Exam 3: Selecting a Form of Business Ownership

Who were the original shareholders in Ben and Jerry's?

If you're asking yourself whether you want to make it easy for the ownership of your new business to change hands, which of the key questions about legal form of Ownership are you posing?

An acquisition occurs when two companies combine to form a new company. A merger is the purchase of one company by another with no new company being formed.

With enough employees and annual sales to form a company to limit the liabilities of its owners, Rock City Dental Clinic could opt to organize as a _____.

If Scuffy the Tugboat operates as a partnership each of its owners would have limited liability.

Perhaps the best legal form of organization for Scuffy the Tugboat is a limited liability company (LLC).This would give the three brothers limited liability and would mean they would not pay personal taxes on their company's earnings.

A limited liability company (LLC) combines the advantages of a corporation and the advantages of a partnership without many of the rules and restrictions imposed on regular corporations.

In Ben and Jerry's hostile takeover they feared that their _____ would end.

Under the ____ form of ownership, the business dissolves upon the owner's death.

If you have the talent to run a business, want to make all important business decisions, and are willing to finance the business with all your own resources, you should consider operating as a partnership.

Many people are reluctant to enter into partnerships because of _____.

In corporations, the individuals who own and manage a business are the same people.

Scenario-Based Jerry Foster is a sole proprietorship who owns a canoe renting business.Jerry's employee, Terry Gibbs, greets customers at the company's office, loads the customers and their rented canoes onto a van, provides them with safety instructions and drives them upstream.Once unloaded the canoers are on their own to float back to the company's office to check in.Although there have been minor accidents, no one has drowned in the nine years the business has been in operation.Jerry plans to add kayaks and rubber rafts next year.The scenery is beautiful and each day people see wild animals come down to the water. -If Jerry wanted to bring Terry into the business, and he was concerned about the cost of changing his form of organization, what legal form of organization Would he most likely switch to?

The brothers are considering joining a cooperative of tugboat operators. This would allow them to join with other tugboat operators to market their services and purchase supplies such as gasoline.If the cooperative is successful, they would share in the cooperative's financial success.

A partnership agreement specifies each owner's rights and responsibilities in the business.

As a general rule it is not feasible to gain new markets or open new distribution channels through mergers and acquisitions.

The purchase of one company by another with no new company being formed is called a(n) _____.

The corporate form of organization would give them more access to funds but they would still be personally liable for any loans.

As a limited liability company (LLC), Miller Shipping would closely resemble a(n) _____.

Teeth for Life would be better suited for a _____ than a sole proprietorship.