Intro to business chapter 4

There are many kinds of partnerships. Which of the following best describes a general partnership?

A general partnership is a partnership in which the partners have full or shared responsibility for operating the business.

The primary difference between a limited-liability partnership (LLP) and limited partnership is

A limited partnership must have at least one general partner that has unlimited liability

Under the United States Uniform Partnership Act a partnership is defined as

A voluntary association of two or more persons to act as co-owners of a business for profit

There are many disadvantages to forming a sole proprietorship, such as lack of continuity and difficulty raising capital. Which of the following is not an advantage of forming a business as a sole proprietorship?

Ability to pay all taxes

According to the textbook, a partnership usually has more capital available than a sole proprietorship because partners can pool their funds. This additional capital, in addition to the general partners' unlimited liability and partners working together in management skills, may encourage

Banks and suppliers

One of the benefits of being a sole proprietorship is

Being your own boss

A corporation can elect to change its tax status to an S corporation. Which of the following is an advantage of electing S corporation status?

Double taxation is eliminated as profits and losses pass directly to stockholders through the business and are reported on the owners' personal income tax returns.

There are many ways in which corporations can merge. Which of the following describes a vertical merger?

Firms that operate at different but related levels in the production and marketing of a product join together.

A not-for-profit corporation

Is organized for charitable purposes

There are many advantages to conducting business as a corporation. Which of the following is not an advantage of conducting business as a corporation?

Pressure to improve

Partnerships have both advantages and disadvantages, which of the following was not a disadvantage or advantage addressed by the authors?

Retention of profits, but when the partnership retains profits, the partners are still taxed on this money

Two or more businesses or individuals may join together temporarily for many business reasons including to perform a specific task. If they join together to raise a large amount of capital for that specific task, what type of organization have they created?

Syndicate

There are many disadvantages to creating a corporation and conducting business as a corporation. One of the disadvantages is double taxation. Which of the following best describes what is meant by double taxation?

Taxation on profits when they are earned and taxation again as personal income of stockholders

Corporate limited liability means corporate losses are limited to

The extent of the assets of the corporation

A corporation is an artificial person created by law, with most of the legal rights of a real person. Which of the following is not a legal right held by a corporation?

The right to total privacy

What is the term for a corporation chartered by a foreign government that is conducting business in the United States?

alien corporation

Joint Ventures

are formed by two or more groups or businesses to form a business entity to achieve a specific goal or to operate for a specific period of time.

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.

closed, open

Partnerships operate as both an entity and as a collection of individuals. When it comes to taxes, partnerships are a (an)

collection of individuals pay no income tax

The joining of firms in completely unrelated industries is a(n) _______.

conglomerate merger

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n):

horizontal merger

When the management and board of directors of a firm targeted for acquisition disapprove of a merger, this is known as a:

hostile takeover

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):

joint venture

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?

preferred

The owner of a corporation is known as the

stockholders

_____________ is a legal concept that holds a business owner personally responsible for all the debts of the business.

unlimited liability