Intro to Business ch5
1a disadvantage of a sole proprietorship
1unlimited liability
4In a sole proprietorship any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is
4unlimited liability
5Which of the following is considered a disadvantage of a sole proprietorship
5unlimited liability
Which of the following statements about partnerships is most accurate
A major drawback of a partnership is that it is difficult to terminate
A good reason why partners should spell-out the details of their partnership arrangements in writing is
A written agreement will help reduce misunderstandings and disagreements among the partners
In a leveraged buyout, the managers of a firm, its employees, or other investors
Borrow funds to buy out the firm's stockholders
In a limited partnership, the liability of the limited partners is unlimited and personal assets are at risk
FALSE
One difference between partnerships and sole proprietorships is that partnerships
Have a greater chance of long term survival due to the accountability of each partner to the other
A company similar to an S corporation but without the special eligibility requirements
LLC
Leaving a BLANK means owners can leave an ongoing business for future generations
Legacy
When investors successfully take a firm private, the firm's stock is
No longer sold to investors on the open market
Having no more than 100 shareholders and one class of stock is a characteristic is
S corporation
a unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called
S corporation
The strategy of investors who are attempting a leveraged buyout is
Secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock
Sole proprietors set their own schedules, but work many hours
TRUE
The main advantage of a sole proprietorship is ease of start up
TRUE
To end a sole proprietorship you simply stop operations
TRUE
a disadvantage of a sole proprietorship is limited financial resources
TRUE
One reason that companies participate in mergers and acquisitions is
To expand within their own field or enter new markets
The owner of a sole proprietorship might choose to incorporate to gain what advantages
ability to spend more money on facilities, limited liability, and ability to raise money for investment
One's company purchase of property and obligations of another company
acquisition
occurs when one company purchases the property and obligations of another
acquisition
The advantages of becoming a sole proprietorship include
being your own boss
Select the reasons why size is an advantage of the corporation
build modern facilities, acquire the latest equipment, and attract experts for hire
if a software company and a fast food company merged
conglomerate merger
A key advantage of a sole proprietorship is that
controlling your own business is exciting
A legal entity with authority to act and have liability apart from its owners
corporation
BLANK can attract talented employees by offering stock in the company
corporation
reasons that disagreements can ruin a partnership include
disagreement over workload, opposing management styles, and arguments over dividing profits
It is important to have Articles of Partnership because problems between partners may occur due to
disagreements over dividing profits
a major disadvantage of the corporate form deals with the tax situated called
double taxation
one of the most important advantages of the sole proprietor form of ownership is that a business owner
finds it easier to start and end the business
A disadvantage of corporations is that they become too large to be
flexible
Drew and Owen are business partners. Drew invested money and manages the business while Owen invested his money, but does not participate in the business management. Drew is considered a BLANK partner while Owen is considered a BLANK partner.
general limited
Mark, Cal, and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming
general partnership
A sole proprietorship has a limited life span unless
it is taken over by a heir or it is sold to someone else
A master limited partnership looks so much like a corporation because
it is traded on the stock exchange
an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
leveraged buyout (LBO)
the responsibility for a loss only up to the amount invested is BLANK liability
limited
Limited liability, choice of taxation, flexible ownership rules, and operating flexibility are all advantages of BLANK company
limited liability company
The form of partnership that limits liability to the limited partner's own acts or those of the people they supervise
limited liability partnership
when two firms join together to form one new company
merger
The various responsibilities of each partner, especially any issues involving BLANK, should be agreed to in discussions and put in writing before agreeing to a partnership
money
sole proprietor must develop on their own
paid health insurance, paid sick or vacation time, and a pension plan
The Uniform Partnership Act defines the three key elements of a general partnership
participation in operations, shared profits and losses, and common ownership
disadvantages of a partnership
partner disagreements, division of labor, and unlimited liability
An advantage of a sole proprietorship is that the owner
retains profits
In order to qualify to become an S corporation, a company must have
shareholders who are individuals or estates, and no more than 100 shareholders
Funds available to a business are limited to what one owner can gather which is a disadvantage to the form of business known as
sole proprietorship
An advantage of partnerships is a longer BLANK rate than sole proprietorships , because they become more disciplined and the business's life is based on all the partners
survival
People who own and manage their own businesses rightfully have pride of ownership
take the risks and provide needed goods and services
When you owe a sole proprietorship you and the business are considered one, so you have BLANK liability for financial obligations such as debt
unlimited
when two firms operating in different stages of related businesses join
vertical merger
funds available for a sole proprietorship are limited to
what the owner can provide
A key advantage of LLC is BLANK liability where personal assets are protected
limited
order in which members of a corporation are chosen in order to separate ownership from management.
