Chapter 4 Review
Quiz by Meredith Schwartzlose
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20 questions
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- Q1Which of the following is necessary for starting a sole proprietorship?an application to the secretary of statea contractarticles of proprietorshipno specific legal documents30s
- Q2Which of the following is not a disadvantage of sole proprietorships?lack of continuitydouble taxationlack of moneyunlimited liability30s
- Q3Unlimited liability meansthere is no limit on the amount an owner can borrowthe business can borrow money for any type of purchasecreditors will absorb any loss from nonpayment of debtthe owner is responsible for all business debts30s
- Q4When the owner of a sole proprietorship dies, what becomes of the business?it ceases to exist, and no one may legally take it overthe employees take over the businessit is automatically auctioned to the highest bidderit ceases to exist unless the heirs take it over or sell it30s
- Q5The person who assumes full co-ownership of a partnership, including unlimited liability, is alimited partnergeneral partnershareholderstockholder30s
- Q6The _______ is a legal document that lists and explains the terms of the partnership.willarticles of partnershipco-owner's agreementcharter30s
- Q7As a limited partner in a construction business, Joehas input only on major company decisionsonly risks his initial investmentdoes not receive any portion of the profitscontributes only his time and not his money30s
- Q8With regard to taxation of partnerships, which of the following statements is true?a partnership is exempt from taxesprofits are taxed twiceeach partner is taxed in the same way as a sole proprietortaxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of the profits.30s
- Q9Kayla purchases shares of ownership in General Electric. These shares are referred to asincorporationarticles of ownershipstockownership documents30s
- Q10A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n) _______closed corporationS-corporationsole proprietorshipopen corporation30s
- Q11A distribution of earnings to the stockholders of a corporation is a(n) ______earnings per sharedistributed paymentdividendpar distribution30s
- Q12When incorporating, a businessmust incorporate in the state in which it does the most businessmay incorporate in any state it choosesmust incorporate in the state in which its headquarters are locatedmust receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located30s
- Q13Which of the following is not a disadvantage of the corporate form of ownership?difficulty of formationlimited liabilitylack of secrecyexpense of incorporation and selling stock30s
- Q14Which of the following is an advantage of the corporate form of organization?the corporation and its stockholders pay taxes on profitsa corporation must submit detailed information to government agenciesownership of stock is easy to transferforming a corporation is a complex and costly process30s
- Q15Unless specififed in the charter, a corporation has alife of fifty yearslife of seventeen years, which is renewablelegal life of one decadeperpetual life30s