chapter 9 smartbook ent

Subchapter S and Subchapter C Corporations take their names from subchapters in the ______ Code

Internal Revenue

True or false: If a corporation suffers substantial losses, the founder(s) will lose only his or her investment in the business.

True

True or false: The greater the insurance coverage obtained by a new business, the lower the cost

False

For tax purposes, all businesses must have a(n) ________.

Employer identification number

Which of the following are the three basic types of legal business organization?

Corporation Partnership Sole proprietorship

Which of the following elements is NOT required when forming a Subchapter C or Subchapter S Corporation?

Details of the social responsibility policy

A Subchapter C Corporation has a _____ that is equal to the par value times the number of shares distributed.

Floor Value

Which form of business involves two or more individuals sharing unlimited liability in a business venture?

General Partnership

A board of _____ is required of corporations, but a board of ______ is optional regardless of the legal form.

Directors; advisors

What is the initial value at which the firm's shares are offered?

Par value

Which of the following are trademarked by most large companies?

Company name Company tag lines Company symbols

A ______ is an agreement between two parties to perform certain activities for some consideration. Multiple choice question.

Contract

One means to limit liability concerns is through the effective application of ______.

Insurance

Which of the following are benefits of a Subchapter S Corporation?

Limited liability for the owners Relatively easy to form compared with Subchapter C Consolidation of business and personal income for tax benefits Legitimacy in the market as a more established form of business

_____ insurance obtained by an entrepreneurial business primarily covers the building, fixtures, and inventory in all of the buildings in which the business has a function.

Property

Which type of legal business organization is the simplest form to establish?

Sole proprietorship

Which of the following are true about the Uniform Partnership Act and the Revised Uniform Partnership Act?

Their provisions do not cover issues like noncompete agreements. They are an effective means to handle the basics of partnership.

Which of the following is NOT a common example of a license or a permit?

Trademark permit

A business with employees will be required to calculate and deduct various payroll taxes for:

Local authorities Federal authorities State authorities

A corporation pays a tax on its profits; then those after tax profits are paid as dividends to the owners, who then have to pay personal income taxes on the dividend income. This situation is referred to as _______.

Double taxation

A more complex business form that has two or more people sharing unlimited liability in a new business venture is called a general

Partnership

One disadvantage of the Subchapter S Corporation is the limitation to the number of shareholders, which is currently set at a maximum of ______ shareholders.

100

Two related entities that can help the new business owner foresee potential legal liabilities are:

A board of directors A board of advisors

A copyright can be claimed on creative materials generated. Identify the examples of such materials.

Advertising copy Books and magazines

Unlike a Subchapter C Corporation, a limited liability corporation (LLC) _____.

Allows for the flexible treatment of profits from the organization

Which of the following must be formally addressed by both Subchapter C and Subchapter S Corporations?

Authorization of more shares of stock Holding annual board meetings Reporting standards to local, state, and federal authorities

Which form of incorporation is required to pay an income tax?

C corporation

Identify the questions that should be considered by a new business owner before entering into a lease contract.

Can the business owner renew the lease after the term expires? Who has to carry the liability insurance and at what level? Who is responsible for maintenance and other facilities issues? Who would be responsible for making improvements to the facility?

The critical issues of personal liability and the desire to limit exposure to the original equity investment led to the development of corporations. A corporation addresses both drawbacks by _____.

Considering the business and the individual separate entities

In the United States, a _____ is considered to apply to anything that is one's own original work, whether that original work itself is filed with the U.S. government or not.

Copyright

Which of the following are disadvantages associated with Subchapter S Corporations?

Expensive, complex formation compared with sole proprietorships May require a lawyer to process paperwork Limitation on the number of shareholders

True or false: A C corporation treats fringe benefits that are paid out as income for its employees.

False

True or false: According to the contract law, the term length of lease contracts involving new businesses must be more than two years.

False

Which of the following is NOT one of the three basic types of legal business organization?

Franchise

Besides sole proprietorships, which of the following business forms requires the business debt to flow directly to the owner(s)?

General partnership

In which of the following business forms do the business debts flow directly to the owner(s)?

General partnership Sole proprietorship

A limited liability corporation (LLC) and a Subchapter S Corporation are similar in that they both _____.

Have the limited liability feature

The effective application of is one means to limit liability concerns of the new venture.

Insurance

Which of the following are true statements about a C corporation?

It considers the owners as employees and pays them salaries and bonuses. Profits that are not paid out for such items as salaries are retained for future expansion.

What are the typical requirements for a new business to obtain a city or county business license?

It should agree to report basic information about its performance on a set schedule. It should pay a set fee, which is usually less than $100.

What are the two broad categories of partnerships?

Limited General

Which of the following elements are required when forming a Subchapter C or Subchapter S Corporation?

Location of corporate headquarters General nature of the business Names, addresses, and titles of all founders

General and limited are two broad categories of

Partnership

An advantage of the Subchapter _____ Corporation is that it allows the owners to report their income or losses on their personal income tax returns, thus avoiding double taxation.

S

Which type of legal business organization is characterized by the fact that the person who owns the business and the business itself are treated as the same entity?

Sole proprietorship

Which of the following are types of corporations developed by the U.S. legal system

Subchapter C Subchapter S LLC

Which of the following business forms are required to hold annual board meetings and file reports to local, state, and federal authorities?

Subchapter S Corporation Subchapter C Corporation

A ______ is legal protection of the intellectual property that is associated with a specific business.

Trademark

True or false: A partnership will be governed by either the Uniform Partnership Act or the Revised Uniform Partnership Act if the partnership agreement is not developed and signed.

True

True or false: It is advisable for an entrepreneur to employ formal written contracts whenever there is an agreement with another party. True false question.

True