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Chapter 6 Quiz Practice

question

Not-for-profit organizations may NOT earn a profit. True or false?
answer

false
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All of the following are advantages of sole proprietorship EXCEPT ________. A) single ownership B) no separate tax form C) ease of formation Correct Response D) limited liability E) control and flexibility
answer

D) limited liability
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Jaden and Noel are starting a computer repair business together. Jaden insists on outlining rules for the departure of partners in the partnership agreement, although Noel does not think it is necessary. Which of the following statements might Jaden use to explain his insistence to Noel?
answer

A) Provisions to remove a partner’s ownership interest are necessary so the business would not have to end.
question

Jenny and Rose are hairstylists that have decided to open their own salon by starting a general partnership. The first step to ensuring a successful partnership would be to ________.
answer

C) draw up a partnership agreement
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Many new business owners prefer a limited liability structure because there are ________.
answer

A) fewer corporate formalities
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A sole proprietorship is a common form of business ownership for start-up businesses. True or false?
answer

True
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Compared to the C corporation, the limited liability company is an attractive form of business ownership because ________.
answer

D) a limited liability company does not require the firm to hold annual meetings and it can avoid double taxation
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In a partnership, all profits and losses flow through each partner’s ________.
answer

A) tax returns
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Policies regarding all of the following points should be included in a partnership agreement EXCEPT ________.
answer

division of stock
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Which of the following moves would MOST likely initiate a hostile takeover?
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A) The buying company offers to buy the target company’s stocks at a price higher than their current value.
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A cooperative is a type of business that is owned by ________ who use its products or services.
answer

A) members
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The profits of a sole proprietorship are taxed as the personal income of the owner. True or false?
answer

True
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Which of the following is a disadvantage of forming a corporation?
answer

D) double taxation
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A company with 200 shareholders can establish itself as an S corporation. True or false?
answer

A) false
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One disadvantage of a sole proprietorship is they usually have limited access to additional financial resources. True or false?
answer

True
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At a meeting to announce a merger with another company, which of the following buzzwords is a business leader MOST likely to use to justify the decision?
answer

D) synergy
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Traci and Sally have considered starting their own business but are concerned about the possibility of losing their personal assets if the business fails. One way for Traci and Sally to avoid this risk would be to organize their company as a ________.
answer

C) corporation
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In a general partnership, all partners are guaranteed an equal share of the firm’s profits. True or false?
answer

False
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Which of the following types of ownership is limited to 100 owners?
answer

B) S corporation
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Leslie is excited to begin a personal shopping business. She is planning to have employees and is concerned about losing personal assets should something happen to the business. She would like to focus on profits and building a business but she does not want her business to pay its own taxes. What ownership structure is Leslie’s best choice?
answer

C) S corporation