chapter 4 1301

Which of the following is correct regarding taxation of a sole proprietorship?

A sole proprietor only pays one income tax that includes both the business and individual income.

What facet of corporations allows them to more easily expand into national and international markets?

Ability to find long-term financing

Corporation

Any number of shareholders

In a corporation, ______ directors are those responsible for running the company.

Inside

Josiah and Fredric were both partners in a business. Fredric no longer wishes to be partners. How does this put Josiah at a disadvantage? (Select all that apply)

Josiah will lose the financial resources and talent that Fredric provided. Josiah will have to find another partner or reorganize the business

Which of the following is an advantage of the corporate form of business ownership?

Limited liability

Luis is a sole proprietor who owns his own tax preparation firm. How are profits taxed for Luis' business?

Luis will pay one income tax that includes both the business and his individual income

A sole proprietor needs skills in which of the following?

Marketing Finance Personnel management

______ corporations are owned and operated by the federal, state, or local government.

Quasi-public

Which way to raise money is unique to corporations?

Selling stock

Which form of business ownership has the most freedom from government regulations?

Sole Proprietorship

Which form of business allows for the greatest degree of secrecy?

Sole proprietorship

What is the preemptive right of a stockholder?

The first right to purchase new shares of stock from the corporation

Camille and Rosa have decided to open a business together. Which of the following is true for their business?

The pooled financial resources and talents of the partners will be an advantage to the business.

How many shareholders can an S-corporation have?

They can have up to 100 shareholders.

True or false: Sole proprietorships pay a higher marginal tax rate than do small corporations on income of less than $75,000; however, sole proprietorships avoid the double taxation that occurs with corporations.

True

True or false: Specialized professionals in fields like accounting are often hired by sole proprietors who lack knowledge in that area.

True

S Corporation

Up to 100 shareholders

A(n) ______ is where one company purchases the property and obligations of another.

acquisition

The purchase of one company by another, usually by buying its stock, is a(n)

acquisition

The only legal condition to dissolving a sole proprietorship is that ______. Multiple choice question.

all financial obligations must be paid or resolved

The selling of a corporation's stock on public markets for the first time is known as ______.

an initial public offering

A _____ is/are elected by the stockholders to oversee the general operation of the corporation and set its long-range objectives.

board of directors

In a leveraged buyout, employees, managers, or investors finance the purchase of the company by ______.

borrowing against its assets

The right to vote for the board of directors is given to ______ stockholders.

common

If a chemical company merged with a textile manufacturer, it would be an example of a ______.

conglomerate merger

A business owned and controlled through pooled resources by the people who use it is a(n) ______.

cooperative

What is a company (or individual) called that wants to acquire or take over another company?

corporate raider

Based on the information in the articles of incorporation, the state issues a ____________ ______________ to the company.

corporate: charter

A state chartered legal entity with authority to act and have liability separate from its owners is a ______.

corporation

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a(n) ______.

general partnership

In a limited partnership, a _____ partner has responsibility or liability for losses beyond their investment, but a ______ partner only has liability to the amount they invest.

general; limited

The three types of mergers are differentiated by analyzing whether the companies merging are in the same, related, or different

industries

It is easy to start a sole proprietorship because ______.

it may only require a simple permit or license to start

A partnership established for a specific project or for a limited time is called ______.

joint venture

Owners in an LLC have ______ liability.

limited

Select the two main types of partnerships.

limited general

When two firms join together to form one new company, it is called a(n)

merger

Having carefully chosen partners with different skills and knowledge can help a partnership succeed because ______.

no one person has all the skills needed it allows people to specialize in a particular area

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

perpetual life

When a firm allows stockholders to buy more shares of stock at prices lower than the current market value to head of a hostile takeover attempt this is called a ______.

poison pill

This is a special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

preferred

An advantage of a sole proprietorship is that the owner ______.

retains all profits

When management requires a large majority of stockholders to approve a takeover, this is known as ______.

shark repellent

Roland wanted to earn extra income, so he signed on with Uber as a driver. Since Roland is not considered an employee of Uber but rather an independent contractor, his new business venture would be called a _______.

sole proprietorship

Public corporations must file reports with ______, the government regulatory agency that regulates securities such as stocks and bonds.

the Securities and Exchange Commission

In a sole proprietorship, any debts or damages incurred by the business that cannot be paid by the business are your personal debts and you must pay them. This disadvantage is known as ______.

unlimited liability