Legal Environmnet of Bus. Chapter 14 Smart Book

in total control of his or her business's goals

A characteristic of a sole proprietor is that he or she is _____.

is the easiest business organization to create

A characteristic of sole proprietorship is that it _____.

incorporators

A corporation is created by a state issuing a charter upon the application of individuals known as _____.

method by which the business organization can be dissolved

A crucial issue with the continuity factor of an organization is the _____.

is easily formed when compared to other forms of business organizations with the exception of a sole proprietorship

A feature of a partnership is that it _____.

have unlimited liability for their organization's debts

A feature of the partners in a general partnership is that they _____.

Blank 1: articles Blank 2: of Blank 3: partnership

A formal agreement explicitly stated among the parties entering into a partnership and drafted into a formal document is known as the _____ ______ _____.

does not require permission from each state in which it does business

A partnership is a form of business organization that _____.

costs of formation are not significant

A partnership is a preferable form of business organization because _____.

guarantees each partner an equal voice in management unless there is a contrary agreement

A partnership is advantageous as a form of business organization because it _____.

proxy

An agent appointed by a shareholder for the purpose of voting the shares in a publicly held corporation is known as a(n) _____.

partnership

An agreement between two or more persons to share a common interest in a commercial endeavor and to share profits and losses is known as a(n)______.

control

An issue of major importance to owners of a business organization is ______, so much so their own egos often insist on it.

a dissolution

Any change in the ownership of an organization that changes the legal existence of the organization is known as _____.

Any word that would imply the existence of a corporation must not be used in the name.

Identify a guideline that must be followed when selecting a name for a partnership.

It may seek to collect damages for the corporation.

Identify a true statement about a derivative suit brought by a minority shareholder in a closely held corporation.

They have higher costs of formation than partnerships.

Identify a true statement about corporations.

A change in the partners at any time results in the dissolution of the organization.

Identify a true statement about the continuity of a partnership.

A partnership may operate in more than one state without a license to do business. Partnerships generally are subject to less regulation than are corporations. Partnerships are not a tax-paying entity.

Identify the advantages of a partnership as a form of business organization. (Check all that apply.)

Partnerships are not a tax-paying entity. Partnerships generally are subject to less regulation than are corporations. A partnership may operate in more than one state without a license to do business.

Identify the advantages of a partnership as a form of business organization. (Check all that apply.)

A partnership is dissolved any time a partner ceases to be a partner, regardless of whether the reason is withdrawal or death. Only a limited number of people can be partners for practical reasons.

Identify the disadvantages of partnership as a form of business organization. (Check all that apply.)

Directors Shareholders Officers

Identify the groups present in the corporate form of organization. (Check all that apply.)

How much paperwork is involved How long it will take to build a particular organization

Identify the most significant creation-related issues that a businessperson faces when establishing a business organization. (Check all that apply.)

Blank 1: alter Blank 2: ego

If a corporate entity is disregarded by its corporate officers, directors, and stockholders themselves, so that there is such a unity of ownership and interest that separateness of the corporation has ceased to exist, the _____-_____ theory will be followed and the corporate veil will be pierced.

Blank 1: derivative Blank 2: suit

If the majority in a closely held organization is oppressing the rights of the minority shareholders or acting illegally, a minority shareholder may bring a lawsuit on behalf of the corporation. This lawsuit is known as a(n) _____ _____.

a dividend received by shareholders is taxed again after being taxed at the corporate level

In the context of taxation of corporations, a situation of double taxation occurs when _____.

The number of authorized shares in the organization The proposed name of the corporation The proposed corporation's period of duration

In the context of the creation of a corporation, identify the information contained in the articles of incorporation. (Check all that apply.)

corporation

In the context of the different forms of business organizations, an artificial, intangible entity created under the authority of a state's law is known as a(n) ______.

creation

In the context of the significant factors one should consider when selecting the best organizational form for a business activity, _____ refers to the legal steps necessary to form a particular business organization.

Dissolution: It means the legal form of an organization does not exist anymore. Termination: It involves the liquidating or winding up of a business.

Match the terms related to the continuity of a partnership (in the left column) with their descriptions (in the right column). Dissolution Termination

Closely held organizations: They are owned by only a few persons. Publicly held organizations: They may be owned by hundreds of persons.

Match the types of business organizations (in the left column) with their descriptions (in the right column). Closely held organizations Publicly held organizations

Closely held organizations: Family-operated and family-owned businesses Publicly held organizations: Businesses whose stock is traded on a public exchange

Match the types of business organizations (in the left column) with their examples (in the right column). Closely held organizations Publicly held organizations

Domestic corporation: A corporation is called so in the state in which it is incorporated. Foreign corporation: A corporation is called so in places other than the state in which it is incorporated. Alien corporation: A corporation created under the authority of a foreign country may be called so.

Match the types of corporations (in the left column) with their descriptions (in the right column). Domestic corporation Foreign corporation Alien corporation

who is managing the organization

The factor of control in a business organization concerns _____.

Blank 1: articles Blank 2: of Blank 3: incorporation

The formal application for a corporate charter is called the ____ ____ ____.

shareholders

The members of the board of directors of a corporation are elected by the _____.

cannot be created by multiple owners

The use of sole proprietorship as a business organization is very limited because it _____.

deduct reasonable salaries paid to corporate officials in computing the taxable business income

To avoid the double taxation of corporate income, it is advisable for a corporation to _____.

False

True or false: A dissolution destroys the business of a partnership.

False

True or false: A partnership can survive a death of one of its partners if there are more than two original partners.

False

True or false: A shareholder needs to vote their shares in person at any stockholder's meeting for those votes to count.

False

True or false: An individual and a corporation cannot agree to create a business in the form of a partnership.

False

True or false: Simply alleging that a person is the sole owner of a corporation that is engaged in wrongful activity will result in a piercing of the corporate veil.

True

True or false: The personal liability of the owners should be taken into account when selecting the best form of organization for one's business.

the taxation of the organization's earnings

When an individual is selecting the best organizational form for his or her business, he or she should consider _____.

The proprietorship's income subject to taxation is attributed to the proprietor.

Which of the following is true of a sole proprietorship?

Each partner has an equal voice in the firm's affairs unless the agreement provides to the contrary.

Which of the following is true of the partners in a general partnership?