses.
B. is automatically taxed as a partnership.