Question 1

Which of the following is a requirement for an S-corporation?

Accepted Answer

A)  The S-corporation must be incorporated in Delaware. 
B)  The S-corporation can have no more than 100 stockholders. 
C)  Only common and preferred stock can be sold to investors. 
D)  At least 30 percent of the investors must be nonresident aliens. 
E)  Only individuals can be stockholders. 
A)  The S-corporation must be incorporated in Delaware. 
B)  The S-corporation can have no more than 100 stockholders. 
C)  Only common and preferred stock can be sold to investors. 
D)  At least 30 percent of the investors must be nonresident aliens. 
E)  Only individuals can be stockholders.

Question 2

What types of information should a partnership agreement contain?

Accepted Answer

A partnership agreement is a formal docu

Question 3

Because of rising fuel costs, a group of farmers have organized a retail gasoline outlet so they can make more reasonable purchases. This type of business is referred to as a(n)

Accepted Answer

A)  syndicate. 
B)  cooperative. 
C)  joint venture. 
D)  corporation. 
E)  S-corporation. 
A)  syndicate. 
B)  cooperative. 
C)  joint venture. 
D)  corporation. 
E)  S-corporation.

Question 4

Twenty-five young investors decided that they want to start a dating service; however, they do not want to be held personally liable for losses of the company. They want to avoid double taxation. Which type of business organization would best fit the needs of these individuals?

Accepted Answer

A)  Corporation 
B)  Closed corporation 
C)  Partnership 
D)  S-corporation 
E)  Limited cooperative 
A)  Corporation 
B)  Closed corporation 
C)  Partnership 
D)  S-corporation 
E)  Limited cooperative

Question 5

A business partnership that is owned and managed like a corporation but taxed like a partnership is called a(n)

Accepted Answer

A)  limited partnership. 
B)  master limited partnership. 
C)  domestic partnership. 
D)  alien partnership. 
E)  limited-liability company. 
A)  limited partnership. 
B)  master limited partnership. 
C)  domestic partnership. 
D)  alien partnership. 
E)  limited-liability company.

Question 6

What does it mean when someone says that a corporation is an artificial person created by law? In your answer, describe some things that an artificial person and a real person, like you, could both do.

Accepted Answer

When someone says that a corporation is

Question 7

In the United States, approximately 72 percent of all businesses are

Accepted Answer

A)  corporations. 
B)  partnerships. 
C)  sole proprietorships. 
D)  joint ventures. 
E)  franchises. 
A)  corporations. 
B)  partnerships. 
C)  sole proprietorships. 
D)  joint ventures. 
E)  franchises.

Question 8

Lisa and John own a partnership that provides rental equipment for parties and special occasions. Which of the following is true about the way Lisa and John would handle company profits?

Accepted Answer

A)  Automatically split the profits, with 50 percent for Lisa and 50 percent for John. 
B)  They would do nothing because partnerships require that profits remain in the business. 
C)  Divide the profits according to each person's investment in the business. 
D)  Distribute the profits according to the terms of the partnership agreement. 
E)  Split the profits according to how many hours each person worked. 
A)  Automatically split the profits, with 50 percent for Lisa and 50 percent for John. 
B)  They would do nothing because partnerships require that profits remain in the business. 
C)  Divide the profits according to each person's investment in the business. 
D)  Distribute the profits according to the terms of the partnership agreement. 
E)  Split the profits according to how many hours each person worked.

Question 9

The corporation, partnership, and sole proprietorship are the three most common forms of business ownership in the United States.

Accepted Answer

A) True 
 B)False

Question 10

A master limited partnership is also known as a closed corporation.

Accepted Answer

A) True 
 B)False

Question 11

Mark owns stock in Walgreens. He has the right to vote on company issues and examine corporate records, and he receives dividends from Walgreens' profits. What type of stock does Mark own?

Accepted Answer

A)  Common 
B)  "A" class 
C)  Proxy 
D)  Dividend 
E)  Preferred 
A)  Common 
B)  "A" class 
C)  Proxy 
D)  Dividend 
E)  Preferred

Question 12

A cooperative provides a service more effectively than any member could by acting alone.

Accepted Answer

A) True 
 B)False

Question 13

A voluntary association of two or more people acting as co-owners of a business is known as a partnership.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is true?

