BUSN 101 CH.4 Concept Check

Which of the following is a legal document that the state issues to a company based on information the company provides in the articles of incorporation?

Corporate charter

What is a sole proprietorship?

A business that is owned (and usually operated) by one person.

What is the term for a corporation chartered by a foreign government that is conducting business in the United States?

Alien corporation

When are joint ventures and syndicates dissolved?

As soon as their purposes have been achieved

Which form of business ownership provides limited liability, as in a corporation, but is taxed like a partnership and is not restricted on the number of allowed stockholders?

Limited-liability company

Which type of corporation focuses on providing a service rather than earning a profit, but is not owned by a government entity?

Not-for-profit corporation

Which of the following is an advantage of partnerships?

Pooled financial resources

Which of the following is a special type of stock whose owners cannot vote regarding the running of the company, yet have a priority claims to profits?

Preferred

Which of the following is an advantage of a sole proprietorship?

Retention of all profits

What association might be formed because no one person or firm is willing to put up the entire amount required for the undertaking of a project; for example, to underwrite a large insurance policy or investment?

Syndicate

Which of the following is NOT usually stated in the articles of partnership?

The value of each partner's retirement accounts

_____________ is a legal concept that holds a business owner personally responsible for all the debts of the business.

Unlimited liability

A disadvantage of a partnership where remaining partners are unwilling to buy the share of a partner who retires can be referred to as _______________.

a frozen investment

A(n) _______ corporation is a corporation whose stock is owned by relatively few people and is not sold to the general public; while, a(n) _______ corporation is one whose stock can be bought and sold by any individual.

closed; open

The joining of firms in completely unrelated industries is a(n) _______.

conglomerate merger

A ______ partner has responsibility or liability for losses beyond their investment, but a ______ partner only has liability for the amount they invest.

general; limited

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n):

horizontal merger.

When the management and board of directors of a firm targeted for acquisition disapprove of a merger, this is known as a:

hostile takeover.

A partnership established for a specific project or for a limited time (for example a U.S. company joining with a foreign firm to enter new markets) is called a(n):

joint venture.

The start-up costs of filing for incorporation are high because:

lawyers and accountants are needed to do the complex filings.

Which of the following is an advantage of corporations?

limited liability.

A legal form of business with two or more owners is a(n):

partnership.

One of the big differences between corporations and S corporations is how profits are:

taxed

Each corporate stockholder's financial liability is typically limited to

the money he or she paid for the corporation's stock.

A key disadvantage of a general partnership is:

unlimited liability.