1.Owner's/stockholders elect board of directors 2.Board of Directors hire officers of the corporation 3.Officers hire managers of the corporation 4.Managers hire employees
2If your company debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called
2 unlimited liability
3In a sole proprietorship debts of the businesses are considered the responsibility of the owner if the business can't pay
3unlimited liability
If you and your friend have started a business together, you have started a sole proprietorship
FALSE
BLANK partners participate in operating the business while limited partners do not
General
Maria has a lot of self-confidence and business knowledge. She recently opened a bakery as a sole proprietor. She is expecting a high level of profits and is looking forward to
Keeping all of the money she earns except for the taxes she is required to pay
No stock, limited, life span, and fewer incentives are disadvantages of a
LLC
The BLANK limited partnership looks much like a corporation in that it acts like a corporation and it is traded on a stock exchange
Master
Select all attributes that make the initial cost of incorporating a disadvantage
The high cost of hiring lawyers and accountants for the complex fillings needed, and high start up costs associated with documentation
A BLANK partner has responsibility or liability for losses beyond their investment, but a BLANK partner only has liability to the amount they invest
general, limited
a merger of two firms in the same industry that allows the companies to diversify or expand their products
horizontal merger
The attributes of a corporation include
it is a legal entity, it is state chartered, corporate liability is separate from owners
LLCs do have to submit articles or organization and an operating agreement, but do not have to
keep minutes, file written solutions and hold annual meetings
An S corporation has the liability protections of a corporation but is taxed
like a partnership or sole proprietorship
A BLANK partnership has partners who do not share in operating the business
limited
The owner of a sole proprietorship must pay which tax
personal income tax, social security and Medicare
individuals who start and manage a business are concerned with risk. They may choose to incorporate to decrease
personal liabilites
If you start and manage a landscaping business on your own, you have likely started a
sole proprietorship
When choosing to form a partnership, a business owner should consider all of the following
the level of participation of each partner, the financial contribution of each partner, a partner's level of expertise in different areas of business
A sole proprietorship often grows slowly because the owner is
the main-source of creativity, know-how, and funding
Which of the following is normally considered a disadvantage of the corporate form of business
Double taxation of earnings
reason why management difficulties are considered a disadvantage of sole proprietorships
It is hard to attract employees to help run the business due to the competition with larger companies offering better benefits, and one person is responsible to keep track of inventory, accounting operations and tax records, and people good at one skill like selling may not be good at another such as managing
In recent years, firms found it easier to grow market share by
Merging with other companies or acquiring new companies
a corporation is formally formed
articles of incorporation and bylaws
In addition to the articles of incorporation, a corporation has BLANK, which describe how the firm is to be firmed from legal and managerial points of view
bylaws
In addition to the articles of incorporation, a corporation has BLANK, which describe how the firm is to be operated from both legal and managerial points of view
bylaws
selling shares of stock to anyone allows BLANK to raise more money to grow
corporation
There is little room for advancement with a sole proprietorship, so the owner may have difficulty attracting and retaining qualified
employees
Except for states like Delaware and Nevada, BLANK creates a disadvantage to incorporate
extensive paperwork
If you are your own boss you are responsible for paying your own wages/salary and for your own
fringe benefits
one advantage of a partnership is that
it is easier to make money
of the many forms of business ownership, BLANK is an easy way for two individuals to conduct business
partnership
When a corporation is separate from its owners and does not terminate with the death of one owner
perpetual life
All profits of a sole proprietorship are taxed as Blank income of the business owner
personal
The limited liability partnership ensures that the limited partners BLANK assets are not at risk
personal
It is more difficult for sole proprietorships to attract and retain employees because
they cannot offer competitive pay and benefits
