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Exam 5: Choosing a Form of Ownership

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Question 41

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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.

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Question 42

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

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Question 43

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Which type of ownership is not subject to federal taxation?

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.

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

Shares the corporation itself owns are called:

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

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

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

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

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

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

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

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) .

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

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

One disadvantage of the proprietorship is:

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

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

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