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Exam 4: Choosing a Form of Business Ownership

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Question 61

Multiple Choice

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To close a sole proprietorship, the owner must

A) notify the secretary of state.
B) pay creditors.
C) publish an out-of-business statement in the newspaper.
D) have all licenses and permits revoked.
E) do none of the above.

F) B) and E)
G) B) and D)

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Question 62

Multiple Choice

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A contract between a business and a state recognizing the business as an artificial person is known as the

A) articles of partnership.
B) articles of incorporation.
C) S-corporation.
D) stock certificate.
E) proxy.

F) A) and E)
G) All of the above

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Question 63

Multiple Choice

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With regard to taxation of partnerships, which of the following statements is true?

How would you go about incorporating a business? Describe the information contained in a corporate charter.

As with a sole proprietorship, one disadvantage of a partnership is a lack of continuity.

Corporations are forbidden by law to enter joint ventures.

Every partnership must have at least one limited partner.

Judy Barnes, Betty Turley, and Bob Turner want to obtain limited liability for their business, but they want to avoid double taxation. Which type of business ownership would you recommend?

A banker or lender is more likely to make sizable loans to a sole proprietor than to a partnership.

Karen Howard loves to cook and receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Karen decides to open a small neighborhood restaurant. Since she plans to maintain complete control of the business, she will most likely organize it as a

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

Wade Comer and Tom Busby decide to start a partnership and offer accounting services. Which of the following is the best way to start this partnership?

What is the difference between a joint venture and a syndicate?

A merger between firms in completely unrelated industries is known as a

A ____ is a merger between firms operating at different but related levels in the production and marketing of a product.

Which of the following is necessary for starting a sole proprietorship?

Which form of business is the easiest to start?

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid double taxation. Which type of business ownership would you recommend?

A corporation chartered in Canada and doing business in the United States is known as a foreign corporation in the United States.

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 realized it was a fairly common practice. He recognized 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. What type of organization was Kevin considering switching to?