ch 4 business

What is a disadvantage of partnerships over sole proprietorships?

In partnerships, profits have to be shared, whereas in sole proprietorships all profits belong exclusively to the owner.

What is an advantage of partnerships over sole proprietorships?

In partnerships, the owners have access to more funds than in sole proprietorships.

What is an advantage of a sole proprietorship?

It is easy and inexpensive to form.

What is an advantage that corporations provide as a form of business ownership?

It is easy to transfer ownership in corporations.

A difference between limited liability companies (LLCs) and S corporations is that

LLCs are very simple to run, whereas S corporations are not.

________ can be considered as both an advantage and a disadvantage of a sole proprietorship.

Taxation

Which business provides a service, but is neither owned by the government nor focuses on earning profits?

a nonprofit corporation

Mountain Outfitters is a large company that manufactures durable outdoor clothing. The company has stock that anyone can buy, sell, or trade, but since it is a large company, its stockholders are far removed from its management. What type of business is this?

a public corporation

The Food Palace, Inc. is a large grocery chain that was incorporated in the United States. Over the years, the corporation has grown, and it has now opened locations in five other nations. In those nations, The Food Palace is considered to be a(n)

alien corporation.

If a business wants to incorporate, its incorporators must file legal documents with the appropriate state office. What are these legal documents called?

articles of incorporation

The legal documents that identify the basic agreements between partners are called

articles of partnership.

Profits of a corporation that are distributed in the form of cash payments to stockholders are called

dividends.

Partnerships are quasi-taxable organizations. This means that they

do not pay taxes when submitting the partnership tax return to the Internal Revenue Service.

Preferred stockholders of a corporation

have a claim to profits before other stockholders do.

Feed & Grow and Boost Products, two fertilizer companies, merge to reduce the number of corporations competing within the fertilizer industry. This merger is an example of a

horizontal merger.

A(n) ________ is a partnership established for a specific project or for a limited time.

joint venture

What is a disadvantage of sole proprietorships?

lack of continuity

Which form of business organization is the most common in the United States?

sole proprietorships

Summer Foods is a public corporation that is experiencing difficulty growing its vegetable products during an especially dry summer season. Wanting the flexibility to make decisions for restructuring the company's operations, its managers buy all the stock, which means the company is

taking the company private.

A characteristic of S corporations is that

their shareholders can shift income and appreciation to others.

All of the following are true of 501(c)(3) organizations EXCEPT

they must answer to their shareholders.

A merger occurs when

two companies combine to form a new company.

An advantage of corporations over sole proprietorships is that

unlike sole proprietorships, the existence of corporations is unaffected by the death or withdrawal of any of the stockholders. Correct

Keesha, Mandy, and Isabel are starting their own pet grooming business, and they are drafting articles of partnership. What item should they be sure to include in their articles of partnership?

what to do if one of the partners becomes disabled

When are limited partnerships generally used?

when a project is risky and the chance of loss is great