BUSN101 Chapter 5 Final Prep

A master limited partnership (MLP) is taxed like a partnership.

A corporation receives its charter from a state government.

Double taxation means corporations pay tax on their profits. If they distribute after-tax profits to the stockholders, the stockholders also pay taxes on the distribution.

A good reason why partners should spell out the details of their partnership agreements in writing as a written agreement will help reduce misunderstandings and disagreements among the partners.

When two companies in the same industry agree to become one firm, the result is called a horizontal merger.

A separation between ownership and management is most likely to occur in a corporation.

When investors successfully take a firm private, the firm's stock is no longer sold to investors on the open market.

A vertical merger unites firms at different stages of related businesses.

The strategy of investors who are attempting a leveraged buyout is to use debt to finance the buyout of the firm's stockholders and gain control of the firm themselves.

An advantage of the corporate form of business when compared to sole proprietorships and partnerships is the limited liability of owners.

Compared to a sole proprietorship, an advantage of a general partnership is the ability to pool financial resources.

An entrepreneur who wishes to start a business with little delay or hassle, and who wants to be his or her own boss, should organize the business as a sole proprietorship.

In the late 1990s, firms found it easier to grow market share by merging with other companies or acquiring new companies.

Any debts or damages incurred by a firm organized as a sole proprietorship are the responsibility of the owner.

A significant disadvantage of owning a sole proprietorship is the overwhelming time commitment often required of the owner.

Canada is by far the most popular target for American franchisers seeking to establish franchises in other countries.

Compared to partnerships and a sole proprietorship, a major advantage of the C (conventional) corporation as a form of business ownership is that it has the ability to raise more money.

In a leveraged buyout, the managers of a firm, its employees, or other investors borrow funds to buy out the firm's stockholders.

When a sole proprietor dies, the sole proprietor's heirs have the option of taking over the business.

One attractive benefit of a corporation is that corporations can attract employees by offering stock options.

The major attraction of S corporations is that they avoid the problem of double taxation.

One result of taking a firm private is the firm's stock is no longer available for purchase on the open market.

One disadvantage of corporations is the initial cost of formation.

Owning and operating a franchise in a different country may require the owner to adapt to social and cultural differences.

The most popular type of business for franchising is restaurants.

The income generated by S-corporations passes through to its owners, and each is taxed individually for this income.

Sole proprietorships are taxed at the owner's personal tax rate.

The purpose of a farm cooperative is to give members more economic power as a group than they would have as individuals.

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set up a limited liability partnership.

To many businesspeople, one of the major attractions of a sole proprietorship is the chance to be their own boss.