Chapter 5 Test Study Guide

Joint ventures ________.

A joint venture lets companies create an operation that is more tightly integrated than a strategic alliance but without disrupting the original companies to the extent that a merger or acquisition does.

Corporation

A legal entity, distinct from any individual persons, that has the power to own property and conduct business

A public corporation refers to a corporation ________.

A public corporation refers to a corporation whose stock is sold to the general public. It is also known as publicly held or publicly traded corporation.

A sole proprietorship ________.

A sole proprietorship is a business owned by one person. However, it may have many employees.

Robert owns three restaurants in Atlanta. He pays taxes for the income from the restaurants as his personal income. Robert's business is an example of a ________.

A sole proprietorship is a business owned by one person. The restaurant is owned by Robert alone although its has three branches.

Corporate officers of a company ________.

Corporate officers are hired by the board. Generally, corporate officers have legal authority to conduct the company's business, in everything from hiring the rest of the employees to launching new products.

Owner has limited personal liability for the business's financial obligations in sole proprietorships.

False Owner has unlimited personal liability for the business's financial obligations in sole proprietorships. In corporations, investors have limited liability.

In a general partnership, ________.

In a general partnership, all partners have joint authority to make decisions for the firm and joint liability for the firm's financial obligations.

Which of the following is a key difference between a corporation and a sole proprietorship?

In a sole proprietorship, the owner has unlimited personal liability for the business's financial obligations. In a corporation, the investors' liability is limited to the amount of their investment.

Which of the following is a key advantage that corporations have over sole proprietorships and partnerships?

Investments in corporations have more liquidity than partnerships and sole proprietorships. The stock of publicly-traded companies has a high degree of liquidity, which means that investors can easily and quickly convert their stock into cash by selling it on the open market. In contrast, liquidating (selling) the assets of a sole proprietorship or a partnership can be slow and difficult.

Profits of sole Proprietorships ________.

Profits and losses of sole proprietorships flow directly to the owners and are taxed at individual rates.

List the three (3) main forms of business ownership.

Sole Proprietorship, Partnership, Corporations

The board of directors are ________.

The board of directors is a group of professionals elected by shareholders as their representatives, with responsibility for the overall direction of the company and the selection of top executives.

Who is the highest-ranked officer of a corporation?

The highest-ranking officer is the chief executive officer (CEO). Other C-level executives, such as the following, assist the CEO: the chief financial officer (CFO), the chief information officer (CIO), the chief technology officer (CTO), and the chief operating officer (COO).

Board of directors is a group of professionals elected by shareholders as their representatives, with responsibility for the overall direction of the company and the selection of top executives.

True

Government agencies require publicly traded companies to publish extensive and detailed financial reports.

True