Question 1

Silent partners are active in a business but generally are known to be members of the partnership.

Accepted Answer

A) True 
 B)False

Question 2

Which type of ownership is not subject to federal taxation?

Accepted Answer

A)  Sole proprietorship
B)  Corporations
C)  Partnership
D)  Limited liability corporationE) A) and B)
F) B) and D)

Question 3

In a partnership,profits (and losses)are shared according to any ratio stated in the articles of partnership.

Accepted Answer

A) True 
 B)False

Question 4

One disadvantage of the proprietorship is:

Accepted Answer

A)  it is the least regulated form of business ownership.
B)  limited personal liability.
C)  excessive access to capital.
D)  limited skills and abilities.E) B) and C)
F) All of the above

Question 5

A nonprofit organization uses its revenues to pursue social value rather than to create personal value for investors.

Accepted Answer

A) True 
 B)False

Question 6

A corporation formed and chartered in Kansas is considered a domestic corporation when doing business in Kansas.

Accepted Answer

A) True 
 B)False

Question 7

What is a limited liability company (LLC)and why would an entrepreneur choose it as a form of ownership?

Accepted Answer

A limited liability company (LLC),like a...

Question 8

While the sole proprietorship is the easiest type of business to get into,it is the most heavily regulated.

Accepted Answer

A) True 
 B)False

Question 9

Like a sole proprietorship,a partnership suffers from the disadvantage of:

Accepted Answer

A)  poor capital accumulation.
B)  limited liability for all owners.
C)  double taxation of profits.
D)  the complexity of regulations under which it must operate.E) A) and B)
F) A) and C)

Question 10

Each partner is an agent for the business and can legally bind other partners to business agreements.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true about choosing a limited liability company form of ownership?

Accepted Answer

A)  It has no disadvantages except its newness.
B)  It is ideal for a new company but difficult to convert to with an existing company.
C)  It is inexpensive,easy to form,and covered by little regulation due to its newness.
D)  It's an excellent conversion vehicle for existing businesses that are suffering from double taxation but problematic for sole proprietorships.E) A) and B)
F) All of the above

Question 12

Perhaps the most important feature of a partnership agreement is its ability to resolve potential sources of conflict among partners.

Accepted Answer

A) True 
 B)False

Question 13

Factors an entrepreneur should consider when choosing a form of ownership should include but not be limited to: tax considerations,liability exposure,business goals,managerial ability,etc.

Accepted Answer

A) True 
 B)False

Question 14

What advantages does a partnership offer the entrepreneur over forming a sole proprietorship?

Accepted Answer

Division of profits;Large pool...

Question 15

One major advantage of the ________ is that once the owner has paid all of the company's expenses,he/she can keep the remaining profits (less taxes,of course) .

Accepted Answer

A)  partnership
B)  corporation
C)  sole proprietorship
D)  limited liability companyE) A) and B)
F) None of the above

Question 16

What are the pluses and minuses for the owners of a company in choosing to incorporate their business?

Accepted Answer

A limited partnership operates like any ...

Question 17

In a partnership,the general partner(s)share their unlimited liability for the business debts with both silent and dormant partners.

Accepted Answer

A) True 
 B)False

Question 18

Shares the corporation itself owns are called:

Accepted Answer

A)  preferred stock.
B)  bonds.
C)  treasury stock.
D)  common stock.E) B) and C)
F) None of the above

Question 19

________ have shares that are controlled by a relatively small number of people,often family members,relatives,or friends.

Accepted Answer

A)  International partnerships
B)  Publicly traded corporations
C)  Closely held corporations
D)  Privately held corporationsE) A) and D)
F) A) and C)

Question 20

This form of ownership is the same as a corporation in terms of legal characteristics even though Congress is considering legislation that would further simplify its formation and running.Its distinction from a corporation is made for federal income tax purposes only.

Accepted Answer

A)  S-corporation
B)  Master limited partnership
C)  Sole proprietorship
D)  Limited liability companyE) A) and B)
F) None of the above

Exam 5: Choosing a Form of Ownership

One disadvantage of the proprietorship is:

Correct AnswerverifiedShow Answer

Factors an entrepreneur should consider when choosing a form of ownership should include but not be limited to: tax considerations,liability exposure,business goals,managerial ability,etc.

Correct AnswerverifiedShow Answer

Which of the following is true about choosing a limited liability company form of ownership?

Correct AnswerverifiedShow Answer

A nonprofit organization uses its revenues to pursue social value rather than to create personal value for investors.

Correct AnswerverifiedShow Answer

What are the pluses and minuses for the owners of a company in choosing to incorporate their business?

Correct AnswerverifiedA limited partnership operates like any ...View AnswerShow Answer

While the sole proprietorship is the easiest type of business to get into,it is the most heavily regulated.

Correct AnswerverifiedShow Answer

Perhaps the most important feature of a partnership agreement is its ability to resolve potential sources of conflict among partners.

Correct AnswerverifiedShow Answer

In a partnership,the general partner(s)share their unlimited liability for the business debts with both silent and dormant partners.

Correct AnswerverifiedShow Answer

A corporation formed and chartered in Kansas is considered a domestic corporation when doing business in Kansas.

Correct AnswerverifiedShow Answer

Shares the corporation itself owns are called:

Correct AnswerverifiedShow Answer

One major advantage of the ________ is that once the owner has paid all of the company's expenses,he/she can keep the remaining profits (less taxes,of course) .

Correct AnswerverifiedShow Answer

________ have shares that are controlled by a relatively small number of people,often family members,relatives,or friends.

Correct AnswerverifiedShow Answer

What is a limited liability company (LLC)and why would an entrepreneur choose it as a form of ownership?

Correct AnswerverifiedA limited liability company (LLC),like a...View AnswerShow Answer

Each partner is an agent for the business and can legally bind other partners to business agreements.

Correct AnswerverifiedShow Answer

Silent partners are active in a business but generally are known to be members of the partnership.

Correct AnswerverifiedShow Answer

This form of ownership is the same as a corporation in terms of legal characteristics even though Congress is considering legislation that would further simplify its formation and running.Its distinction from a corporation is made for federal income tax purposes only.

Correct AnswerverifiedShow Answer

What advantages does a partnership offer the entrepreneur over forming a sole proprietorship?

Correct AnswerverifiedDivision of profits;Large pool...View AnswerShow Answer

In a partnership,profits (and losses)are shared according to any ratio stated in the articles of partnership.

Correct AnswerverifiedShow Answer

Like a sole proprietorship,a partnership suffers from the disadvantage of:

Correct AnswerverifiedShow Answer

Which type of ownership is not subject to federal taxation?

Correct AnswerverifiedShow Answer

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A limited partnership operates like any ...
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A limited liability company (LLC),like a...
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Division of profits;Large pool...
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