Midterm Quiz 5

Which of the following statements about the operation of a corporation is correct?

A corporation receives its charter from a state government.

A(n) _________ occurs when one company buys the property and obligations of another company.

acquisition

A major advantage of S corporations is that they:

avoid the problem of double taxation associated with conventional corporations.

Chris Callier and a few of his relatives own all of the stock in the Double C Corporation. Double C stock is not sold to the general public. Chris apparently owns stock in a(n)

closed corporation

A(n) ___________________ is a state-chartered legal entity with authority to act and to have liability separate from its owners.

conventional corporation

____________ comprise about 20% of all businesses but account for about 81% of all business receipts.

corporations

Homer and Marge have decided to open a floral design shop, which they intend to run as co-owners. Both intend to take an active role in the management of their new business, and each will accept unlimited liability. Homer and Marge are planning to operate a:

general partnership

When two companies in the same industry combine, the result is called a(n):

horizontal merger

Which of the following statements is the most accurate? A foreign corporation:

is one that does business in one state, but is chartered in another.

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

limited liability of owners

A partner who invests money in a business, but does not take an active role in management or assume unlimited liability for the firm's losses is known as a(n):

limited partner

The result of two firms combining to form one company is called a:

merger

The __________ is the most common form of business ownership.

sole proprietorship

The __________ is usually the easiest form of business to start and end.

sole proprietorship

An owner of a corporation is known as a(n):

stockholder

The board of directors for a corporation is elected by its:

stockholders

One of the major disadvantages of a sole proprietorship is the:

unlimited liability the owner has for the debts of the firm.

A ______________ merger unites firms at different stages of related businesses.

vertical

The three major types of corporate mergers are known as:

vertical, horizontal, and conglomerate.