Chapter 6
Which of the following is a similarity between a general partner and a limited partner in a limited partnership?
Both contribute financially to the company.
When people use the term "corporation" without specifying which type, they are generally referring to a(n) _____.
C corporation
Which of the following statements is true of the formation of general partnerships?
Expert legal assistance can be acquired when drawing up a partnership agreement.
Which of the following statements is true of a typical franchise agreement?
It requires the franchisee to pay an initial fee.
The owners of limited liability companies (LLCs) are called members because:
LLCs are neither corporations nor partnerships.
Svelter Corporation does not face the problem of double taxation as the Internal Revenue Service (IRS) does not tax the earnings of the company separately. Instead, taxes are only levied on the personal income of the stockholders. A limitation, however, is that the company is only allowed to have a maximum number of 100 stockholders at a time. Given this information, Svelter Corporation is a(n) _____.
S Corporation
Fabotels is a hotel aggregator that buys budget hotels that succumb to financial losses and then refurbishes them under the company's brand name. Fabotels recently purchased Ravine Comforts, a small lodge that was running into huge debts. The business deal between Fabotels and Ravine Comforts exemplifies a(n) _____.
acquisition
A textile corporation has two hundred odd stockholders. As it is inconvenient for so many stockholders to manage the company, the stockholders elect a group of individuals to oversee the company's operation and to represent their interests. In this scenario, the stockholders elect a _____.
board of directors
A _____ is a partnership arrangement that includes at least one general partner and at least one limited partner.
limited partnership
A(n) _____ cannot distribute dividends to its members.
not-for-profit corporation
A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.
partnership
Which of the following is an advantage of limited liability companies (LLCs)?
They can have any number of owners.
Hot and Black Tide Inc., an electronics manufacturer, merges with Crimp Corp., a food manufacturing brand, to make the firms less vulnerable to adverse conditions in any single market. This scenario is an example of a(n) _____.
conglomerate merger
A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.
corporation
When a business that is incorporated in one state does business in other states, it is called a(n) _____ in the state where it is incorporated.
domestic corporation
A firm considers _____ to increase size and market power within the industry.
horizontal mergers
Which of the following features of a sole proprietorship proves that it is a risky endeavor?
its unlimited liability
FoodieGo, a catering company, is owned by foreign investors and local businessmen. Its earnings are equally divided among its members. It does not face the problem of double taxation as taxes are only levied on the personal income of the members. The owners of FoodieGo do not have personal liability for any debts incurred by the company. In the given scenario, FoodieGo is an example of a
limited liability company
Ronald, Jamie, Ben, and Joseph are colleagues who want to start a company of their own. All of them want to be actively involved in managing the business. However, they do not want any personal liability for any debts incurred by the company. In this scenario, they should most likely get involved in a
limited liability partnership
Norman owns a large number of shares in a telecommunications corporation. Despite that, he does not have the right to vote in a meeting held specifically to elect the CEO of the company. In this scenario, Norman is most likely a _____.
limited partner
