Ch. 4 Concept Checks

a. general; limited

A ______ partner has responsibility or liability for losses beyond their investment, but a ______ partner only has liability for the amount they invest. a. general; limited b. limited; general c. corporate; limited d. general; unlimited e. unlimited; general

d. a frozen investment

A disadvantage of a partnership where remaining partners are unwilling to buy the share of a partner who retires can be referred to as _______________. a. unlimited liability b. retention of profits c. additional tax liability d. a frozen investment e. lack of continuity

d. unlimited liability.

A key disadvantage of a general partnership is: a. extensive paperwork. b. difficult to start-up. c. additional tax liability. d. unlimited liability. e. additional regulations.

e. partnership.

A legal form of business with two or more owners is a(n): a. estate. b. limited proprietorship. c. sole proprietorship. d. multiple proprietorship. e. partnership.

a. horizontal merger.

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n): a. horizontal merger. b. acquisition. c. conglomerate merger. d. vertical merger. e. hostile takeover.

d. joint venture.

A partnership established for a specific project or for a limited time (for example a U.S. company joining with a foreign firm to enter new markets) is called a(n): a. general partnership. b. limited partnership. c. syndicate. d. joint venture. e. S corporation.

d. closed; open

A(n) _______ corporation is a corporation whose stock is owned by relatively few people and is not sold to the general public; while, a(n) _______ corporation is one whose stock can be bought and sold by any individual. a. open; closed b. limited; unlimited c. general; limited d. closed; open e. unlimited; limited

d. the money he or she paid for the corporation's stock.

Each corporate stockholder's financial liability is typically limited to a. an amount determined in court. b. the stockholder's net worth. c. the amount of outstanding creditor claims. d. the money he or she paid for the corporation's stock.

b. taxed.

One of the big differences between corporations and S corporations is how profits are: a. distributed. b. taxed. c. calculated. d. allocated. e. reinvested.

c. conglomerate merger

The joining of firms in completely unrelated industries is a(n) _______. a. horizontal merger b. acquisition c. conglomerate merger d. hostile takeover e. vertical merger

b. lawyers and accountants are needed to do the complex filings.

The start-up costs of filing for incorporation are high because: a. stockholders are very exacting. b. lawyers and accountants are needed to do the complex filings. c. partnership agreements are lengthy. d. the federal government charges very high fees.

c. Syndicate

What association might be formed because no one person or firm is willing to put up the entire amount required for the undertaking of a project; for example, to underwrite a large insurance policy or investment? a. Not-for-profit corporation b. Limited-liability company c. Syndicate d. Joint venture e. S corporation

b. A business that is owned (and usually operated) by one person.

What is a sole proprietorship? a. An artificial person created by law with most of the legal rights of a real person. b. A business that is owned (and usually operated) by one person. c. A person who invests money in a business, but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership. d. A form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership. e. A voluntary association of two or more persons to act as co-owners of a business for profit. Check My Work

a. Alien corporation

What is the term for a corporation chartered by a foreign government that is conducting business in the United States? a. Alien corporation b. Limited-liability corporation c. Domestic corporation d. Foreign corporation e. General corporation

d. As soon as their purposes have been achieved

When are joint ventures and syndicates dissolved? a. Between zero and 20 years b. Never c. Greater than 20 years d. As soon as their purposes have been achieved

b. hostile takeover.

When the management and board of directors of a firm targeted for acquisition disapprove of a merger, this is known as a: a. vertical merger. b. hostile takeover. c. tender offer. d. proxy fight. e. conglomerate merger.

b. Limited-liability company

Which form of business ownership provides limited liability, as in a corporation, but is taxed like a partnership and is not restricted on the number of allowed stockholders? a. Sole proprietorship b. Limited-liability company c. Limited partnership d. Corporation e. S corporation

c. The value of each partner's retirement accounts

Which of the following is NOT usually stated in the articles of partnership? a. What happens if a partner wants to dissolve the partnership or dies b. Assets each partner has contributed c. The value of each partner's retirement accounts d. How profits will be distributed e. Each partner's management role

c. Corporate charter

Which of the following is a legal document that the state issues to a company based on information the company provides in the articles of incorporation? a. Dividend certificate b. Corporate deed c. Corporate charter d. Articles of partnership e. Stock certificate

c. Preferred

Which of the following is a special type of stock whose owners cannot vote regarding the running of the company, yet have a priority claims to profits? a. Common b. Nonprofit c. Preferred d. Dividend e. Private

e. Retention of all profits

Which of the following is an advantage of a sole proprietorship? a. They pay the same federal income taxes that corporations pay b. Unlimited liability c. Limited management skills d. Lack of continuity e. Retention of all profits

a. Limited liability

Which of the following is an advantage of corporations? a. Limited liability b. Lack of secrecy c. Ease of formation d. Double taxation e. Lack of government regulations

c. Pooled financial resources

Which of the following is an advantage of partnerships? a. No management disagreements b. Limited liability c. Pooled financial resources d. Unlimited liability e. Perpetual life

a. Not-for-profit corporation

Which type of corporation focuses on providing a service rather than earning a profit, but is not owned by a government entity? a. Not-for-profit corporation b. Syndicate c. Joint venture d. S corporation e. Limited-liability company

b. Unlimited liability

_____________ is a legal concept that holds a business owner personally responsible for all the debts of the business. a. Lack of continuity b. Unlimited liability c. Seized assets d. Limited management skills e. Ease of start-up