Exam 6: Business Formation: Choosing the Form That Fits

Since sole proprietorships are extensions of their owners, they:

A corporation can be a partner in a partnership.

The earnings of not-for-profit corporations are exempt from federal and state income taxes.

In a sole proprietorship, any debts the company incurs are:

List and describe any two forms of business ownership.

Which of the following is a similarity between a sole proprietorship and a partnership?

Clara and Sandra collaborate to open a cafe. They come to an arrangement wherein Sandra manages the cafe from Monday to Wednesday, Clara manages it from Thursday to Saturday, and both jointly manage it on Sunday. Both Clara and Sandra share the profits of the business equally while facing a personal liability for any debts or losses that the cafe may incur. In this scenario, Clara and Sandra most likely _____.

Michael owns 100 shares of stock in the Zanson Electricals Corporation, but as a stockholder, he does not have the right to vote in stockholders' meetings. In this scenario, Michael is a preferred stockholder.

A(n) _____ cannot contribute funds to a political campaign.

A _____ refers to a partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm.

The shareholders of a C corporation fill in all the required paperwork with a government agency. They also adopt a set of rules that will govern the way the corporation is organized and conducts its business. Given this information, the shareholders most likely adopt _____.

The basic rules governing how a corporation is organized and how it conducts its business are known as _____.

In the context of limited partnerships, the general partners of a company assume limited personal liability for any of the company's debts.

Lancelock Inc. buys a less accomplished firm by directly signing a deal with the target firm's shareholders. The move is vehemently opposed by the board of directors and the top management of the target firm. This is an example of a _____.

_____ is a type of divestiture in which a firm converts a particular unit or division into a separate company and issues stock in the newly created corporation to outside investors.

Which of the following statements is true of a typical franchise agreement?

Clareese Trends, a clothing manufacturer, identifies twelve potential franchisees who would introduce the brand's outlets across eight major cities in the United States. Clareese Trends, however, has retained the production rights with itself, giving its franchisees only the right to sell the products they receive from the company at their various outlets. This scenario exemplifies a _____.

Which of the following is an example of an institutional investor?

Which of the following statements is true of sole proprietors?

Happta is a corporation with tax-exempt status. It has members but cannot have stockholders. Given this information, Happta is most likely a(n):