Exam 4: Selecting a Form of Business Ownership

Mary and Diane drafted a partnership agreement for their apparel business. Which element below should not have been included

Jane, Karla, and Brenda have set up an accounting firm. An essential part of their partnership agreement is the division of the business income.

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

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

SCENARIO-BASED Rock City is a community in the Midwest with a population of 23,000 people. Three dental clinics serve the city and the surrounding area. Perfect Smile is owned and operated by the newest dentist in town, Dr. Martin Harris, who employs one dental assistant and a secretary/receptionist. Drs. Joan Bennett and Joseph Young jointly operate Teeth for Life and provide a few more services than Dr. Harris. Rock City Dental Clinic has been in business for 58 years, employs 38 people, and offers a range of services that include dentures, orthodontics, and minor oral surgery. -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 _____.

Liability is a major issue in the formation and type of ownership of a new business enterprise.

The shareholders elect a ___________, a group of people who are legally responsible for governing the corporation.

The earnings of a limited liability company (LLC) are only taxed once-when they are paid out to employees in the form of wages and salaries.

Bob Grange has just opened a new pet shop on Main Street. If he selected the easiest and cheapest legal form to start a business, what legal form would Bob have selected

Some corporate founders of Smith Company want to restrict the transferability of their stock and hold it in the hands of only a few individuals who are not allowed to sell it to the general public. What type of company is Smith Company

About what percent of U.S. businesses are partnerships

"What are you willing to do to set up and operate your business" is one of the questions you should ask yourself when choosing a form of ownership.

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 someone does drown this year, who will be held liable

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.

Which of the following statements is not true about sole proprietors

The S-corporation follows the same tax rules as a sole proprietorship or partnership.

Which of the following is not true about not-for-profit corporations:

One drawback to incorporation-one that often discourages small businesses from incorporating-is the fact that corporations are costly to set up.

An alternative approach to traditional business growth is to merge with or acquire another company.

Pinnacle Games will be able to form an S-corporation because it has 128 employees-fewer than the 200 maximum allowed by law.