Question 1

Partnership agreements do not cover how to dissolve a partnership or sell a partnership interest.

Accepted Answer

A) True 
 B)False

Question 2

Carlos founded the "Taco Factory" 20 years ago as a family-oriented restaurant business.Over the years as he grew the business,he incorporated and sold stock.Recently the stockholders voted to seek liquor licenses and sell beer and hard liquor in the restaurants.Carlos opposed this,citing the history of the restaurant's "family" environment,but was voted down.Carlos experienced which drawback of the corporate form of ownership?

Accepted Answer

A) The inability to accumulate capital 
B) The potential for diminished managerial incentives 
C) Legal requirements and red tape 
D) The potential loss of control 
A) The inability to accumulate capital 
B) The potential for diminished managerial incentives 
C) Legal requirements and red tape 
D) The potential loss of control

Question 3

Factors an entrepreneur should consider when choosing a form of ownership should include but not be limited to: tax considerations,liability exposure,business goals,managerial ability,etc.

Accepted Answer

A) True 
 B)False

Question 4

Bylaws are the rules and regulations the officers and directors establish for the corporation's internal management and operation.

Accepted Answer

A) True 
 B)False

Question 5

This form of ownership is the same as a corporation in terms of legal characteristics even though Congress is considering legislation that would further simplify its formation and running.Its distinction from a corporation is made for federal income tax purposes only.

Accepted Answer

A) S-corporation 
B) master limited partnership 
C) sole proprietorship 
D) limited liability company 
A) S-corporation 
B) master limited partnership 
C) sole proprietorship 
D) limited liability company

Question 6

A limited partner does not have the right to manage the business in any way and still maintain limited status.

Accepted Answer

A) True 
 B)False

Question 7

An owner should choose an S-corporation form of ownership when he/she:

Accepted Answer

A) has an established company that is suffering losses due to double taxation. 
B) is starting up a company and anticipating either net losses or high profits with large dividends. 
C) owns a company in which net profits before any compensation to shareholders are less than $100,000 per year. 
D) has an existing sole proprietorship and wants to lower the tax bill through deducting fringe benefits as business expenses. 
A) has an established company that is suffering losses due to double taxation. 
B) is starting up a company and anticipating either net losses or high profits with large dividends. 
C) owns a company in which net profits before any compensation to shareholders are less than $100,000 per year. 
D) has an existing sole proprietorship and wants to lower the tax bill through deducting fringe benefits as business expenses.

Question 8

When the owner of a sole proprietorship dies,the business automatically terminates.

Accepted Answer

A) True 
 B)False

Question 9

A partner cannot legally bind the other partners to a business agreement.

Accepted Answer

A) True 
 B)False

Question 10

By choosing certain forms of ownership,an entrepreneur does not give up some control over the company.

Accepted Answer

A) True 
 B)False

Question 11

An S-corporation maintains the advantages of the corporate form of ownership while having the ability to be taxed as a partnership.

Accepted Answer

A) True 
 B)False

Question 12

Which form of ownership is the least costly to form?

Accepted Answer

A) Sole Proprietorship 
B) Corporations 
C) Partnership 
D) Limited Liability Corporation 
A) Sole Proprietorship 
B) Corporations 
C) Partnership 
D) Limited Liability Corporation

Question 13

The sole proprietorship is the simplest and least expensive form of ownership to begin.

Accepted Answer

A) True 
 B)False

Question 14

The partnership,like the proprietorship,avoids the disadvantage of double taxation.

Accepted Answer

A) True 
 B)False

Question 15

What is a limited liability company (LLC)and why would an entrepreneur choose it as a form of ownership?

Accepted Answer

A limited liability company (LLC),like a

Question 16

One disadvantage of the proprietorship is:

Accepted Answer

A) the least regulated form of business ownership. 
B) limited personal liability. 
C) excessive access to capital. 
D) limited skills and abilities. 
A) the least regulated form of business ownership. 
B) limited personal liability. 
C) excessive access to capital. 
D) limited skills and abilities.

Question 17

The Internal Revenue Service requires partnerships to designate one person to be responsible for handling the partnership's tax matters.

Accepted Answer

A) True 
 B)False

Question 18

A corporation formed and chartered in Kansas is considered a domestic corporation when doing business in Kansas.

Accepted Answer

A) True 
 B)False

Question 19

Corporations can also stimulate managers' and employees' incentive on the job by creating an ________ (ESOP).

Accepted Answer

A) Entrepreneur Stock Ownership Plan 
B) Employee Stock Ownership Plan 
C) Employee Shares Ownership Plan 
D) Entrepreneur Shares Ownership Plan 
A) Entrepreneur Stock Ownership Plan 
B) Employee Stock Ownership Plan 
C) Employee Shares Ownership Plan 
D) Entrepreneur Shares Ownership Plan

Question 20

A limited liability company is formed under:

Accepted Answer

A) a Certificate of Incorporation. 
B) a Partnership Agreement. 
C) Articles of Organization. 
D) the Revised Uniform Partnership Act. 
A) a Certificate of Incorporation. 
B) a Partnership Agreement. 
C) Articles of Organization. 
D) the Revised Uniform Partnership Act.

Exam 3: Choosing a Form of Ownership

Partnership agreements do not cover how to dissolve a partnership or sell a partnership interest.

Factors an entrepreneur should consider when choosing a form of ownership should include but not be limited to: tax considerations,liability exposure,business goals,managerial ability,etc.

Bylaws are the rules and regulations the officers and directors establish for the corporation's internal management and operation.

This form of ownership is the same as a corporation in terms of legal characteristics even though Congress is considering legislation that would further simplify its formation and running.Its distinction from a corporation is made for federal income tax purposes only.

A limited partner does not have the right to manage the business in any way and still maintain limited status.

An owner should choose an S-corporation form of ownership when he/she:

When the owner of a sole proprietorship dies,the business automatically terminates.

A partner cannot legally bind the other partners to a business agreement.

By choosing certain forms of ownership,an entrepreneur does not give up some control over the company.

An S-corporation maintains the advantages of the corporate form of ownership while having the ability to be taxed as a partnership.

Which form of ownership is the least costly to form?

The sole proprietorship is the simplest and least expensive form of ownership to begin.

The partnership,like the proprietorship,avoids the disadvantage of double taxation.

What is a limited liability company (LLC)and why would an entrepreneur choose it as a form of ownership?

One disadvantage of the proprietorship is:

The Internal Revenue Service requires partnerships to designate one person to be responsible for handling the partnership's tax matters.

A corporation formed and chartered in Kansas is considered a domestic corporation when doing business in Kansas.

Corporations can also stimulate managers' and employees' incentive on the job by creating an ________ (ESOP).

A limited liability company is formed under:

Entrepreneurs: the Driving Force Behind Small Business

Strategic Management and the Entrepreneur

Franchising and the Entrepreneur

Buying an Existing Business

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Creating a Solid Financial Plan

Managing Cash Flow

Building a Guerrilla Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

Ethics and Social Responsibility: Doing the Right Thing

The Legal Environment: Business Law and Government Regulation

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