MIE CH 4 Smartbook

Ace Hardware has many independently-owned stores across the United States. These stores all share in the savings that result from the company buying supplies in large quantities and providing advertising for the stores. Which form of ownership does this represent?

Cooperative

What is a legal document that the state issues to a company based on information the company provides in the articles of incorporation?

Corporate charter

A state-chartered legal entity with authority to act and have liability separate from its owners is a ______.

Corporation

The situation known as "double taxation" only occurs with which form of business ownership?

Corporations

What is the main information included on the tax return for a partnership?

Distribution of profits among the partners

A business owned and controlled through pooled resources by the people who use it is a(n) ______.

A cooperative

What is required to start a partnership?

Articles of partnership

Which document sets forth the basic legal agreement between partners?

Articles of partnership

Select all that apply Which three items are usually listed in the articles of partnership?

Authority and responsibility of each partner How profits will be distributed Contribution (money or assets) of each partner

_____ are legally liable for the mismanagement of the firm or for any misuse of funds.

Board members

The two major types of partnerships are ______.

general and limited

A limited liability company is taxed like a(n) _______.

partnership

What is a disadvantage of the partnership form of business?

Friction between general and limited partners

What is one advantage of corporations?

Limited liability

Select all that apply What are the two main types of partnerships?

Limited, general

Fluffy Cloud Mattress and So Soft Mattress combined to form a new company called Fluffy Soft Mattress. What type of ownership does this represent?

Merger

Quantum Manufacturing was founded in 1955 by Earl and Jenni Maxwell. Today, their two sons own the business and are closely involved in managing the day-to-day workings of the company. What kind of company is Quantum Manufacturing?

Private corporation

What term refers to a corporation that is owned by just one or a few people, often a family, who are closely involved in managing the business?

Private corporation

Of the following forms of business ownership, which is relatively easy and inexpensive to form?

Sole proprietorship

Match the type of business ownership listed on the left with the description that characterizes its ownership listed on the right.

Sole proprietorship-One owner Partnership-Two or more owners Corporation-Any number of shareholders S Corporation-Up to 100 shareholders

What is the name given to businesses that owned and operated by one individual, and are the most common form of business organization in the United States?

Sole proprietorships

How are the members of a board of directors selected?

They are elected by the stockholders of the corporation.

Which statement is an accurate description of S corporations?

They are taxed like a partnership.

What is a disadvantage of sole proprietorship?

Unlimited liability

A(n) ______ occurs when one company purchases the property and obligations of another.

acquisition

The purchase of one company by another, usually by buying its stock, is called a(n) ______.

acquisition

A form of business ownership that looks like a corporation but is taxed as though it were a partnership with restrictions on shareholders is ______.

an S corporation

In a leveraged buyout, employees, managers, or investors finance the purchase of the company by ______.

borrowing against its assets

Before the owners of a corporation can establish the company's bylaws and elect a board of directors, they must receive a _____ from the state in which they are doing business.

corporate charter

As a legal entity, _______ have many of the rights, duties, and powers of a person, such as the right to receive, own, and transfer property.

corporations

When a corporation pays a tax on its profits and individual stockholders each pay tax on dividends distributed by the corporation, it is called ______.

double taxation

A key disadvantage of a general partnership is ______.

friction between partners

One advantage of a partnership is that ______.

it is easy to create

It is easy to start a sole proprietorship because ______.

it may only require a simple permit or license to start

A partnership established for a specific project or for a limited time is called a venture.

joint

A partnership established for a specific project or for a limited time is called a ______.

joint venture

A(n) ______ is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

leveraged buyout

Owners in an LLC have ______ liability.

limited

liability means that the owners of the business are responsible for its losses only up to the amount they invest.

limited liability

The result of two firms (usually corporations) combining to form one company is called a(n) ______.

merger

A legal form of business with two or more owners is a(n) ______

partnership

A(n) is an association of two or more persons who carry on as co-owners of a business. (Enter one word in the blank.)

partnership

The partnership business entity is not taxed, because each partner pays tax on the business's profits as their ______.

personal income

After working for years at one of the big accounting firms, Joslyn has decided to go into business for herself. She has opened up her own accounting and tax preparation firm. While she is the only accountant right now, Joslyn hopes to hire more people in the future. Joslyn's business can be defined as a ______.

sole proprietorship

In a sole proprietorship, any debts or damages incurred by the business that cannot be paid by the business are considered personal debts and the owner must pay them. This disadvantage can be termed _____.

unlimited liability