Question 1

All the profits of a sole proprietorship are taxed as current income of the owner even if they are not withdrawn from the business.

Accepted Answer

A) True 
 B)False

Question 2

In a partnership,the ________ partner(s)has (have)unlimited liability for the partnership's debts.

Accepted Answer

A) limited 
B) dormant 
C) nominal 
D) general 
A) limited 
B) dormant 
C) nominal 
D) general

Question 3

Which of the following issues would a typical partnership agreement address?

Accepted Answer

A) The contributions of each partner to the business 
B) How the partnership profits (or losses)will be distributed 
C) How a partner can sell her ownership in the business 
D) All of the above 
A) The contributions of each partner to the business 
B) How the partnership profits (or losses)will be distributed 
C) How a partner can sell her ownership in the business 
D) All of the above

Question 4

A limited liability company:

Accepted Answer

A) is similar to an S corporation in that it is a cross between a partnership and a corporation. 
B) prevents owners who want to maintain their limited liability status from actively managing the company. 
C) can have a maximum of 50 owners. 
D) All of the above 
A) is similar to an S corporation in that it is a cross between a partnership and a corporation. 
B) prevents owners who want to maintain their limited liability status from actively managing the company. 
C) can have a maximum of 50 owners. 
D) All of the above

Question 5

The most common form of business ownership in the United States is the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a disadvantage of the corporation form of ownership?

Accepted Answer

A) An inability to accumulate capital 
B) The unlimited liability to the members of the board 
C) Double taxation on profits 
D) The lack of continuity 
A) An inability to accumulate capital 
B) The unlimited liability to the members of the board 
C) Double taxation on profits 
D) The lack of continuity

Question 7

A corporation receives its charter from:

Accepted Answer

A) the federal government. 
B) the state. 
C) the board of directors. 
D) the stockholders. 
A) the federal government. 
B) the state. 
C) the board of directors. 
D) the stockholders.

Question 8

Probably the most important reason to have a partnership agreement is that:

Accepted Answer

A) it identifies the name of the partnership and protects that name from infringement by others. 
B) it states the location and the purpose of the business. 
C) it determines how the partnership and the partners will pay taxes. 
D) it resolves potential sources of conflict that,if not addressed in advance,could later result in partnership battles and dissolution of an otherwise successful business. 
A) it identifies the name of the partnership and protects that name from infringement by others. 
B) it states the location and the purpose of the business. 
C) it determines how the partnership and the partners will pay taxes. 
D) it resolves potential sources of conflict that,if not addressed in advance,could later result in partnership battles and dissolution of an otherwise successful business.

Question 9

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality,which has little impact on the business and its owner(s).

Accepted Answer

A) True 
 B)False

Question 10

In a sole proprietorship,the owner has limited liability.

Accepted Answer

A) True 
 B)False

Question 11

An S corporation form of ownership overcomes which disadvantage of the regular or C corporation form of ownership?

Accepted Answer

A) The double taxation issue 
B) The expense and difficulty of formation 
C) The amount of regulation and red tape involved in its operation 
D) The potential loss of control by the founder 
A) The double taxation issue 
B) The expense and difficulty of formation 
C) The amount of regulation and red tape involved in its operation 
D) The potential loss of control by the founder

Question 12

Which form of ownership generally has the least ability to accumulate capital?

Accepted Answer

A) Partnership 
B) Sole proprietorship 
C) Corporation 
D) S corporation 
A) Partnership 
B) Sole proprietorship 
C) Corporation 
D) S corporation

Question 13

A limited liability company is most like a(n):

Accepted Answer

A) general partnership. 
B) master partnership. 
C) sole proprietorship. 
D) S corporation. 
A) general partnership. 
B) master partnership. 
C) sole proprietorship. 
D) S corporation.

Question 14

What factors should an entrepreneur consider when choosing a form of ownership?

Accepted Answer

Factors an entrepreneur should consider

Question 15

If a limited partner withdraws,sells his ownership in the partnership,or dies,the partnership is not forced into dissolution.

Accepted Answer

A) True 
 B)False

Question 16

When filing the corporate charter,a corporation must file in the state in which its headquarters are located.

Accepted Answer

A) True 
 B)False

Question 17

"Double taxation" refers to the fact that corporations are required to pay both federal and state income taxes.

Accepted Answer

A) True 
 B)False

Question 18

One of the advantages of a partnership over a proprietorship is the increased sources of capital and credit it offers.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statement(s)is/are true?

Accepted Answer

A) Closely held corporations are owned by only a few shareholders,often family members. 
B) Most closely held corporations require shareholders interested in selling their stock to offer it first to the corporation.This is known as the right of first refusal. 
C) Shares of stock the corporation itself owns are called treasury stock. 
D) All of the above 
A) Closely held corporations are owned by only a few shareholders,often family members. 
B) Most closely held corporations require shareholders interested in selling their stock to offer it first to the corporation.This is known as the right of first refusal. 
C) Shares of stock the corporation itself owns are called treasury stock. 
D) All of the above

Question 20

Corporations must obtain a federal charter before they can conduct any business.

Accepted Answer

A) True 
 B)False

All the profits of a sole proprietorship are taxed as current income of the owner even if they are not withdrawn from the business.

In a partnership,the ________ partner(s)has (have)unlimited liability for the partnership's debts.

Which of the following issues would a typical partnership agreement address?

A limited liability company:

The most common form of business ownership in the United States is the partnership.

Which of the following is a disadvantage of the corporation form of ownership?

A corporation receives its charter from:

Probably the most important reason to have a partnership agreement is that:

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality,which has little impact on the business and its owner(s).

In a sole proprietorship,the owner has limited liability.

An S corporation form of ownership overcomes which disadvantage of the regular or C corporation form of ownership?

Which form of ownership generally has the least ability to accumulate capital?

A limited liability company is most like a(n):

What factors should an entrepreneur consider when choosing a form of ownership?

If a limited partner withdraws,sells his ownership in the partnership,or dies,the partnership is not forced into dissolution.

When filing the corporate charter,a corporation must file in the state in which its headquarters are located.

"Double taxation" refers to the fact that corporations are required to pay both federal and state income taxes.

One of the advantages of a partnership over a proprietorship is the increased sources of capital and credit it offers.

Which of the following statement(s)is/are true?

Corporations must obtain a federal charter before they can conduct any business.

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Exam 5: Forms of Business Ownership

All the profits of a sole proprietorship are taxed as current income of the owner even if they are not withdrawn from the business.

In a partnership,the ________ partner(s)has (have)unlimited liability for the partnership's debts.

Which of the following issues would a typical partnership agreement address?

A limited liability company:

The most common form of business ownership in the United States is the partnership.

Which of the following is a disadvantage of the corporation form of ownership?

A corporation receives its charter from:

Probably the most important reason to have a partnership agreement is that:

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality,which has little impact on the business and its owner(s).

In a sole proprietorship,the owner has limited liability.

An S corporation form of ownership overcomes which disadvantage of the regular or C corporation form of ownership?

Which form of ownership generally has the least ability to accumulate capital?

A limited liability company is most like a(n):

What factors should an entrepreneur consider when choosing a form of ownership?

If a limited partner withdraws,sells his ownership in the partnership,or dies,the partnership is not forced into dissolution.

When filing the corporate charter,a corporation must file in the state in which its headquarters are located.

"Double taxation" refers to the fact that corporations are required to pay both federal and state income taxes.

One of the advantages of a partnership over a proprietorship is the increased sources of capital and credit it offers.

Which of the following statement(s)is/are true?

Corporations must obtain a federal charter before they can conduct any business.

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters