Intro to Business ch5

1a disadvantage of a sole proprietorship

1unlimited liability

4In a sole proprietorship any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is

4unlimited liability

5Which of the following is considered a disadvantage of a sole proprietorship

5unlimited liability

Which of the following statements about partnerships is most accurate

A major drawback of a partnership is that it is difficult to terminate

A good reason why partners should spell-out the details of their partnership arrangements in writing is

A written agreement will help reduce misunderstandings and disagreements among the partners

In a leveraged buyout, the managers of a firm, its employees, or other investors

Borrow funds to buy out the firm's stockholders

In a limited partnership, the liability of the limited partners is unlimited and personal assets are at risk

FALSE

One difference between partnerships and sole proprietorships is that partnerships

Have a greater chance of long term survival due to the accountability of each partner to the other

A company similar to an S corporation but without the special eligibility requirements

LLC

Leaving a BLANK means owners can leave an ongoing business for future generations

Legacy

When investors successfully take a firm private, the firm's stock is

No longer sold to investors on the open market

Having no more than 100 shareholders and one class of stock is a characteristic is

S corporation

a unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called

S corporation

The strategy of investors who are attempting a leveraged buyout is

Secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock

Sole proprietors set their own schedules, but work many hours

TRUE

The main advantage of a sole proprietorship is ease of start up

TRUE

To end a sole proprietorship you simply stop operations

TRUE

a disadvantage of a sole proprietorship is limited financial resources

TRUE

One reason that companies participate in mergers and acquisitions is

To expand within their own field or enter new markets

The owner of a sole proprietorship might choose to incorporate to gain what advantages

ability to spend more money on facilities, limited liability, and ability to raise money for investment

One's company purchase of property and obligations of another company

acquisition

occurs when one company purchases the property and obligations of another

acquisition

The advantages of becoming a sole proprietorship include

being your own boss

Select the reasons why size is an advantage of the corporation

build modern facilities, acquire the latest equipment, and attract experts for hire

if a software company and a fast food company merged

conglomerate merger

A key advantage of a sole proprietorship is that

controlling your own business is exciting

A legal entity with authority to act and have liability apart from its owners

corporation

BLANK can attract talented employees by offering stock in the company

corporation

reasons that disagreements can ruin a partnership include

disagreement over workload, opposing management styles, and arguments over dividing profits

It is important to have Articles of Partnership because problems between partners may occur due to

disagreements over dividing profits

a major disadvantage of the corporate form deals with the tax situated called

double taxation

one of the most important advantages of the sole proprietor form of ownership is that a business owner

finds it easier to start and end the business

A disadvantage of corporations is that they become too large to be

flexible

Drew and Owen are business partners. Drew invested money and manages the business while Owen invested his money, but does not participate in the business management. Drew is considered a BLANK partner while Owen is considered a BLANK partner.

general limited

Mark, Cal, and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming

general partnership

A sole proprietorship has a limited life span unless

it is taken over by a heir or it is sold to someone else

A master limited partnership looks so much like a corporation because

it is traded on the stock exchange

an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

leveraged buyout (LBO)

the responsibility for a loss only up to the amount invested is BLANK liability

limited

Limited liability, choice of taxation, flexible ownership rules, and operating flexibility are all advantages of BLANK company

limited liability company

The form of partnership that limits liability to the limited partner's own acts or those of the people they supervise

limited liability partnership

when two firms join together to form one new company

merger

The various responsibilities of each partner, especially any issues involving BLANK, should be agreed to in discussions and put in writing before agreeing to a partnership

money

sole proprietor must develop on their own

paid health insurance, paid sick or vacation time, and a pension plan

The Uniform Partnership Act defines the three key elements of a general partnership

participation in operations, shared profits and losses, and common ownership

disadvantages of a partnership

partner disagreements, division of labor, and unlimited liability

An advantage of a sole proprietorship is that the owner

retains profits

In order to qualify to become an S corporation, a company must have

shareholders who are individuals or estates, and no more than 100 shareholders

Funds available to a business are limited to what one owner can gather which is a disadvantage to the form of business known as

sole proprietorship

An advantage of partnerships is a longer BLANK rate than sole proprietorships , because they become more disciplined and the business's life is based on all the partners

survival

People who own and manage their own businesses rightfully have pride of ownership

take the risks and provide needed goods and services

When you owe a sole proprietorship you and the business are considered one, so you have BLANK liability for financial obligations such as debt

unlimited

when two firms operating in different stages of related businesses join

vertical merger

funds available for a sole proprietorship are limited to

what the owner can provide

A key advantage of LLC is BLANK liability where personal assets are protected

limited

order in which members of a corporation are chosen in order to separate ownership from management.

1.Owner's/stockholders elect board of directors 2.Board of Directors hire officers of the corporation 3.Officers hire managers of the corporation 4.Managers hire employees

2If your company debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called

2 unlimited liability

3In a sole proprietorship debts of the businesses are considered the responsibility of the owner if the business can't pay

3unlimited liability

If you and your friend have started a business together, you have started a sole proprietorship

FALSE

BLANK partners participate in operating the business while limited partners do not

General

Maria has a lot of self-confidence and business knowledge. She recently opened a bakery as a sole proprietor. She is expecting a high level of profits and is looking forward to

Keeping all of the money she earns except for the taxes she is required to pay

No stock, limited, life span, and fewer incentives are disadvantages of a

LLC

The BLANK limited partnership looks much like a corporation in that it acts like a corporation and it is traded on a stock exchange

Master

Select all attributes that make the initial cost of incorporating a disadvantage

The high cost of hiring lawyers and accountants for the complex fillings needed, and high start up costs associated with documentation

A BLANK partner has responsibility or liability for losses beyond their investment, but a BLANK partner only has liability to the amount they invest

general, limited

a merger of two firms in the same industry that allows the companies to diversify or expand their products

horizontal merger

The attributes of a corporation include

it is a legal entity, it is state chartered, corporate liability is separate from owners

LLCs do have to submit articles or organization and an operating agreement, but do not have to

keep minutes, file written solutions and hold annual meetings

An S corporation has the liability protections of a corporation but is taxed

like a partnership or sole proprietorship

A BLANK partnership has partners who do not share in operating the business

limited

The owner of a sole proprietorship must pay which tax

personal income tax, social security and Medicare

individuals who start and manage a business are concerned with risk. They may choose to incorporate to decrease

personal liabilites

If you start and manage a landscaping business on your own, you have likely started a

sole proprietorship

When choosing to form a partnership, a business owner should consider all of the following

the level of participation of each partner, the financial contribution of each partner, a partner's level of expertise in different areas of business

A sole proprietorship often grows slowly because the owner is

the main-source of creativity, know-how, and funding

Which of the following is normally considered a disadvantage of the corporate form of business

Double taxation of earnings

reason why management difficulties are considered a disadvantage of sole proprietorships

It is hard to attract employees to help run the business due to the competition with larger companies offering better benefits, and one person is responsible to keep track of inventory, accounting operations and tax records, and people good at one skill like selling may not be good at another such as managing

In recent years, firms found it easier to grow market share by

Merging with other companies or acquiring new companies

a corporation is formally formed

articles of incorporation and bylaws

In addition to the articles of incorporation, a corporation has BLANK, which describe how the firm is to be firmed from legal and managerial points of view

bylaws

In addition to the articles of incorporation, a corporation has BLANK, which describe how the firm is to be operated from both legal and managerial points of view

bylaws

selling shares of stock to anyone allows BLANK to raise more money to grow

corporation

There is little room for advancement with a sole proprietorship, so the owner may have difficulty attracting and retaining qualified

employees

Except for states like Delaware and Nevada, BLANK creates a disadvantage to incorporate

extensive paperwork

If you are your own boss you are responsible for paying your own wages/salary and for your own

fringe benefits

one advantage of a partnership is that

it is easier to make money

of the many forms of business ownership, BLANK is an easy way for two individuals to conduct business

partnership

When a corporation is separate from its owners and does not terminate with the death of one owner

perpetual life

All profits of a sole proprietorship are taxed as Blank income of the business owner

personal

The limited liability partnership ensures that the limited partners BLANK assets are not at risk

personal

It is more difficult for sole proprietorships to attract and retain employees because

they cannot offer competitive pay and benefits