Exam 6: Forms of Business Ownership

A partner who invests money in a business but is not involved in the day-to-day operation and is only risking capital equal to what they have contributed is called a ________.

A small group of businesspeople decide that the best way to do business, while simultaneously protecting their own assets, is to form a corporation. What steps do they need to take in order to successfully establish a corporation?

All of the following EXCEPT ________ would be an advantage to partnership.

Unlimited liability with respect to business ownership means ________.

A corporation is a specific form of business that is legally formed under state laws and is considered a separate entity.

S corporations are similar to C corporations because they both pay corporate income taxes.

If you want to terminate your ownership in a publicly traded corporation, you simply sell your shares.

When a not-for-profit corporations dissolves, its assets are ________.

The owners of a corporation are known as general corporate partners.

A merger involving a computer manufacturer and an electronics retailer that sells its computers would be an example of a ________.

Alex and Bailey opened a dance studio together as general partners. They each invested $10,000 of their personal savings. After one year in business, they decided to close the doors. Their partnership agreement said they would divide profits and losses 50/50. They have more debt than assets. Alex and Bailey will each ________.

In a general partnership, all partners are entitled to an equal share of the firm's profits.

One disadvantage of sole proprietorship is the ________.

In a partnership, all profits and losses flow through each partner's ________.

After a successful five years, Double Z, LLC (a retirement ranch for race horses)thinks it may be able to attract donations from animal activist groups and even the federal government if it becomes a nonprofit corporation. Explain what changes the owners of Double Z would need to make in order to be a not-for-profit corporation?

Tom has agreed to become a partner in a business. Since he will provide 30% of the capital to start the company, he is entitled to 30% of any profits the company earns during its first year of operation.

Dan is excited to start marketing and selling his new indoor practice hockey tarps and would like to start today. He already has several hockey associations waiting to make purchases. Dan's best option for starting his business quickly and hassle free is a(n)________.

The biggest difference between general and limited partnerships involves who accepts most of the business liability.

Jenny and Rose are hairstylists that have decided to open their own salon by starting a general partnership. The first step to ensuring a successful partnership would be to ________.

Partnerships are taxed at the lowest corporate tax rate.