Chapter 4 Business 1301

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total annual sales

4%

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation.

In a 1960s movie, an heiress sends out thousands of letters to shareholders in an attempt to have them vote for her and for the company to remain independent or to give her the right to vote for them. The opponent tried to get the shareholders to vote for his side and asked shareholders to give him the right to vote for them. What kind of corporate takeover technique was this movie about?

a proxy fight

When many banks join together to lend money to developing countries such as Bangladesh and Malaysia, they seek to spread out the risk of default. This is called

a syndicate

The person who assumes full co-ownership of a partnership, including unlimited liability, is a

general partner

If Avon and Merck joined together to produce a cream that slows down the aging process, this would be called a(n)

joint venture

Refer to B&G, Inc. Which of these features does not belong to this type of corporation?

management flexibility

The Smithsonian Institution exists to preserve historical and cultural items of value and to share those items with the public; it does not exist to maximize the wealth of any shareholders. This entity is organized as a(n)

not-for-profit corporation

The major reason why businesses change from sole proprietorships to other forms of ownership is to

obtain help and eliminate the problem of too much to do in one day

Anyone with the money can purchase shares of Coca-Cola's stock. This makes Coca-Cola a(n) ____ corporation.

open

Which of the following is an advantage of the corporate form of organization?

ownership of stock is easy to transfer

Sears Holding Corporation is incorporated in Delaware, but when it operates in Illinois and Texas, it is considered a(n) ____ corporation in those states.

Foreign

When the owner of a sole proprietorship dies, what becomes of the business?

It ceases to exist unless the heirs take it over or sell it

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid double taxation. Which type of business ownership would you recommend?

Limited-liability company

Ted's partnership agreement with two other men was a bit unsound. One of the problems the men were encountering was uneven productivity among the partners. The agreement required each partner to contribute to every aspect of the business to receive an equal portion of the profits. This agreement did not reflect the idea that

all partners need not be equal; that is, there are different types of partners. Some may be fully active in running the business, whereas others may have a more limited role.

Allied Services is a transportation company that operates in most of the United States. If Allied Services decided to incorporate, in which state would it incorporate?

any state that the company chooses

Nortons, Inc. is a hardware store that is owned by members of the Norton family as well as a few close friends of the family. This company is a(n)

closed corporation

In the state in which it is incorporated, a business is known as a(n)

domestic corporation

With regard to taxation of partnerships, which of the following statements is correct?

each partner is taxed in the same way as a sole proprietor

Maurice would like to own a train store and operate it by himself. He has enough money to open it and operate it on his own and elects to do so. What form of business is this?

sole proprietorship

Which form of business is the easiest to start?

sole proprietorship

Unlimited liability means

the owner is responsible for all business debts

Which of the following is an example of a horizontal merger?

the purchase of Mobil Oil by Exxon

When starting a corporation, people submit articles of incorporation to

the secretary of state

Refer to Samantha's Dilemma. What would not be an advantage of Samantha's aunt's business?

unlimited liability