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Exam 4: Selecting a Form of Business Ownership

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Question 21

Multiple Choice

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As a limited liability company (LLC) , Miller Shipping would closely resemble a(n) _____.

A) S-corporation
B) partnership
C) cooperative
D) sole proprietorship

E) All of the above
F) B) and C)

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Question 22

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Corporations are limited to large, well-known companies.

A) True
B) False

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Question 23

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CEO, Jack Yates oversees the operations of Johnson Company, a corporation with 1,200 employees. Yates reports to the company's board of directors. Who owns Johnson Company

A _____ is entirely separate from the parties who own it.

The number and severity of disputes between partners can be lessened if the partners have executed _______ that specifies everyone's rights and responsibilities.

Explain and give an example of the concept of unlimited liability in a partnership.

A sole proprietorship is a legal form of business ownership.

The rationale behind mergers and acquisitions is to grab a bigger share of the market and improve profitability.

As a general rule it is not feasible to gain new markets or open new distribution channels through mergers and acquisitions.

Because it restricts the transferability of its stock, Generation Now is a _____ corporation.

SCENARIO-BASED Jerry Foster is a sole proprietorship who owns a canoe renting business. Jerry’s employee, Terry Gibbs, greets customers at the company’s office, loads the customers and their rented canoes onto a van, provides them with safety instructions and drives them upstream. Once unloaded the canoers are on their own to float back to the company’s office to check in. Although there have been minor accidents, no one has drowned in the nine years the business has been in operation. Jerry plans to add kayaks and rubber rafts next year. The scenery is beautiful and each day people see wild animals come down to the water. -If Jerry wanted to bring Terry into the business, and he was concerned about the cost of changing his form of organization, what legal form of organization would he most likely switch to

A limited liability company (LLC) combines the advantages of a corporation and the advantages of a partnership without many of the rules and restrictions imposed on regular corporations.

SCENARIO-BASED Jerry Foster is a sole proprietorship who owns a canoe renting business. Jerry’s employee, Terry Gibbs, greets customers at the company’s office, loads the customers and their rented canoes onto a van, provides them with safety instructions and drives them upstream. Once unloaded the canoers are on their own to float back to the company’s office to check in. Although there have been minor accidents, no one has drowned in the nine years the business has been in operation. Jerry plans to add kayaks and rubber rafts next year. The scenery is beautiful and each day people see wild animals come down to the water. -Under the ____ form of ownership, any money borrowed by the business is loaned to the owner personally.

A disadvantage of a corporation is that managers and shareholders may have goals that conflict.

A not-for-profit corporation is formed to serve some public purpose and not for financial gain.

Which statement is true about partnerships in the United States.

In deciding on a legal form of organization, you should ask yourself all of the following questions except______________

The _____ in a limited partnership has(have) limited involvement in the business and suffer loss only to the extent of their business investments.

Identify and define three types of business ownership.

In a limited partnership, although one partner runs the business, any number of the others may have partial involvement in the business.