chap 4 missed questions
________ are legal documents that the state issues to companies based on information the company provides in the articles of incorporation.
Corporate charters
Sasha works for a large corporation, and sometimes, she finds it difficult to see how she fits into the corporate picture. However, recently, her company decides to establish an employee stock ownership plan. Which is a benefit of this type of plan?
It can boost employee productivity.
In an S corporation, net profits and losses of the corporation pass to the owners. What effect does this have?
It eliminates double taxation.
Ken is a partner in a local hardware store. He decides to sell his partnership interest. What is one challenge that Ken will face?
It may be difficult for the partners to place a value on Ken's share of the partnership.
A difference between limited liability companies (LLCs) and S corporations is that
LLCs are very simple to run, whereas S corporations are not.
What is a true statement about the board members of a corporation?
They have a duty of care and loyalty to oversee the management of the firm.
When are limited partnerships generally used?
When a project is risky and the chance of loss is great
Brewer Bikes, Inc. is a company that sells bicycles and accessories. It has been owned and operated by the Brewer family for 25 years. The Brewers own all the corporation's stock, and they are not required to disclose financial information publicly. What type of business is this?
a private corporation
When a company issues a poison pill to try to head off a hostile takeover attempt, the company will
allow stockholders to buy shares of stock at prices lower than the market value in an attempt to make a takeover less attractive to a potential acquirer.
Businesses set up as private corporations
are owned and managed by just one or a few people.
A characteristic of joint ventures is that they
are popular in situations that call for large investments.
A ________ is a legal entity, created by the state, whose assets and liabilities are separate from its owners.
corporation
________ are typically owned by many individuals and organizations who own shares of the business, called stock.
corporation
Profits of a corporation that are distributed in the form of cash payments to stockholders are called
dividends
When a group of investors borrows money from banks and other institutions to acquire a company and uses the assets of the purchased company to guarantee repayment of the loan, a ________ is taking place.
leveraged buyout
April is a doctor who is forming her own medical practice. She wants her practice to be flexible, simple to run, and free from required meetings, minutes, or resolutions. Her goal is to blend the best characteristics of corporations, partnerships, and sole proprietorships. What form of business ownership seems most in-line with April's goals?
limited liability company
GasSource, a national provider of natural gas, is a partnership that is traded on securities exchanges. This allows it to have the tax benefits of a limited partnership but the liquidity of a corporation. GasSource is an example of a(n)
master limited partnership.
Geraldine is a professor at a local college who serves on the board of directors for a leading academic publisher. She is a valued member of the board because she brings her unique perspective from the field, and she is qualified, knowledgeable, and independent of the company. Geraldine is a(n)
outside director.
The right of common stockholders to have the opportunity to purchase new shares of stock is called a
preemptive right.
The form of business ownership that has the ability to raise capital most easily is a
public corporation.
A difference between common stockholders and preferred stockholders within a corporation is that common stockholders
receive dividends after preferred stockholders.
Frank, Martin, and Paul secure a charter for their business. They hold an organizational meeting to establish the corporation's bylaws and elect a board of directors. What is one thing the bylaws might do?
set up committees of the board of directors
David, Shannon, and Greg are starting a new accounting firm together, and they are drafting articles of partnership. All of the following are items they should include EXCEPT
the total money and assets of each partner's estate.
A characteristic of S corporations is that
their shareholders can shift income and appreciation to others.
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
