Exam 5: Forms of Business Ownership

What is a sole proprietorship? Explain the advantages and the disadvantages of a sole proprietorship.

Profits earned by a partnership are taxed in the same fashion as those earned by a sole proprietorship.

Liquidating an S corporation involves several steps, including paying all taxes and debts, obtaining the written approval of shareholders to dissolve the company, filing a statement of intent to dissolve with the secretary of state's office and, finally, distributing all remaining assets of the corporation to shareholders.

State law requires that individuals creating a partnership file the Articles of Partnership with the secretary of state.

There is no limit to the number of general partners a partnership may have, but it must have at least one general partner.

Each partner in a limited liability partnership is a limited partner; there are no general partners.

One disadvantage of the partnership form of ownership is the great potential for personality and authority conflicts.

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

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

Most states do not require a Certificate of Incorporation or a charter to be filed for a new corporation.

The most common form of business ownership that is also the simplest to create is the:

The "Das Spelunker" corporation, formed in Germany and conducting business in the U.S., is considered to be a(n) ________ corporation.

Although not required by law, a written partnership agreement that spells out the terms of operating the partnership and the status of each partner should be developed.

Compare and contrast the following forms of ownership: a corporation, an S corporation, and a limited liability company.

Which of the following is true regarding the corporate form of ownership?

Stockholders in the corporation have the same kind of liability as do general partners in a partnership.

In a sole proprietorship, the owner has limited liability.

A ________ partner is a person who makes financial investments in a partnership, does not take an active role in managing the business, and whose liability for the partnerships' debts is limited to the amount they have invested.

Which of the following generally is not required by a Certificate of Incorporation?

Acme Corporation is chartered in Delaware, but its primary area of operation is in South Carolina. In South Carolina, Acme would be considered a(n) ________ corporation.