BUSINESS
most partnerships have partners
2
when compared to partnerships & corps, sole proprietorships account for __ percent of total annual sales
9
how does an S-corp. differ from a limited liability company?
LLC is not restricted to 100 stockholders. less restricted w/ more flexibility
what is a not-for-profit corp.?
a corp. organized to provide a social, educational, religious, or other service rather than to earn a profit
alien corporation
a corporation charted by a foreign govern. & conducting business in the U.S
closed corporation
a corporation whose stock is owned by relatively few people & is not sold to the general public
limited liability
a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock.
horizontal merger
a merger between "like" firms- firms that make & sell similar products or services in a similar manner & in similar markets
syndicate
a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capitol. syndicates are primarily made up of corporations, none of which are willing to put up an entire amount required for an undertaking nor that are willing to share the risk of a venture individually
mercedes-benz, which is charted as a corporation in Germany but conducts much of its business in the U>S, is known as a _ in the U.S
alien corporation
how do management tasks differ for a general partner and a limited partner?
all partners assume shared responsibility for operating the business.
joint venture
an agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time. corporations and individuals may enter into a joint venture.
domestic corporation
an incorp. business in the state in which it is incorporated
if allied services decided to incorporate , in which state would it incorporate
any state the company chooses
corporate officers are
appointed by the board of directors
a contract between a business & a state recognizing the business as an artificial person is known as the
articles of incorporation
before troy can incorporate his advertising business in illinois, he must have a _ approved by the _
articles of incorporation; stockholders
the _ is a legal document that lists & explains the terms of the partnership
articles of partnership
general partner
assumes an important share of the management tasks of the business and must make decisions in consultation w/ the other general partners
does an LLC type of ownership appeal to you?
b/c pass-through taxation & limited- liability protection
conglomerate merger
between firms in completely different industries
vertical merger
between firms that operate at different but related levels in the production & marketing of a product
the top governing body of a corporation is known as the
board of directors
which of the following is a disadvantage of the corporate form of organization
both the corporation & its stock holders are taxed on profits retained & distributed
Mars, inc., is 100% percent owned by the mars family & is therefore referred as a(n)
closed corporation
a hardware store that is owned by members of the Norton family as well as a family friends. this company is
closed corporation
shares of burger house stock cannot be purchased on any stock exchange or by just an individual. This means that burger house is a(n)
closed corporation
he has the right to vote on company issues & examine corporate records, & he receives dividends from walgreens profits. what type of stock does mark own?
common
what does double taxation mean
companies must pay taxes on their earnings, & then stockholders pay taxes on their dividends
the form of business organization most heavily regulated by the government is the
corporation
the form of business organization that accounts for 82% of all sales revenues in the U.S is the
corporation
the form of business organization that comprises about 19% percent of all business in the U.S id the
corporation
the form of business organization that experiences double taxation is the
corporation
the most effective form of business organization for raising capital is the
corporation
what type of business organization should tiffany work for?
corporation
what does it mean when someone says that a corporation is an artificial person created by law?
corporation is an artificial person created by the law and includes most of the following rights : to start & operate a business, to buy or sell property, to borrow money, to sue or be sued, to enter into binding contracts.
the order of difficulty & expense, from most to least, when forming a business organization is as follows:
corporation, partnership, sole proprietorship
thomas dies suddenly of a heart attack. what will most likely become of the partnership?
daniel &lucas will be able to purchase thomas's interest from his estate
which of the following states offers the lowest organized costs for corporation
delaware
which of the following is true about the way lisa & john would handle company profits
distribute the profits according to the terms of the partnership agreement
a distribution of earnings to the stockholders of a corporation is a
dividend
within arkansas, walmart is classified as a _ corporation
domestic
in the state in which it is incorporated, a business is known as a
domestic corporation
all of the following are disadvantages that Sean should consider before entering a partnership agreement w/ his cousin except
double taxation
which of the following is not a disadvantage of sole proprietorships
double taxation
with regard to taxation of partnerships, which of the following statements is correct?
