Intro to Business - Ch. 4

All profits from a sole proprietorship belong exclusively to the ______.

Owner

Corporation

Any number of shareholders

What is most commonly required to start a partnership?

Articles of partnership

Which legal document sets forth the basic agreement between partners?

Articles of partnership

Select the three items that 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 situation known as "double taxation" only occurs with which form of business ownership?

Corporations

Which of the following is a disadvantage of the partnership form of business?

Friction between general and limited partners

The two major types of partnerships are _____.

General and limited

Sole Proprietorship

Individual income is taxed.

Partnership

Individual owners' income is taxed.

In a partnership, the liability of limited partners is limited to their ______.

Initial investment

It is easy to start a sole proprietorship because ______.

It may only require a simple permit or license to start

Which of the following is an advantage of the corporate form of business ownership?

Limited liability

Select from the following three resources available to a sole proprietor to obtain funds.

Loans from a bank, Money from friends & family, The business owner's own personal funds

Sole proprietorship

One owner

How is taxation handled in partnerships?

Partners pay taxes at the income tax rate for individuals.

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

Partnership

As association of two or more persons who carry on as co-owners of a business for profit is the definition of a(n) ______.

Partnership

_____ do not pay taxes when submitting the organization's tax return to the Internal Revenue Service, the tax return simply provides information about the profitability of the organization and the distribution of profits.

Partnerships

This is a corporation whose stock anyone may buy, sell, or trade.

Public corporation

An advantage of a sole proprietorship is that the owner ______.

Retains all profits

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

Sole proprietorship

Roland wanted to earn extra income, so he signed on with Uber as a driver. Since Roland is not considered an employee of Uber but rather an independent contractor, his new business venture would be called a _______.

Sole proprietorship

Which form of business allows for the greatest degree of secrecy?

Sole proprietorship

______ are businesses owned and operated by one individual, and are the most common form of business organization in the United States.

Sole proprietorships

Corporation

The business and shareholders are taxed.

Which of the following is TRUE of S corporations?

They are taxed like a partnership

Partnership

Two or more owners

As a sole proprietor, Ellie enjoys many advantages. Which of the following is NOT one of them?

Unlimited liability

In a sole proprietorship, any debts or damages incurred by the business that cannot be paid by the business are your personal debts and you must pay them. This disadvantage is known as ______.

Unlimited liability

S Corporation

Up to 100 shareholders

A(n) ______ is where one company purchases the property and obligations of another.

acquisition

The purchase of one company by another, usually by buying its stock, is 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 the number of shareholders is ______.

an S corporation

A _____ is/are elected by the stockholders to oversee the general operation of the corporation and set its long-range objectives.

board of directors

If a chemical company merged with a textile manufacturer, it would be an example of a ______.

conglomerate merger

The joining of firms in completely unrelated industries is a(n) _______.

conglomerate merger

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n) ______.

cooperatives

A legal document that the state issues to a company based on information the company provides in the articles of incorporation is called a ______.

corporate charter

Based on the information in the articles of incorporation, the state issues a _______ ________ to the company.

corporate charter

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

corporation

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

LLCs are flexible, simple to run, and do not require the members to hold meetings, keep minutes, or make resolutions, all of which are necessary in______.

corporations

When the 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 the partnership form of business is ______.

friction between partners

If two companies that both make water valves for plumbing contractors merge, it would be an example of a ______ merger.

horizontal

A merger of two firms that sell similar products to the same customers is a(n) ______.

horizontal merger

One advantage of a partnership is that ______.

it is easy to create

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 ______.

joint venture

Owners in an LLC have ______ liability.

limited

Stockholders' liability for losses only up to the amount they invest is called ______ liability.

limited

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

merger

When two firms join together to form one new company, it is called a(n) _______.

merger

As an entity, cooperatives are not set up to make _______.

money

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

personal income

A _______ corporation is owned by just one or a few people who are closely involved in managing the business.

private

A(n) ______ is owned by just one or a few people who are closely involved in managing the business.

private corporation

A _____ corporation is one whose stock anyone may buy, sell, or trade.

public

In a sole proprietorship, the possibility that competitors can obtain trade secrets is minimized because _______.

the sole proprietor does not have to discuss publicly his or her operating plans

When each general partner is liable for the debts of the firm, no matter who was responsible for causing the debt, this is called ______ liability.

unlimited

A merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger.

vertical

The joining of two companies involved in different but related levels of an industry is called a(n) ______ merger.

vertical

Funds available for a sole proprietorship are limited to ______.

what the owner can provide