Bus 001 - Ch. 4

Which type of business organization experiences the least governmental regulation?

Sole proprietorship

Which of the following is a disadvantage of sole proprietor ownership? Ease and low cost of formation Freedom from government regulation All profits to the owner Unlimited liability Ease of dissolution

Unlimited liability

Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses. As the sole proprietor of the business, he has unlimited liability, which means: a. he has unlimited access to funds b. he is fully liable for all business debts c. he usually has to put in an unlimited number of hours d. he must have liability insurance e. he is free from government regulation

b. he is fully liable for all business debts

Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:

business dies with her

Bob Nichol and Martha Bohner own and operate a small company that bakes and sells Thunder Muffins, gigantic muffins full of blueberries, blackberries, or raspberries. They sell the muffins at a local farm that is open to the public on weekends. Since they operate the business as a partnership, they should: borrow as much as possible hire an outside consultant hire a manager to operate the business seek government assistance agree to share the business's profits and losses

agree to share the business's profits and losses (one of the conditions of a partnership is equality).

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. Nyami and Rice have recently abandoned their business because they could not pay its outstanding business debts. Since Nyami and Rice are both liable for the debts, their business was a(n):

general partnership

Tonya Thomas is tired of working for other people. She wants to start her own administrative services businesses and control her own work schedule. She wants to have sole responsibility for all business decisions. Thomas should form a(n): limited cooperative limited partnership sole proprietorship joint venture S corporation

sole proprietorship

Which of the following is a disadvantage of sole proprietor ownership? Difficulty in raising capital No special taxation Ease of dissolution Ease of formation Freedom from government regulation

Difficulty in raising capital

A term that means that business damages and/or debts can also be attached to the personal assets of the owners is ______ liability.

unlimited

Which of the following statements about a general partnership is true? A general partnership is an entity separate from its owners. A general partnership is the most popular form of business ownership. The partnership agreement must be in writing to be legal. General partnerships are usually "double-taxed." Partners in a general partnership co-own the company's assets.

Partners in a general partnership co-own the company's assets

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. The mushrooms are expensive, and there were other unexpected financial problems, so Nyami and Rice asked Bill Ng to become a limited partner. This means that Ng: is limited in the number of hours he can work each month is limited in the amount he can invest qualifies for a limited income tax rate agrees not to participate in day-to-day management of the firm agrees to limit his expertise to a certain area, such as finance or marketing

agrees not to participate in day-to-day management of the firm

Three Sisters Specialty Foods, owned by Judith Coker, Millie Humphreys, and Jade Watson, sells eggless cake mixes for people on a restricted diet. Coker recently purchased an industrial grade mixer without conferring with her sisters who were upset when they learned that they were all three liable for the payments on the mixer. Three Sisters is an example of a:

general partnership

The growing popularity of bread machines has become a new business opportunity for Shelly Clemins and Jan Schoenbarr. The women make and sell bread machine covers and fabric gift bags to hold the bread loaves made in the machines. The women share the responsibilities of running the business (called Bread & Butter) as well as its profits equally. Bread & Butter would be an example of a(n): general partnership general cooperative limited cooperative S-partnership sole partnership

general partnership (A general partnership is a partnership in which all partners share in the management and profits.)

Sole proprietorships: are double taxed have unlimited liability are more difficult to dissolve than partnerships find is easy to raise needed capital are more closely regulated by the government than other forms of business

have unlimited liability

Thom Georges wants to open a store where he sells nothing but antique architectural features that he can salvage from old houses being torn down to make way for progress. He has an eye for the kind of doors, windows, mantels, and so forth that decorators want, but he does not have all the funding he needs to get started. He has invited his parents to invest $40,000 in the enterprise. He has told them that if they do invest, they would have liabilities in the firm equal to but no greater than their investment. Georges is trying to get them to form a _____ with him. closely-held corporation cooperative general partnership joint venture limited partnership

limited partnership (A limited partnership is a partnership with one or more general partners who have unlimited liability, and one or more limited partners whose liability is limited to the amount of their investment in the company.)

Partnership agreements generally specify all of following EXCEPT: contributions of each partner management responsibilities provisions for senior partnership interests methods of taxation of each partner steps in dissolving the entity

methods of taxation of each partner

Stewed Tomatoes was an "all-girl power-pop trio." Its three members realized that many musicians feel stifled when making music in a sterile studio environment while the clock ticked away expensive hours, so the three girl band members created Materville Studios, a multimedia production house and recording studio in downtown Chicago. They share work responsibilities and profits equally. Materville Studios is a(n): S corporation cooperative sole proprietorship partnership double proprietorship

partnership

Pete Yankin and Ken Lowery consider themselves to be experts on hunting in the mountains in North Carolina. As a result, the two men established a company that markets hunting expeditions. Yankin and Lowery share responsibilities for booking the trips, gathering supplies, and guiding groups of five to seven hunters into locations where they can hunt for deer and bear. Since the two will share any profit equally, this would be an example of a(n): S corporation cooperative sole proprietorship partnership double proprietorship

partnership (A partnership is an association of two or more individuals who agree to operate a business together for profit.)

The form of business ownership that has the most difficulty in raising capital is the:

sole proprietorship

The form of business ownership that is easiest to dissolve is the:

sole proprietorship