each partner is taxed in the same way as a sole proprietor
jack hesitates b/c he knows that it is _ to invest money in a partnership & _ to get the money back out
easy; difficult
similarities between not-for-profit corp. and for-profit corp.
employees of both for-profit & not-for organization are responsible for making sure the organization achieves it goals and objectives, ensuring accountability for fiances & donations, & monitoring activities to improve performance of both employees & volunteers
when compared to larger businesses, the lure of employee benefits is one reason why people go to work for sole proprietorships
false
corporation is incorporated in delaware, but when it operates in illinois & texas, it is considered a _ corporation in those states
foreign
boeing is incorporated in seattle. it has a large facility in huntsville, and considered a _ b/c it conducts business within alabama
foreign corporation
in all states besides the one in which it is incorporated, a business is known as a
foreign corporation
the person who assumes full co-ownership of a partnership, including unlimited liability, is a
general partner
legally, a partnership must
have at least one general partner
wade serves on foot locker's board of directors. how did wade get this position?
he was elected by the company's stockholders
thomas wants to make money, so he starts his own business as a sole proprietor. he likes this form of business b/c
he will get to keep all of the profits the business makes
which of the following best describes the limited liability that heidi has as the primary stockholder in this corporation?
heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment
what do corporate officers manage?
help the board to make plans, carry out the plans, hire employees, and manage day-to-day activities
foreign corporation
in all other states where the organization does business
he is very protective of his company's info & fears that will get into the wrong hands. shane would probably not want to
incorporate his company
susan contacts her lawyer to see if all the legal requirements are met to start the process of
incorporating
limited partner
invests money in a business but has no management responsibility or liability for losses beyond his or her investment in the partnership
when the owner of sole proprietorship dies, what becomes of the business
it ceases to exist unless the heirs take it over or sell it
how might a sole proprietorship have a possible tax advantage
it does not pay special state & federal taxes that corporations pay
which of the following is not an advantage of a sole proprietorship?
it has unlimited liability
what is the significance of the name preferred stock
its claims on dividends are paid before those of common stock
why is a sole proprietorship the most flexible type of business?
its the simplest type of ownership as well as the easiest to start. owner can make decisions w/o having to consult anyone else.
which of the following is necessary for starting a sole proprietorship?
limited legal documents
which of the following is not a disadvantage of the corporate form of ownership?
limited liability
advantages of a corporation
limited liability, the greater ease of rising capital, the ease of transfer of ownership, perpetual life of corporation, & the ability to include specialized management in the organization are all advantages of the corporate form of business ownership
a _ invests money in the business but has no management responsibility
limited partner
the partner who can lose only what he or she has invested in a business is the
limited partner
while mike would like to become a partner in the firm, he is concerned about his liability b/c he has recently inherited a lot of money. mike should become a
limited partner
define "growth from within" in regard to a corp.
many corps. grow by expanding their present operations either through introducing & selling new, but related, products. other corps. choose to expand their geographic reach & introduce their products &/or services to new locations. internal growth, when planned & organized, is generally an effective method to expand a corp. & may have little adverse effect on the business
when incorporating, a business
may incorporate in any state it chooses
describe the merger trends affecting American business
most experts predict that mergers & acquisitions will result from companies that have large amounts of cash and are looking to acquire other businesses that will enhance their position within the marketplace. experts also predict that more mergers involving investors from other countries will occur. there will be real focus on mergers and acquisitions driven by solid business logic and the desire to compete in the international marketplace
how would you go incorporating a business?
most recommend that a lawyer be used in the corporation process. 1st- choosing the state pf incorporation and then developing and submitting the articles of incorp. to the secretary of that state. stockholders' rights need to be decided. last step- organizing a meeting to adopt corporate by-laws & elect the first board of directors
who would make the best partner for kerry?
natalie, who has business experience w/ accounting, management,& marketing
criteria a corp. must meet for the IRS to grant the business an S-corp. status
no more than 100 stockholders; stockholders must be individuals, estates, or certain trusts; only one class of outstanding stock; must be domestic corporation eligible to file for S-corp. status; no partnerships, corp., or nonresident-alien stockholders; all stockholders must agree to the decision to form an S-corp.
