Question 1

The ________ is a document that states in writing all of the terms of operating the partnership for the protection of each partner involved.

Accepted Answer

A)  Certificate of Incorporation
B)  Partnership Agreement
C)  Certificate for Conducting Business as Partners
D)  Partnership Document

Question 2

In a partnership,each partner acts as a(n) ________ for the business.

Accepted Answer

A)  agent
B)  manager
C)  supporter
D)  guarantor

Question 3

The ________ codifies the body of law dealing with partnerships in the United States.

Accepted Answer

A)  Small Business Partnership Agreement
B)  Uniform Partnership Act (UP
A)  
C)  Partnership Agreement
D)  None of the above

Question 4

The three key elements of any partnership are:

Accepted Answer

A)  common ownership in the business,sharing the business' profits or losses,and the right to participate in managing the business.
B)  equal ownership in the business,sharing its profits and losses,and the right to participate in managing the business.
C)  equal ownership in the business,sharing its profits and losses,and the right to limited liability for all partners.
D)  common ownership in the business,sharing its profits and losses,and the right to limited liability for all partners.

Question 5

The form of ownership with the greatest ability to accumulate capital is the:

Accepted Answer

A)  sole proprietorship.
B)  partnership.
C)  joint venture.
D)  corporation.

Question 6

Shares the corporation itself owns are called:

Accepted Answer

A)  treasury stock.
B)  common stock.
C)  preferred stock.
D)  bonds.

Question 7

Failing to keep corporate and personal funds separate is most often a problem in closely held corporations.

Accepted Answer

A) True 
 B)False

Question 8

Stockholders in the corporation have the same kind of liability as do general partners in a partnership.

Accepted Answer

A) True 
 B)False

Question 9

Corporations can also stimulate managers' and employees' incentive on the job by creating an ________ (ESOP) .

Accepted Answer

A)  Entrepreneur Stock Ownership Plan
B)  Employee Stock Ownership Plan
C)  Employee Shares Ownership Plan
D)  Entrepreneur Shares Ownership Plan

Question 10

What are the nine general factors an entrepreneur should consider when choosing the form of small business ownership? List and explain at least six of them.

Accepted Answer

The key to choosing the "right" form of ...

Question 11

Owners/founders can be minority stockholders in a corporation but never lose their final authority or control over business decisions because they are the owners.

Accepted Answer

A) True 
 B)False

Question 12

An owner should choose an S-corporation form of ownership when he/she:

Accepted Answer

A)  has an established company that is suffering losses due to double taxation.
B)  is starting up a company and anticipating either net losses or high profits with large dividends.
C)  owns a company in which net profits before any compensation to shareholders are less than $100,000 per year.
D)  has an existing sole proprietorship and wants to lower the tax bill through deducting fringe benefits as business expenses.

Question 13

Common ownership interest in a business,sharing profits (or losses) of a business,and the right to participate in managing the operations of the business are characteristics of a(n) :

Accepted Answer

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

Question 14

An S-corporation form of ownership overcomes which disadvantage of the regular or "C" corporation form of ownership?

Accepted Answer

A)  The double taxation issue
B)  The expense and difficulty of formation
C)  The amount of regulation and red tape involved in its operation
D)  The potential loss of control by the founder

Question 15

A limited liability company differs from an S-corporation in:

Accepted Answer

A)  that it is not subject to the same amount of restrictions.
B)  its ability to attract and accumulate capital.
C)  that ownership is not transferable through the sale of stock.
D)  that it is limited to only one class of stock.

Question 16

The corporate form of ownership has a significant advantage in that:

Accepted Answer

A)  it is easy to transfer ownership.
B)  it has a lower tax rate than either partnerships or sole proprietorships.
C)  there is little cost to its formation.
D)  there is little regulatory oversight by the government.

Question 17

Like "C" corporations,S-corporations must pay taxes on any assets that have appreciated in value and are sold.

Accepted Answer

A) True 
 B)False

Question 18

There is no legal limit to the number of general partners a partnership must have,but it must have one.

Accepted Answer

A) True 
 B)False

Question 19

Why would someone choose an S-corporation? Discuss who can,how it is done,how it is different from or similar to other types of corporations,and its advantages and disadvantages.

Accepted Answer

An S-corporation offers its ow...

Question 20

The terms of a partnership agreement are legally binding even if some of the items are illegal.

Accepted Answer

A) True 
 B)False

Exam 5: Choosing a Form of Ownership

An owner should choose an S-corporation form of ownership when he/she:

Correct AnswerverifiedShow Answer

A limited liability company differs from an S-corporation in:

Correct AnswerverifiedShow Answer

The terms of a partnership agreement are legally binding even if some of the items are illegal.

Correct AnswerverifiedShow Answer

Why would someone choose an S-corporation? Discuss who can,how it is done,how it is different from or similar to other types of corporations,and its advantages and disadvantages.

Correct AnswerverifiedAn S-corporation offers its ow...View AnswerShow Answer

An S-corporation form of ownership overcomes which disadvantage of the regular or "C" corporation form of ownership?

Correct AnswerverifiedShow Answer

Failing to keep corporate and personal funds separate is most often a problem in closely held corporations.

Correct AnswerverifiedShow Answer

The three key elements of any partnership are:

Correct AnswerverifiedShow Answer

Corporations can also stimulate managers' and employees' incentive on the job by creating an ________ (ESOP) .

Correct AnswerverifiedShow Answer

Common ownership interest in a business,sharing profits (or losses) of a business,and the right to participate in managing the operations of the business are characteristics of a(n) :

Correct AnswerverifiedShow Answer

The ________ codifies the body of law dealing with partnerships in the United States.

Correct AnswerverifiedShow Answer

The corporate form of ownership has a significant advantage in that:

Correct AnswerverifiedShow Answer

Stockholders in the corporation have the same kind of liability as do general partners in a partnership.

Correct AnswerverifiedShow Answer

In a partnership,each partner acts as a(n) ________ for the business.

Correct AnswerverifiedShow Answer

The ________ is a document that states in writing all of the terms of operating the partnership for the protection of each partner involved.

Correct AnswerverifiedShow Answer

The form of ownership with the greatest ability to accumulate capital is the:

Correct AnswerverifiedShow Answer

There is no legal limit to the number of general partners a partnership must have,but it must have one.

Correct AnswerverifiedShow Answer

Like "C" corporations,S-corporations must pay taxes on any assets that have appreciated in value and are sold.

Correct AnswerverifiedShow Answer

What are the nine general factors an entrepreneur should consider when choosing the form of small business ownership? List and explain at least six of them.

Correct AnswerverifiedThe key to choosing the "right" form of ...View AnswerShow Answer

Shares the corporation itself owns are called:

Correct AnswerverifiedShow Answer

Owners/founders can be minority stockholders in a corporation but never lose their final authority or control over business decisions because they are the owners.

Correct AnswerverifiedShow Answer

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An S-corporation offers its ow...
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The key to choosing the "right" form of ...
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