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Exam 4: Types of Business Ownership

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Question 81

Multiple Choice

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What does double taxation mean?

A) Companies must pay taxes on their income, and then employees must pay taxes on their salaries and wages.
B) Companies have to pay both sales taxes and income taxes.
C) Companies must pay taxes on their earnings, and then stockholders pay taxes on their dividends.
D) Suppliers tax their customers, and in turn these businesses tax the ultimate consumer.
E) Companies must pay taxes on corporate income and then additional taxes on distributions to profit stockholders.

F) A) and E)
G) A) and B)

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Question 82

Multiple Choice

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The Smithsonian Institution exists to preserve historical and cultural items of value and to share those items with the public; it does not exist to maximise the wealth of any shareholders.This entity is organised as a(n)

A) cooperative.
B) quasi-government corporation.
C) S-corporation.
D) not-for-profit corporation.
E) closed corporation.

F) A) and B)
G) A) and C)

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Question 83

True/False

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Since someone must be responsible for a partnership's debts, a limited partnership must have at least one general partner.

The simplest form of business owned and operated by one person is called a(n)

A voluntary association of two or more people acting as co-owners of a business is known as a partnership.

Recently there have been several mergers involving Big Four accounting firms.One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young.This is an example of a

A corporation is perhaps the easiest form of business to organise.

In the state in which it is incorporated, a business is known as a(n)

Experts predict that mergers in the first part of the twenty-first century will be the result of cash-rich companies looking to acquire businesses that will enhance their position in the marketplace.

All of the following are advantages of the partnership form of organisation except

Lisa and John own a partnership that provides rental equipment for parties and special occasions.Which of the following is true about the way Lisa and John would handle company profits?

If Avon and Merck joined together to produce a cream that slows down the aging process, this would be called a(n)

Brian wants to start a business that provides canoe and kayak trips.He decides that it would be better to ask his brother Brad to become his partner because

The citizens of a number of small rural towns have decided to form an association that will allow them to purchase electricity at a much cheaper rate than they are currently paying.This alliance is referred to as a(n)

The weakness of one partner may be offset by another partner's strength.

When the owner of a sole trader dies, what becomes of the business?

Your friend Steve owns a considerable amount of ordinary share in Intel, the large microchip manufacturer.He wants to cast his votes on various issues at the annual stockholders' meeting, but he does not have the time to travel a great distance to the meeting.Instead of attending the meeting, Steve decides to register his votes by

Daniel, Thomas, and Lucas are partners in a law firm under a typical partnership agreement in which each owns an equal share of the business.Thomas dies suddenly of a heart attack.What will most likely become of the partnership?

A hostile takeover is a situation in which

B&G, Inc. A year ago, Kevin went to work for B&G, Inc.He has worked for the finance department ever since he started.He noticed that the corporation was only taxed as though it were a partnership.This was something that he found very odd when he first started working for the company, but he later realised it was a fairly common practice.He recognised that this was one of the advantages of this type of corporation. While the job was challenging, Kevin was not happy.He wanted to work for a company whose main goal was to provide service to the community, not to make a profit.However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc.A week later, Kevin discovered there was going to be a merger between B&G, Inc.and one of its major competitors.Kevin's boss informed him that he would be getting a promotion and a raise.While he was excited about making more money, he still was not happy.He knew then that he would not be working for the company for long. -Refer to B&G, Inc.B&G, Inc.was going through a ____ merger.