Intro to Business Ch. 5
Which one of the following statements is NOT accurate in relation to shareholders and their conduct in a corporation?
Because shareholders elect the directors, the shareholders are the final governing body of the corporation.
Which form of business has most of the characteristics of a regular corporation but adds the legal constraint that the company has to follow a specified nonfinancial goal?
Benefit corporations
General Motors (GM) is the largest United States-based auto manufacturing corporation. Who is the highest ranking officer at GM?
Chief Executive Officer
The policies, procedures, and systems that oversee the legal operations of an organization are referred to as what?
Corporate governence
Which of the following represents a legal body, separate from any individual, that can possess property and conduct business?
Corporation
What is an advantage of operating a sole proprietorship?
Fewer limitations on personal income
What is a disadvantage of operating a sole proprietorship?
Finite life span
Federal law now requires that a majority of the directors on the board of a corporation be _______.
Independent
NoName International is a public company. NoName has a Board of Directors comprised of 18 members. Of the following, who traditionally oversees the members of the Board of Directors?
Independent board chair at NoName International
A(n) _____________ occurs when an individual or a group of people buy a company's publicly traded stock mainly by using borrowed funds.
Leveraged buyout
William Russell recently started a home-based consulting company, WR Consulting, as a sole proprietorship. Which of the following is a disadvantage of this form of business?
Limited managerial perspective for William
A business with one or more general partners with the same unlimited liability as a sole proprietor is known as a __________.
Limited partnership
Which of the following is an advantage of corporations?
Longevity
Corinne, Kayla, Ann, and Mishika are starting their business as a partnership. Which of the following is an advantage of this form of business?
More resources
Which one of the following statements is NOT accurate in relation to the responsibilities of the board of directors of a corporation?
Much of the attention focused on corporate reform in recent years has zeroed in on boards being not too closely allied with management.
Bob and Rob have started a food delivery business together called Grub Galore in their college town. They have not incorporated their business and they run it from Bob's basement and garage. Grub Galore is an example of which form of business ownership?
Partnership
Every public corporation is susceptible to a takeover. Which of the following is a defense against unwanted takeovers?
Poison pill
Which of the following is a disadvantage of partnerships?
Potential for conflict
Which form of business is also known as a closely held corporation?
Private corporation
Which one of the following statements is accurate as regards functions of a corporation?
Public corporations are said to be publicly held or publicly traded.
Which of the following is a disadvantage of corporations?
Reporting requirement
Operating ABC Tools as a public company, founders are discovering that ______ is a key disadvantage of their form of business.
Reporting requirements
Which of the following limits a sole proprietor's ability to expand?
Resource limitations
Investors who purchase shares of stock in a company are called ________.
Shareholders
Which of the following is an advantage of a sole proprietorship?
Single layer taxation
Which statement describes the advantage of operating a sole proprietorship?
Sole proprietors have more privacy and generally are not required to report anything to anyone.
A business that is owned by one individual is a __________.
Sole proprietorship
Susan operates and owns a small business from home in her own name. Susan's business is most likely a _______.
Sole proprietorship
Which one of the following statements describes a disadvantage of operating a sole proprietorship?
Sole proprietorships have fewer financial resources and fewer ways to get additional funds from lenders or investors.
The federal government requires which of the following for the make-up of a board of directors?
The majority of seats must be held by independent directors
Which of the following is a characteristic of a general partnership?
The partners have joint liability for the firm's financial obligations
William Russell recently started a home-based consulting company, WR Consulting, as a sole proprietorship. Which of the following is NOT an advantage of this form of business for William?
There are limits on William's personal income
Jason and Jeanette are starting their business as a partnership along with eight other friends. They should understand that this form of business is plagued with which of the following disadvantages?
Unlimited liability
Which of the following is a disadvantage of partnerships?
Unlimited liability
A complete definition of corporate governance is ________.
a description of all the policies, procedures, relationships, and systems in place to oversee the successful and legal operation of the enterprise
You own shares of ThatCo International. The annual meeting is scheduled for next month and you realize you cannot attend it. When you authorize management to vote on your behalf, you are authorizing ______.
a proxy
An S corporation is a ________.
corporation allowed to sell stock to a limited number of investors while enjoying the pass-through taxation of a partnership