MGT 241 Ball State Quiz 6
Lana recently launched a company as a sole proprietorship. What is the greatest threat of this form of ownership to Lana?
the unlimited personal liability that Lana has for the business's debt
The best form of ownership is the:
there is no "best" form of ownership because the form of ownership that suits one entrepreneur's needs and requirements may not suit those of another entrepreneur.
What percentage of all business sales that are initiated fall through?
50 to 75
An S corporation can have no more than _____ shareholders.
100
What percentage of business owners intend to leave their companies within the next decade and their most likely exit strategy is selling the business to someone?
60
The failure rate for entrepreneurs who purchase troubled companies in hopes of turning them around is _____ percent.
85
In _____ percent of business sales, the seller provides at least some of the financing of the purchase price.
90
Which of the following statements about an S corporation is false? E.
A. An S corporation must be a domestic corporation. B. An S corporation can have no more than 100 shareholders. C. An S corporation provides its owners with limited personal liability for the business's debts. D. An S corporation is no different from any other corporation in terms of its legal characteristics. (E.) An S corporation pays taxes at a special S corporation tax rate.
Which of the following statements about purchasing an existing business is false? C.
A. The hidden market of companies that might be for sale but are not advertised as being for sale is one of the richest sources for top-quality businesses. B. In a business sale, value is what a business is worth; price is what the buyer agrees to pay. C. The first step a potential business buyer should take is to explore the various financing options for buying the business. Your answer is correct. D. The most common reason that business sales fail to close is lack of available financing. E. After conducting a self-analysis to identify his or her skills, abilities, and interests, a business buyer should develop a list of criteria that a potential business acquisition must meet.
In a partnership, a __________ partner has unlimited liability for the debts of the business and usually takes an active role in managing the business.
general
If an entrepreneur intends to make an initial public offering at some point in the future to raise money to fuel the growth of her company, which form of ownership should she use?
C corporation
Which form of ownership accounts for the greatest percentage of sales and profits in the United States?
C corporation
Which form of ownership suffers from the disadvantage of double taxation?
C corporation
Art has decided to leave his job with a large corporation and realize his dream of owning a business of his own. Rather than start a business from scratch, Art prefers to buy an existing business. What should be his first step?
Conducting a self-inventory to analyze his skills, abilities, and interests to determine the types of businesses that offer the best fit.
Which type of business buyer searches for a service business that has commercial clients and existing contract revenue?
Corporate refugee
Which of the following statements about purchasing an existing business is false?
Most business sellers are not willing finance any of the business's purchase price.
Which type of business buyer searches for a business that is manageable and easy to run alone or with a small group of employees and are priced at less than $1 million?
Main Street buyer
Which type of corporation is taxed like a partnership?
S
Which of the following statements about partnerships is false?
The Revised Uniform Partnership Act requires every partnership to file a partnership agreement with the appropriate state office, usually the Secretary of State.
Which of the following is the greatest disadvantage of the sole proprietorship?
The unlimited personal liability that the sole proprietor has for the business's debts.
A limited liability company's _____________ is similar to a corporation's articles of incorporation and create the LLC by establishing its name, address, method of management, duration, and the names and addresses of its organizers.
articles of organization
There is no one "best" form of ownership. Which of the following is NOT an important issue that entrepreneurs should consider when they are evaluating the various ownership forms?
business dissolution; The important issues that entrepreneurs should consider when evaluating the various ownership forms include the following: tax considerations, liability exposure, start-up and future capital requirements, control, managerial ability, business goals, management succession plans, and cost of formation.
A corporation whose shares of ownership are controlled by a relatively small number of people, often family members, friends, or employees, is called a(n) ___________ corporation
closely held
The most common cause of a business sale failing to close is the:
lack of available financing.
In a partnership, a __________ partner is treated as an investor in the business, has limited liability for the business's debts, and cannot take an active role in managing the business.
limited
Which form of ownership is a cross between a partnership and a corporation and offers its owners limited personal liability for the debts of the business, but is not subject to restrictions on the number or characteristics of its owners?
limited liability company
Which form of ownership is least popular in the United States?
limited partnership
The owners of a limited liability company are called:
members
A limited liability company's ________ is similar to a corporation's bylaws and outlines the way the LLC will conduct business.
operating agreement
The most popular form of ownership (percentage of businesses) in the United States is the:
sole proprietorship
Which form of ownership is the simplest and least costly to form?
sole proprietorship
