Week 1 - Chapter 4 Reading

How is taxation handled in partnerships?

Partners pay taxes at the income tax rate for individuals.

Drag and drop the descriptions of methods of taxation against the corresponding types of business ownership.

Sole proprietorship: Individual income is taxed. Partnership: Individual owners' income is taxed. Corporation: The business and shareholders are taxed. S corporation: It is taxed as a partnership.

Drag and drop the ownership patterns against the corresponding types of business structures.

Sole proprietorship: One owner Partnership: Two or more owners Corporation: Any number of shareholders S Corporation: Up to 100 shareholders

______ are businesses owned and operated by one individual and are the most common form of business organization in the United States.

Sole proprietorships

Which legal document sets forth the basic agreement between partners?

Articles of partnership

How are the members of a board of directors selected?

They are elected by the stockholders of the corporation.

Which of the following is true of S corporations?

They are taxed like a partnership.

A form of business ownership that looks like a corporation but is taxed as though it were a partnership with restrictions on the number of shareholders is

an S corporation

What is most commonly required to start a partnership?

articles of partnership

A Blank______ is/are elected by the stockholders to oversee the general operation of the corporation and set its long-range objectives.

board of directors

A business owned and controlled through pooled resources by the people who use it is a(n)

cooperative

Before the owners of a corporation can establish the company's bylaws and elect a board of directors, they must receive a Blank______ from the state in which they are doing business.

corporate charter

A legal document that the state issues to a company based on information the company provides in the articles of incorporation is called a:

corporate charter.

A state-chartered legal entity with authority to act and have liability separate from its owners is a

corporation

As a legal entity, a(n) has many of the rights, duties, and powers of a person, such as the right to receive, own, and transfer property.

corporation or corporations

The situation known as "double taxation" only occurs with which form of business ownership?

corporations

When the corporation pays a tax on its profits and individual stockholders each pay tax on dividends distributed by the corporation, it is called

double taxation

Which of the following is a disadvantage of the partnership form of business?

friction between general and limited partners

A key disadvantage of the partnership form of business is

friction between partners

The two major types of partnerships are

general and limited

Select the three items that are usually listed in the articles of partnership.

how profits will be distributed contribution (money or assets) of each partner management role or duty of each partner

One advantage of a partnership is that

it is easy to create

It is easy to start a sole proprietorship because

it may only require a simple permit or license to start

A partnership established for a specific project or for a limited time is called a venture.

joint

A partnership established for a specific project or for a limited time is called

joint venture

Owners in an LLC have Blank______ liability.

limited

Select the two main types of partnerships.

limited general

What is considered to be the biggest advantage to the corporate form of ownership?

limited liability

Fluffy Cloud Mattress and So Soft Mattress combined to form a new company called Fluffy Soft Mattress. What type of ownership does this represent?

merger

The result of two firms (usually corporations) combining to form one company is called a

merger, merge, or mergers

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

partnership

A limited liability company is taxed like a

partnership

An association of two or more persons who carry on as co-owners of a business for profit is the definition of a(n)

partnership

The partnership business entity is not taxed, because each partner pays tax on the business's profits as their

personal income

A corporation is owned by just one or a few people who are closely involved in managing the business. (Enter one word in the blank.)

private

A(n) Blank______ is owned by just one or a few people who are closely involved in managing the business.

private corporation

As an entity, cooperatives are not set up to make

profits, money, or profit

Of the following forms of business ownership, which is relatively easy and inexpensive to form?

sole proprietorship

Roland wanted to earn extra income, so he signed on with Uber as a driver. Since Roland is not considered an employee of Uber but rather an independent contractor, his new business venture would be called a

sole proprietorship

Corporations have all the rights and privileges listed below except:

their owners have unlimited liability.

As a sole proprietor, Ellie enjoys many advantages. Which of the following is not one of them?

unlimited liability

In a sole proprietorship, any debts or damages incurred by the business that cannot be paid by the business are your personal debts and you must pay them. This disadvantage is known as

unlimited liability

The biggest advantage of the corporate form of ownership is its perpetual life.

False