Business Principles: Chapter 4

question

Compared to other forms of business ownership, sole proprietorships have the greatest degree of secrecy.
answer

True
question

Sole proprietorships typically employ less than 50 people.
answer

True
question

Which of the following is an advantage of a sole proprietorship?
answer

It is easy and inexpensive to form.
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Which of the following is an advantage of a sole proprietorship?
answer

Ease of dissolving the business
question

According to the U.S. Bureau of the Census, which form of business ownership is the least used in the U.S.?
answer

A partnership
question

The income earned in sole proprietorship is:
answer

taxed as personal income
question

Which of the following is a disadvantage of sole proprietorship?
answer

Lack of continuity
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Which characteristic of a sole proprietorship can be considered both an advantage and a disadvantage?
answer

Taxation
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When are limited partnerships generally used?
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When a project is risky and the chance of loss is great
question

The legal documents that identify the basic agreements between partners are called:
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articles of partnership
question

The decision-making process in a partnership tends to be faster when:
answer

there are two partners and both of them are involved in the day-to-day activities of the business
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Which of the following is not a disadvantage of forming a partnership?
answer

Fewer regulatory controls than in a corporation
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Which of the following is an advantage of a partnership?
answer

Lack of regulatory control
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Which of the following statements is true of taxation in partnership?
answer

They pay taxes at the income tax rate for individuals
question

___ are profits of a corporation that are distributed in the form of cash payments to stockholders.
answer

Dividends
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__ is a legal document that the state issues to a company based on information the company provides in the articles of incorporation.
answer

Corporate charter
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A corporation doing business outside the state in which it is chartered is known as a(n) ___ corporation.
answer

foreign
question

A private corporation is one:
answer

whose stock is not traded in public markets
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Which of the following is a corporation that provides a service, but does not focus on earning profits, nor is it owned by the government?
answer

a nonprofit corporation
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A(n) __ is elected by the stockholders of a corporation to oversee its general operation and set long-term objectives.
answer

board of directors
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Which of the following statements is true of preferred stockholders?
answer

they have a claim to profits before other stockholders do
question

A written authorization that assigns a stockholder’s voting privilege to another is called a:
answer

proxy
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Which of the following statements is true of joint ventures?
answer

It is popular in situations that call for large investments
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Which of the following forms of business organizations restricts the number and types of shareholders and is difficult to form and operate?
answer

An S corporation
question

Which of the following forms of business ownership provides limited liability, but is taxed like a partnership?
answer

a limited liability company

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