Exam 6: Business Formation: Choosing the Form That Fits

Mikhail, a Korean, wishes to be a stockholder in an airline company in the United States. However, he is told that he cannot buy shares of the company as he is neither a U.S. citizen nor a permanent resident of the country. Besides this, he can become a stockholder only if any of the current stockholders decide to sell their shares as the company already has 100 stockholders. Given this information, it can be assumed that Mikhail wants to be a stockholder of a(n) _____.

One of the reasons why C corporations have an edge over sole proprietorships is:

A limited partnership is an agreement between two or more individuals to operate a business as co-owners for a limited period of time.

Which of the following statements is true of the formation of general partnerships?

Fabotels is a hotel aggregator that buys budget hotels that succumb to financial losses and then refurbishes them under the company's brand name. Fabotels recently purchased Ravine Comforts, a small lodge that was running into huge debts. The business deal between Fabotels and Ravine Comforts exemplifies a(n) _____.

A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.

Which of the following is an advantage of limited liability companies (LLCs)?

The owners of limited liability companies (LLCs) are called members because:

Charles wants to start a décor business and takes a loan of $35,000 from the bank to set up the business. Once the business is up and running, Charles will have full control of the business and its profits. However, he will also be responsible for any losses that the business incurs. In this scenario, which of the following forms of business ownership is Charles planning to start?

Norman owns a large number of shares in a telecommunications corporation. Despite that, he does not have the right to vote in a meeting held specifically to elect the CEO of the company. In this scenario, Norman is most likely a _____.

Which of the following is a challenge faced by a franchisor?

A Franchise Disclosure Document (FDD) is:

The benefits of a general partnership include its _____.

Inkglot Technologies, a medium-sized corporation, is allowed to have only 35 stockholders at any point of time. However, all stockholders of the company can actively participate in the management of the company while still maintaining limited liability. Given this information, Inkglot Technologies is most likely a(n):

Which of the following is a difference between limited partnerships and limited liability partnerships?

Jovi's Corner, a toy store, abruptly closes down after the death of its owner. Without an heir or an experienced person to manage the store, Jovi's Corner is shut down, and the property is sold off to another party. The profits are donated to an orphanage. In the given scenario, Jovi's Corner is most likely an example of a _____.

Albert is the owner of a car service center. As a sole proprietor, any profit that he earns is:

Ronald, Jamie, Ben, and Joseph are colleagues who want to start a company of their own. All of them want to be actively involved in managing the business. However, they do not want any personal liability for any debts incurred by the company. In this scenario, they should most likely get involved in a _____.

The most common type of corporation is an S corporation.

Which of the following is an advantage of general partnerships?