Corporation & Partnership – Introduction to Business
This quiz is about Corporation & Partnership – Introduction to Business.
_____ are profits of a corporation that are distributed in the form of cash payments to stockholders.
Common Stock
Retained earnings
Dividends – correct
A corporation doing business in the state in which it is chartered is known as a(n)
horizontal corporation
alien corporation
domestic corporation – correct
quasi corporation
Sole proprietorships are typically small businesses that
focus on providing a service rather than earning a profit.
employ fewer than 50 people. – correct
are formed by two or more partners.
are managed by incorporators.
Which of the following forms of business ownership provides limited liability but is taxed like a partnership?
a sole proprietorship
a general partnership
a C corporation
a limited liability company – correct
A ______ has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business.
sole proprietorship
C corporation
general partnership
limited partnership – correct
_____ is a volunteer agency funded by the Small Business Administration to provide advice for owners of small firms.
Local Chambers of Commerce
Small Business Development Centers
Service Corps of Retired Executives – correct
Business Executive Council
Which of the following is the best definition of a merger?
when a company splits into two separate companies
when one company purchases another company by buying most of its stock
when a group of investors borrows money from banks and other institutions to acquire a company
when two companies combine to form a new company – correct
All of the following are advantages of franchising EXCEPT
more freedom in purchasing goods. – correct
national and local advertising programs.
brand-name appeal.
centralized buying power.
Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called
intrapreneurs.
category captains.
venture capitalists. – correct
franchisers.
In the process of starting a business, the step that immediately follows the development of a business plan involves
organizing resources like labor and supplies.
developing some general business ideas.
deciding an appropriate legal form of business ownership. – correct
promoting the business to the customers.
Which of the following is one of the commonly reported disadvantages of franchising?
lack of management training and assistance
restrictions on purchasing – correct
lack of financial assistance
low rate of success
Limited partners do not participate in the management of the business.
True – correct
False
Which of the following forms of business ownership is the easiest to establish?
corporation
joint ventures
sole proprietorship – correct
partnership
In sole proprietorships, owners
cannot easily dissolve the business.
have to share their profits.
have access to limited sources of funds. – correct
do not have to pay any income tax.
Which of the following statements is true of taxation in partnerships?
They are taxed based on the number of shareholders.
They pay taxes at the income tax rate for individuals. – correct
They are exempted from tax.
They pay taxes before distributing profits.
_____ are legal documents that the state issues to companies based on information the company provides in the articles of incorporation.
Corporation contracts
Articles of partnership
State bonds
Corporate charters – correct
A _____ has been defined as “an association of two or more persons who carry on as co-owners of a business for profit.”
sole proprietorship
cooperative
partnership – correct
quasi-public corporation
A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as a(n)
business agreement
business plan. – correct
article of partnership
article of incorporation
Which of the following statements best describes bartering?
It is the practice of small businesses trading their own products for the goods and services offered by other businesses. – correct
It is the process in which a small-business owner provides personal property as collateral for a loan.
It is the process in which suppliers allow a business to acquire needed goods and pay for them at a later date.
It is an agreement by which a financial institution promises to lend a business a predetermined sum on demand.
To make profits from a small business, the owner must first provide or obtain _____ to start the business and keep it running smoothly.
products
profits
capital – correct
employees
The act of financing one’s business by using real personal assets is known as
debt financing.
equity financing. – correct
factoring.
franchising.
A _____ is best described as any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.
publicly traded company
small business – correct
limited liability company
conglomerate
_____ are typically owned by many individuals and organizations who own shares of the business, called stock.
General partnerships
Corporations – correct
Franchises
Limited partnerships
Obtaining money from venture capitalists to start a new business venture is an example of
factoring.
mortgaging.
debt financing.
equity financing. – correct
A(n) _____ is a form of business ownership that is taxed as though it were a partnership, is popular among entrepreneurs, and represents almost half of all corporate filings.
worker cooperative
C corporation
general partnership
S corporation – correct
Which of the following statements is true of preferred stockholders?
They are the voting owners of a corporation.
They are eligible to vote by proxy.
They have a claim to profits before other stockholders do. – correct
They are generally the decision-makers in the day-to-day running of an organization.
Which of the following is an advantage of a sole proprietorship?
It has limited liability for the debts incurred by the business.
It is easy and inexpensive to form. – correct
It is hard to dissolve.
It is unaffected by the death or withdrawal of its owner.
A ______ involves a complete sharing in the management of a business.
general partnership – correct
limited partnership
joint partnership
joint venture
A(n) _____ is a legal entity, created by the state, whose assets and liabilities are separate from its owners.
corporation – correct
strategic group
sole proprietorship
partnership
Which of the following is a disadvantage of corporations?
The life expectancy of a corporation is very short and it lacks continuity.
C. The formation of a corporation can be costly and it faces double taxation. – correct
The owners will have unlimited liability for the debts of a corporation.
The transfer of ownership in a corporation is very difficult.
Which of the following is a disadvantage of sole proprietorships?
lack of business control
lack of continuity – correct
stringent government regulations
sharing of profits with major stock holders
Which of the following is a corporation that provides a service, but is neither owned by the government nor focuses on earning profits?
a C corporation
a nonprofit corporation – correct
an S corporation
a government subsidiary
Entrepreneurship is the process of creating and managing a business to achieve desired objectives.
True – correct
False
The legal documents that identify the basic agreements between partners are called
articles of incorporation.
articles of partnership. – correctc
partnership charters.
partnership bonds.
Which of the following is an advantage of a partnership?
unlimited liability
few regulatory controls – correct
lack of business responsibility
unrestricted access to funds
Which of the following is a disadvantage of a partnership?
limited liability faced by the partners
stringent government regulations
difficulty of forming the business
difficulty of selling the partnership interest – correct
_____ is best described as the lack of funds to operate a business normally.
Debt financing
Undercapitalization – correct
Trade credit
Trade deficit
A license to sell another’s products or to use another’s name in business, or both, is called a
franchise. – correct
mortgage.
collusion.
collateral.
Which form of business ownership is least used in the United States?
sole proprietorships
partnerships – correct
joint ventures
corporations
Which of the following is a source of equity financing?
securing government loans
borrowing money from friends
securing short-term loans from a family member
selling personal assets to raise funds – correct
An S corporation is taxed just like any other corporation.
True
False – correct
An acquisition occurs when one company purchases another company by buying most of its stock.
True – correct
False
A sole proprietor has limited liability in meeting the debts of his or her business.
True
False – correct
Small businesses may obtain funding from their suppliers in the form of a _____, which means that suppliers allow the business to take possession of the needed goods and services and pay for them at a later date or in installments.
stock dividend
non-recourse loan
mutual fund
trade credit – correct
An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization is known as a(n)
S corporation.
cooperative. – correct
multinational firm.
general partnership
Which type of stockholders usually has the right to vote and elect the board of directors?
a capital stockholder
a preferred stockholder
a proxy stockholder
a common stockholder – correct
A _____ is a partnership established for a specific project or for a limited time.
conglomerate
C corporation
joint venture – correct
cooperative
The income earned in sole proprietorships is
taxed as personal income. – correct
taxed as business income.
exempted for tax.
taxed twice.
The assets and liabilities of a corporation are separate from its owners.
True – correct
False
Banks and other financial institutions can grant a small business a _____, which is an agreement by which a financial institution promises to lend a business a predetermined sum on demand.
trade credit
trust fund
mutual fund
line of credit – correct