Exam 6: Forms of Business Ownership

Brian establishes a small shoe factory that specializes in custom-made shoes. As a sole proprietor, he is immediately able to set up his business without needing to consult other people to make decisions and establish policies. How would the establishment of policies be different for Brian if he were a board member in a corporation?

Leslie is excited to begin a personal shopping business. She is planning on having employees and is concerned about losing personal assets should something happen to the business. She would like to focus on profits and building a business but she does not want her business to pay its own taxes. What ownership structure is Leslie's best choice?

Which of the following methods do not-for-profit corporations primarily use to generate revenues?

A sole proprietorship is a common form of business ownership for startup businesses.

All of the following are advantages of sole proprietorship EXCEPT ________.

A limited partner is an owner who assumes no management responsibility and has no liability for losses beyond the amount invested.

Emily wants to open a chain of sandwich shops and hopes to attract investors to help finance growth. She considered forming a C corporation but wants to have more flexibility about how the new business will be taxed. She also wants to offer investors limited liability. What form of ownership will best meet Emily's objectives?

Owners of limited liability companies are referred to as ________, while owners of corporations are called ________.

Which of the following statements about S corporations is MOST accurate?

A good reason why partners should spell out the details of their partnership arrangements in writing is because ________.

A disadvantage of a limited liability company is that it ________.

Traci and Sally have considered starting their own business but are concerned about the possibility of losing their personal assets if the business fails. One way for Traci and Sally to avoid this risk would be to organize their company as a ________.

A cooperative is a type of business that is owned by ________ who use its products or services.

The organizational structure of a corporation allows for shareholders to have control over the company's daily operations.

To protect partnerships and minimize misunderstandings among partners, all terms of a partnership should be spelled out in writing.

Which of the following is the limit of liability of a limited partner?

When two companies in entirely different industries combine, it is known as a ________.

A dance studio and a dancewear manufacturer decide to combine. This type of merger is called a ________.

Explain what is involved in starting a business as a sole proprietor and the advantages to choosing this form of ownership.

A company with 200 shareholders can establish itself as an S corporation.