Business Organizations

What percentage of businesses are sole proprietorships?

75 percent

What is a major reason for conglomerate mergers?

Diversification

Which of the following is an advantage of a sole proprietorship?

It is the least-regulated form of business organization

What does limited liability of the owners of stock in a corporation mean?

The stockholders of a corporation can lose only what they have invested in the corporation

A bond is a certificate issued by a corporation promising to repay the amount it has borrowed plus interest at a specified time in the future

True

A company paid health plan would be an example of a fringe benefit

True

A horizontal merger is the joining of two or more firms competing in the same market with the same good or service

True

A partnership is a business organization owned by two or more individuals

True

Corporations are regarded as separate legal entities

True

Dividend represent a portion of corporate profits

True

If you buy stock, you own part of the corporation

True

Liability is the legal obligation to pay debts

True

Limited life is a disadvantage of a sole proprietorship

True

Most large businesses are corporations

True

Stockholders pay personal income taxes on the money they receive from dividends

True

Corporations raise large sums of money by

borrowing money, selling stock in the company, and selling bonds

An advantage of a merger between two companies is

improved production and efficiency

which of the following is a disadvantage of a sole proprietorship?

lack of permanence

One advantage enjoyed by a corporation is

limited liability

If the Panther Manufacturing Co, Inc. has profits of $1,000,000 and distributes all of its profits in the form of dividends to its sole shareholder, Maddie Hemann, how much money will she end up having to spend if the corporate tax rate is 30% and the individual income tax rate is 20%?

$560,000

Which of the following is an example of a merger?

A company combines with a company that supplies it with raw materials

What is the major difference between corporation and other kinds of businesses?

A corporation has a separate entity apart from that of the owners and workers

Which type of business organization faces double taxation?

Corporations

Ford buying Kia would be an example of vertical merger

False

If a company must liquidate, preferred stockholders are the first in line to receive any money from the sale of assets.

False

Preferred stockholders have the right to vote for nominees to the board of directors of corporations

False

The federal government issues a company's certificate of incorporation.

False

The most common form of business organization is the corporation

False

A business fails and the owners lose their investment in the company, along with their homes, automobiles, and other personal property. The owners are

General partners in a general partnership

If a general partnership fails, who is responsible for the debts?

all of the partners

What are the money and other valuables that belong to a corporation or partnership called?

assets

A major disadvantage of the sole proprietorship is that

banks are often unwilling to lend money to the business

A sole proprietor

does not have to pay a separate business tax

The Securities and Exchange Commission (SEC) supervises and regulates the

sale of corporate stock to the public

An example of a nonprofit organization is a

school

Selling stock that you dont presently own is called

short selling

What is NOT a characteristic of the corporate form of organization?

unlimited liability

NOT a major advantage of a sole proprietorship

unlimited personal liability

A joining of two or more businesses that are involved in different stages of producing the same good or service is called which of the following?

vertical merger