the major reason why businesses change from sole proprietorships to other forms of ownerships is to
obtain & eliminate the problem of too much to do in one day
open corporation
one whose stock can be bought & sold by any individual
as a limited partner in a construction business, joe
only risks his initial investment
anyone w/ the money can purchase shares of coco-cola's stock. this makes coke a(n) _ corporation
open
a corporation whose stock can be purchased by anyone & is traded in stock markets is known as a(n)
open corporation
describe the ownership, operation, & size of a sole proprietorship
owned & operated by one person. there are few sole proprietorships that are large and have numerous employees, most are small size.
stockholder
owner of a corporation
which of the following is an advantage of the corporate form of organization
ownership of stock is easy to transfer
a voluntary association of two or more people acting as co-owners of a business is known as a
partnership
such feuding, which damages business relationships, occurs most frequently in what form of business?
partnerships
to close a sole proprietorship, the owner must
pay creditors
all of the following are disadvantages of corporations except
perpetual life
unless specified in the charter, a corporation has a
perpetual life
which of the following is an advantage of sole proprietorship?
profits are taxed as individual income
a _ is a form that enables stockholders to allow someone else to vote for them
proxy
common stock carries all the following rights except the right to
receive part of the profit before other classes of stock
want to obtain limited liability for their business, but they want to avoid double taxation. which type of business ownership would you recommend?
s-corporation
what are the primary responsibilities of the board of directors?
set company goals and develop general plans (or strategies) for meeting those goals of the corporation, overall operation as well as appointing corporate officers
glenn owns & operates a large hardward store in missouri that employs about fifty people. he delegates some of the decision making to two mangers, but he remains the only owner.
sole proprietorship
in the U.S, approximately 72 percent of all businesses are
sole proprietorship
karen decides to open a small neighborhood restaurant. since she plans to maintain complete control of the business, she will most likely organize it as a
sole proprietorship
the simplest form of business owned & operated by one person is called
sole proprietorship
which form of business is the easiest to start
sole proprietorship
Kayla purchases shares of ownership in General Electric. These shares are referred to as
stock
"stockholders control the activities of a corporation"
stockholders elect the board of directors, & this board is responsible for appointing corporate officers who manage the daily business for the corporation
when alyssa decides that she no longer wants her radio shack stock, she will discover that a related benefit of a corporation is
the ease of transfer of ownership
unlimited liability
the owner is responsible for all business debts
which of the following is a requirement for an S-corporation?
the s-corpoartion can have no more than 100 stockholders
when starting a corporation, people submit articles of incorporation to
the secretary of state
he decides that it would be better to ask his brother Brad to become his partner b/c
together they will be able to get more capital & credit to start the business
all of the following are advantages of the partnership form of organization except
unlimited liability
darrell wishes to start his own business, & his lawyers encourage him to make a corporation. what disadvantages of a sole proprietorship are the lawyers trying to avoid
unlimited liability
what is the primary disadvantage of both sole proprietorship & a partnership that a corporation overcomes?
unlimited liability
why is the concept of unlimited liability a concern for the sole proprietor?
unlimited liability is a legal concept that holds a business owner personally responsible for all the debts of the business. debts of the business are not legally separated or different from debts of the sole proprietor
disadvantages of partnership
unlimited liability- each general partner being responsible for the debts of all general partners, lack of continuity and the challenges of getting an investment out of a partnership
which of the following would least likely be stated in the articles of partnership
what products the company will sell
what types of information should a partnership agreement contain?
who will make the final decisions of the partnership, what each partner's duties will be, and the investment amount of each partner, how much profit or loss each partner receives or is responsible for, & what happens if the partnership dissolves & one partner wants to exit the partnership or dies.
which of the following is the best way to start this partnership
with the help of an attorney, they should draft a partnership agreement that states each partner's duties & investments