Exam 6: Forms of Business Ownership

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 ________.

In September 2001,technology company Hewlett-Packard (HP)announced a proposal to acquire Compaq Computer Corporation for $25 billion in stock.It offered shareholders a deal whereby they could exchange one Compaq share for one HP share.At the time,HP shares were worth 18% more than Compaq shares.In March 2002,shareholders narrowly approved the takeover.What type of acquisition took place in this situation? Explain what happens in this type of an acquisition.

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.

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

Which of the following parts of a partnership agreement spells out the policy regarding partners entering into key financial or contractual agreements?

It's important for partners to spell out the details of their partnership arrangements in writing because ________.

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

A corporation that owns a chain of pastry shops on the west coast has seen a decrease in revenue in recent months due to an increase in the price of flour.The company is considering merging with another company in order to combine resources and save on costs.Which type of merger would be most beneficial for the corporation and why?

A sole proprietorship can have only one owner,but it can have any number of employees.

Which of the following is the MOST compelling argument for incorporating a business?

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

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

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

The following are characteristics shared by both for-profit and not-for-profit corporations EXCEPT ________.

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

Jose lives in Mexico City and is a Mexican citizen.He has several friends in the United States who own a company.If Jose wanted to invest in the company,why would it matter if the company was an S corporation as opposed to a limited liability company?

Ben recently purchased 100 shares of stock in Feger's Sports,Inc.Ben is a(n)________ of Feger's Sports,Inc.

Nick is investing $25,000 in a partnership with his sister and brother.Nick does not want to be an active part of the partnership and can only afford to risk the $25,000 he is investing.His brother and sister agree to let him share a proportionate amount of the profits.Nick is a ________ in this partnership.

Which of the following types of ownership is limited to 100 owners?

Paula is thinking of making homemade perfumes and selling them to her relatives.She has not filed any legal documents to start her business.Paula would be operating as a(n)________.