Exam 5: How to Form a Business

A horizontal merger refers to a merger between two companies in the same industry, and serving the same markets.

Stockholders in a corporation entrust control over the company's daily operations to managers selected by the board of directors to run the company.

Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invests. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a in this partnership.

When one of the owners of a corporation dies, the corporation legally ceases to exist.

If a corporation distributes after-tax profits to its stockholders in the form of dividends, the government considers these distributions as part of each stockholder's personal income. Stockholders pay taxes on these distributions.

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set- up a:

are companies that are similar to S Corporations but are not restricted with similar eligibility requirements.

Joshua wants to run his own business. A friend suggested that an inexpensive way to get started is to buy a franchise, where he will have the freedom to run it exactly as he sees fit. As a recent student of business, you concur with this advice.

Modern Screen Entertainment, Inc., recently bought Star Power Pictures, Inc., for an undisclosed amount of money. It now owns all of Star Power Picture's properties and obligations. This is an example of a(n):

A is a form of business that is owned, and usually managed, by one person.

The owners of California Canines, a firm that designs and manufactures coats, sweaters, jackets, and rainwear for dogs want to organize as an LLC. Two members are college students and two others are thirty something couples with young children. This is good strategy because each member can choose to commit to limited or unlimited liability.

Which of the following statements is the most accurate? A foreign corporation:

The S corporation is likely to be less popular in the future because:

A good reason why partners should spell-out the details of their partnership arrangements in writing is:

In the Spotlight on Small Business box, titled, "Pick Your Partners Wisely", the writer suggests that potential partners discuss the types of skills that each brings to the business. Partners with complimentary skills may enhance the business.

Which of the following is an advantage of a partnership?

The income generated by S-Corporations:

One result of taking a firm private is:

A disadvantage of corporations is that an owner must get the approval of all other owners before selling his or her interest in the firm to another investor.

In a franchise arrangement, ownership remains in the hands of the franchisor.