Exam 6: Forms of Business Ownership

Jose lives in Mexico City and is a Mexican citizen. He has several friends in the United States who own a company. If Jose wanted to invest in the company, why would it matter if the company was an S corporation as opposed to a limited liability company?

A sole proprietorship can have only one owner, but it can have any number of employees.

A conglomeration occurs when two companies selling different but related products in the same market combine.

A corporation that owns a chain of pastry shops on the west coast has seen a decrease in revenue in recent months due to an increase in the price of flour. The company is considering merging with another company in order to combine resources and save on costs. Which type of merger would be most beneficial for the corporation and why?

Which of the following is a disadvantage of forming a corporation?

One disadvantage of a sole proprietorship is they usually have limited access to additional financial resources.

Diane and Julie own a coffee shop. Due to the growing number of customers, they need to hire. At the beginning of their partnership it was agreed that Diane would manage human resources. Diane independently interviewed and hired two servers. What makes Diane and Julie's partnership successful in this situation?

Which of the following tasks is NOT the responsibility of the board of directors?

Paula is thinking of making homemade perfumes and selling them to her relatives. She has not filed any legal documents to start her business. Paula would be operating as a(n)________.

Which of the following statements about the operation of a corporation is correct?

Members are the most important part of a cooperative.

Becca and Bob own a car rental business. Becca contributes 75 percent of the capital but does only 20 percent of the work, while Bob contributes 25 percent of the capital but does 80 percent of the work. Both decide on a 50/50 allocation of profits. In which types of business structures would this arrangement be possible?

The Sarbanes-Oxley Act of 2002 was enacted to provide a new set of standards of accountability for ________.

Mr. Gonzales wants to help fellow farmers in his community, but he is not interested in making a personal profit. His main goal is to join with other farmers so they can have better bargaining power when purchasing supplies. Which of the following business types will Mr. Gonzales MOST likely form?

More than one-half of all mergers do not succeed in achieving greater market value.

The most significant difference between a partnership and a sole proprietor is the ________.

Mergers and acquisitions occur when two companies decide to combine resources and work toward a common goal. Although a number of acquisitions may not be friendly, they still help to keep businesses alive. What are some of the factors that may influence one company to merge with another?

What is the difference between a general partnership and a limited partnership? What would be some reasons for choosing a limited partnership?

Delta and Northwest Airlines merged in April 2008, creating an airline with a fleet of 800 planes. The merger took place amid widespread concern about rising fuel prices. What type of merger took place between Delta and Northwest? Explain this type of merger.

In a large corporation, shareholders responsibilities include ________.