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