Accepted Answer

A)  Economists and financial analysts agree that mergers are good for the economy. 
B)  Takeovers always increase a firm's productivity. 
C)  Mergers in the first part of the twenty-first century will see an increase in debt financing. 
D)  Mergers in the first part of the twenty-first century will be driven by cash-rich companies looking to acquire businesses that will enhance their position in the marketplace. 
E)  There will be fewer mergers that involve investors from other countries. 
A)  Economists and financial analysts agree that mergers are good for the economy. 
B)  Takeovers always increase a firm's productivity. 
C)  Mergers in the first part of the twenty-first century will see an increase in debt financing. 
D)  Mergers in the first part of the twenty-first century will be driven by cash-rich companies looking to acquire businesses that will enhance their position in the marketplace. 
E)  There will be fewer mergers that involve investors from other countries.

Question 15

Mercedes-Benz, which is chartered as a corporation in Germany but conducts much of its business in the United States, is known as a(n) ____ in the United States.

Accepted Answer

A)  foreign corporation 
B)  alien corporation 
C)  domestic corporation 
D)  S-corporation 
E)  private corporation 
A)  foreign corporation 
B)  alien corporation 
C)  domestic corporation 
D)  S-corporation 
E)  private corporation

Question 16

Boeing is incorporated in Seattle, Washington. It has a large facility in Huntsville, Alabama, and is considered a(n) ____ because it conducts business within Alabama.

Accepted Answer

A)  outsider 
B)  domestic corporation 
C)  foreign corporation 
D)  tax write-off 
E)  alien corporation 
A)  outsider 
B)  domestic corporation 
C)  foreign corporation 
D)  tax write-off 
E)  alien corporation

Question 17

Why does the IRS allow some corporations to use the S-corporation form of ownership?

Accepted Answer

The Internal Revenue Service (IRS) allow

Question 18

Corporate officers are

Accepted Answer

A)  listed in the corporate charter. 
B)  elected by stockholders. 
C)  appointed by the board of directors. 
D)  appointed by management. 
E)  elected by incorporators. 
A)  listed in the corporate charter. 
B)  elected by stockholders. 
C)  appointed by the board of directors. 
D)  appointed by management. 
E)  elected by incorporators.

Question 19

Most stockholders attend a corporation's annual meeting and vote in person.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a disadvantage of the corporate form of ownership?

Accepted Answer

A)  Difficulty of formation 
B)  Limited liability 
C)  Expense of incorporation and selling stock 
D)  Lack of secrecy 
E)  Double taxation 
A)  Difficulty of formation 
B)  Limited liability 
C)  Expense of incorporation and selling stock 
D)  Lack of secrecy 
E)  Double taxation

Exam 4: Choosing a Form of Business Ownership

Which of the following is a requirement for an S-corporation?

What types of information should a partnership agreement contain?

Because of rising fuel costs, a group of farmers have organized a retail gasoline outlet so they can make more reasonable purchases. This type of business is referred to as a(n)

Twenty-five young investors decided that they want to start a dating service; however, they do not want to be held personally liable for losses of the company. They want to avoid double taxation. Which type of business organization would best fit the needs of these individuals?

A business partnership that is owned and managed like a corporation but taxed like a partnership is called a(n)

What does it mean when someone says that a corporation is an artificial person created by law? In your answer, describe some things that an artificial person and a real person, like you, could both do.

In the United States, approximately 72 percent of all businesses are

Lisa and John own a partnership that provides rental equipment for parties and special occasions. Which of the following is true about the way Lisa and John would handle company profits?

The corporation, partnership, and sole proprietorship are the three most common forms of business ownership in the United States.

A master limited partnership is also known as a closed corporation.

Mark owns stock in Walgreens. He has the right to vote on company issues and examine corporate records, and he receives dividends from Walgreens' profits. What type of stock does Mark own?

A cooperative provides a service more effectively than any member could by acting alone.

A voluntary association of two or more people acting as co-owners of a business is known as a partnership.

Which of the following statements is true?

Mercedes-Benz, which is chartered as a corporation in Germany but conducts much of its business in the United States, is known as a(n) ____ in the United States.

Boeing is incorporated in Seattle, Washington. It has a large facility in Huntsville, Alabama, and is considered a(n) ____ because it conducts business within Alabama.

Why does the IRS allow some corporations to use the S-corporation form of ownership?

Corporate officers are

Most stockholders attend a corporation's annual meeting and vote in person.

Which of the following is not a disadvantage of the corporate form of ownership?

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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