BUSE CH6
What is the defining feature of a general partnership?
a partnership with unlimited liabilities
Which of the following is an advantage of having a sole proprietorship?
. Corporate records keeping and/or reports to file, including tax reporting, aren't require
Which of the following is a merger in which two companies sell the same types of products and are in direct competition with each other?
A horizontal merger
Lucy and Dana are the two owners of a small pizza parlor, which is not an S corporation or a C corporation. Lucy runs the restaurant, and Dana provides capital to the business in return for equity in it or a share of the profits. Which of the following best describes Dana?
A limited partner
Good Groceries, a chain located on the east coast of the United States, and Pak & Save, a grocery store chain located on the west coast of the United States, have agreed to merge. What type of merger is this?
A market extension merger
Feed the Schoolchildren is an organization that uses social media and other methods to help raise revenue to ensure that children who do not have money to pay for school lunches receive them. All of the profits the organization collects and earns go toward that purpose. Feed the Schoolchildren is what type of an organization?
A not-for-profit organization
Which of the following is a type of business structure in which two or more entities share the ownership and the profits and losses of the business?
A partnership
Which of the following is regulated by the U.S. Securities and Exchange Commission because the shares of ownership can be traded on public stock exchanges?
A publicly owned corporation
Which of the following is an unincorporated business owned, and usually controlled, by a single individual?
A sole proprietorship
An automobile maker purchasing a company that supplies parts for its vehicles is an example of what kind of a merger?
A vertical merger
What type of merger involves the gathering together of previously separate, often unrelated companies in order to achieve diversification?
Conglomeration
Four brothers open an automotive service business together. Although they did not contribute equal amounts of capital to the business, they all actively participate in the business's daily operations. They share in the income of the business and the income is taxed as personal income. What type of business structure is this?
General partnership
Chaplain and Brooker, Inc. is a corporate law office that wishes to establish itself as an S corporation. The company has approximately 125 shareholders, all of whom are U.S. citizens. The company issues only one class of stock and distributes all profits and losses to the shareholders proportionately based on each person's interest in the business. Which of the following is true of Chaplain and Brooker?
It cannot become an S corporation because it has more than 100 shareholders.
Which of the following is true of an S corporation?
It cannot have more than 100 shareholders.
Which of the following is a disadvantage of a sole proprietorship?
It has unlimited liability.
Which of the following best describes a sole proprietorship?
It is a business owned, and usually controlled, by a single individual.
Which of the following best describes a corporation?
It is a specific form of business organization that is legally formed under state laws and is considered a separate entity apart from its owners.
Which of the following best describes a proxy fight?
It occurs when an acquiring company tries to persuade the shareholders of the target company to vote out its existing management.
Which of the following best describes a vertical merger?
It occurs when two companies that have a company/customer relationship or a company/supplier relationship merge.
What is a market extension merger?
It occurs when two companies that sell the same products in different markets merge.
Which of the following best describes a merger?
It occurs when two firms voluntarily decide to combine their companies.
Which of the following is a characteristic of a C corporation?
It offers a business more options when raising capital.
Randell Company is a Montana-based mining firm. It wants to take over a competitor, Wygand Mining, which is located in Idaho. As part of the effort, Randell Company offers to buy the stock from Wygand's shareholders for an attractive price. If the move is successful, Randell will oust Wygand's current managers once it takes over the company. Which of the following best describes what Randell is doing?
Making a tender offer
Which of the following is a difference between a sole proprietorship and a partnership?
Multiple owners contribute to the starting and ongoing capital of the business.
Which of the following is NOT a drawback of forming a business as a sole proprietorship?
No separate tax returns
Which of the following best describes a capital contribution?
The amount of money, equipment, supplies, and other tangible things of value that each partner contributes to a partnership
Who is responsible for choosing a corporation's chief executive officer?
The corporation's board of directors
Which of the following is true of limited partners?
Their liability is limited to the amount of capital they contributed to the business.
Which of the following is FALSE regarding S corporations?
Transfer of stock requires the approval of other shareholders.
Which of the following is a business that is not owned by investors but rather is governed by members who use or benefit from the products or services provided by the organization?
a cooperative
__ is a specific form of business organization that is legally formed under state laws.
a corporation
The amount of money, equipment, supplies, and other tangible things of value that each partner brings to a partnership is specified in the partnership agreement as the partner's __
capital contribution
A corporation's ___ is usually responsible for the entire operation of the organization.
chief executive officer
When two companies that have no common business areas merge to obtain diversification, a ___ occurs.
conglomeration
Stan has operated his business, a sole proprietorship, for nearly 10 years. Among the services he offers is writing and editing technical manuals and project management. One of the biggest advantages he has as a sole proprietor is ____.
control over management and business operations
A __ is a business owned and governed by members who use its products or services, not by outside shareholders.
cooperative
A __ is a specific form of business organization that is legally formed under state laws and is considered a separate entity apart from its owners.
corporation
Sharing the initial and ongoing finances of a business as well as management responsibilities best describes a __
general partnership
Stella and Mac have pooled their trust funds and opened their own video game salon. They have spent a large amount of money on leather couches, LCD television screens, and the most expensive gaming consoles. Because they contributed equal amounts to the business, they share the profits equally. They have also divided the responsibilities of the business equally and both face unlimited liability. Stella and Mac's business is best described as a __
general partnership
A ___ is the default arrangement for a partnership.
general partnership
A sole proprietorship ___
has unlimited liability
A medium-sized publicly owned firm that handles regional contracts is replacing one of its top-leveling employees. The team looking for a replacement is searching for someone with a strong history of work experience in upper corporate level accounting. What position is the search committee most likely looking to fill?
majority shareholder
A business structure that combines the tax benefits of a limited partnership but is similar to a corporation in that is publicly traded on a security exchange is known as a _____.
master limited partnership
Which of the following is the most important part of a cooperative?
members
Two companies, ABC and XYZ, that sell the same products have decided to come together cooperatively to form one company, MNO Alphabets. This is an example of a(n) ___
merger
A C corporation ___
must have a board of directors, corporate officers, annual meetings, and annual reporting
A ___ occurs when two companies selling different but related products in the same market merge.
product extension merger
When an acquiring company tries to persuade the shareholders of a target company to vote out its existing management, the move is known as a ___
proxy fight
A ___ is a business in which the shares of ownership can be sold to anyone who has the means to buy them.
publicly owned corporation
Incat is a multimillion-dollar organization that manufactures and sells computers. It is owned by its stockholders, who have a share in the company but are not involved in its management. These stockholders have elected a board of directors, who make decisions for the firm and are responsible for its performance. Incat best illustrates a __
publicly owned corporation
Teresa has recently obtained her coaching certification after completing 100 hours of life-skills coaching classes and a written test. She has opened a small coaching institution at her residence that she runs entirely on her own. She coaches young adults in personality development, confidence, and assertiveness. She charges $50 for 2 hours of coaching, and so far she has seven clients. Teresa is operating as a ___
sole proprietor
A ___ is a business owned, and usually controlled, by a single individual.
sole proprietorship
Organizations that have met the qualifications provided in Section 501(c)(3) of the Internal Revenue Code are classified as ____
tax-exempt