Chapter 4 Conept Checks

c. general; limited

A ______ partner has responsibility or liability for losses beyond their investment, but a ______ partner only has liability for the amount they invest. a. limited; general b. unlimited; general c. general; limited d. corporate; limited e. general; unlimited

b. a frozen investment

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. unlimited liability b. a frozen investment c. retention of profits d. additional tax liability e. lack of continuity

c. unlimited liability.

A key disadvantage of a general partnership is: a. additional tax liability. b. additional regulations. c. unlimited liability. d. extensive paperwork. e. difficult to start-up.

b. partnership.

A legal form of business with two or more owners is a(n): a. multiple proprietorship. b. partnership. c. sole proprietorship. d. estate. e. limited proprietorship.

c. horizontal merger.

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n): a. acquisition. b. vertical merger. c. horizontal merger. d. conglomerate merger. e. hostile takeover.

a. joint venture.

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): a. joint venture. b. syndicate. c. S corporation. d. general partnership. e. limited partnership.

closed; open

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. a. open; closed b. unlimited; limited c. closed; open d. limited; unlimited e. general; limited

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

Each corporate stockholder's financial liability is typically limited to a. the amount of outstanding creditor claims. b. an amount determined in court. c. the stockholder's net worth. d. the money he or she paid for the corporation's stock.

taxed

One of the big differences between corporations and S corporations is how profits are: a. calculated. b. allocated. c. reinvested. d. distributed. e. taxed.

d. conglomerate merger

The joining of firms in completely unrelated industries is a(n) _______. a. vertical merger b. horizontal merger c. acquisition d. conglomerate merger e. hostile takeover

b. lawyers and accountants are needed to do the complex filings.

The start-up costs of filing for incorporation are high because: a. partnership agreements are lengthy. b. lawyers and accountants are needed to do the complex filings. c. the federal government charges very high fees. d. stockholders are very exacting.

c. Syndicate

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? a. Limited-liability company b. Joint venture c. Syndicate d. Not-for-profit corporation e. S corporation

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

What is a sole proprietorship? a. A business that is owned (and usually operated) by one person. b. A person who invests money in a business, but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership. c. A form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership. d. An artificial person created by law with most of the legal rights of a real person. e. A voluntary association of two or more persons to act as co-owners of a business for profit.

Alien Coporation

What is the term for a corporation chartered by a foreign government that is conducting business in the United States? a. Limited-liability corporation b. Foreign corporation c. Alien corporation d. Domestic corporation e. General corporation

c. As soon as their purposes have been achieved

When are joint ventures and syndicates dissolved? a. Never b. Between zero and 20 years c. As soon as their purposes have been achieved d. Greater than 20 years

e. hostile takeover.

When the management and board of directors of a firm targeted for acquisition disapprove of a merger, this is known as a: a. conglomerate merger. b. proxy fight. c. tender offer. d. vertical merger. e. hostile takeover.

c. Limited-liability company

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? a. Sole proprietorship b. Corporation c. Limited-liability company d. S corporation e. Limited partnership

c. The value of each partner's retirement accounts

Which of the following is NOT usually stated in the articles of partnership? a. Assets each partner has contributed b. Each partner's management role c. The value of each partner's retirement accounts d. How profits will be distributed e. What happens if a partner wants to dissolve the partnership or dies

b. Corporate charter

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? a. Dividend certificate b. Corporate charter c. Stock certificate d. Corporate deed e. Articles of partnership

Preferred

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? a. Nonprofit b. Private c. Preferred d. Dividend e. Common

c. Retention of all profits

Which of the following is an advantage of a sole proprietorship? a. They pay the same federal income taxes that corporations pay b. Unlimited liability c. Retention of all profits d. Lack of continuity e. Limited management skills

c. Limited liability

Which of the following is an advantage of corporations? a. Ease of formation b. Lack of secrecy c. Limited liability d. Lack of government regulations e. Double taxation

e. Pooled financial resources

Which of the following is an advantage of partnerships? a. Unlimited liability b. Limited liability c. No management disagreements d. Perpetual life e. Pooled financial resources

b. Not-for-profit corporation

Which type of corporation focuses on providing a service rather than earning a profit, but is not owned by a government entity? a. Joint venture b. Not-for-profit corporation c. Limited-liability company d. S corporation e. Syndicate

d. Unlimited liability

_____________ is a legal concept that holds a business owner personally responsible for all the debts of the business. a. Ease of start-up b. Limited management skills c. Lack of continuity d. Unlimited liability e. Seized assets