Question 1

The creation of _____ is automatic based on business conduct and is modified by agreement.

Accepted Answer

A)  limited partnership 
B)  corporation 
C)  partnership 
D)  sole proprietorship 
E)  S corporation 
A)  limited partnership 
B)  corporation 
C)  partnership 
D)  sole proprietorship 
E)  S corporation

Question 2

What are the drawbacks of corporate form of organization?

Accepted Answer

Among the frequently cited disadvantages

Question 3

When a derivative law suit is filed:

Accepted Answer

A)  majority shareholders may complain that minority shareholders are not cooperating with the board. 
B)  majority shareholders are required to prove that they are not acting illegally or oppressing the rights of minority shareholders. 
C)  minority shareholders are required to provide evidence that the majority shareholders are acting illegally or oppressing the rights of the minority shareholders. 
D)  directors are suing the officers and asking for their termination due to illegal or oppressive acts directed at all shareholders. 
E)  majority shareholders act on behalf of the organization. 
A)  majority shareholders may complain that minority shareholders are not cooperating with the board. 
B)  majority shareholders are required to prove that they are not acting illegally or oppressing the rights of minority shareholders. 
C)  minority shareholders are required to provide evidence that the majority shareholders are acting illegally or oppressing the rights of the minority shareholders. 
D)  directors are suing the officers and asking for their termination due to illegal or oppressive acts directed at all shareholders. 
E)  majority shareholders act on behalf of the organization.

Question 4

A sole proprietorship is not taxed as an organization.

Accepted Answer

A) True 
 B)False

Question 5

Explain sole proprietorship in terms of its continuity.

Accepted Answer

A proprietorship's continuity is tied di

Question 6

A partnership:

Accepted Answer

A)  cannot operate in more than one state without obtaining a license to do so. 
B)  is generally subject to more regulation and governmental supervision than a corporation. 
C)  provides general partners with unlimited liability. 
D)  involves significant formation costs. 
E)  allows unlimited number of people to become partners. 
A)  cannot operate in more than one state without obtaining a license to do so. 
B)  is generally subject to more regulation and governmental supervision than a corporation. 
C)  provides general partners with unlimited liability. 
D)  involves significant formation costs. 
E)  allows unlimited number of people to become partners.

Question 7

To what extent are partners in a general partnership liable for the organization's debts?

Accepted Answer

All partners in a general partnership ha

Question 8

Which of the following is true about the creation of a corporation?

Accepted Answer

A)  It is created under federal law. 
B)  It created under state law. 
C)  The formal application for a corporate charter is called the articles of association. 
D)  It is regulated only by local statutes. 
E)  Corporations are inexpensive to form. 
A)  It is created under federal law. 
B)  It created under state law. 
C)  The formal application for a corporate charter is called the articles of association. 
D)  It is regulated only by local statutes. 
E)  Corporations are inexpensive to form.

Question 9

Other than a sole proprietorship, why is partnership easy to form when compared to other forms of business organizations?

Accepted Answer

The cost of forming a partnership is rel

Question 10

A corporate charter is issued following an application made by individuals known as:

Accepted Answer

A)  incorporators. 
B)  corporate officers. 
C)  board members. 
D)  corporate panel. 
E)  proxies. 
A)  incorporators. 
B)  corporate officers. 
C)  board members. 
D)  corporate panel. 
E)  proxies.

Question 11

In a(n) _____, the shareholders are taxed only on income distributed.

Accepted Answer

A)  limited partnership 
B)  corporation 
C)  Limited liability company 
D)  sole proprietorship 
E)  S corporation 
A)  limited partnership 
B)  corporation 
C)  Limited liability company 
D)  sole proprietorship 
E)  S corporation

Question 12

When selecting a form of business venture, considering potential conflicts and mechanisms to resolve disputes refers to which of the following factors?

Accepted Answer

A)  Creation 
B)  Continuity 
C)  Liability 
D)  Managerial control 
E)  Taxation 
A)  Creation 
B)  Continuity 
C)  Liability 
D)  Managerial control 
E)  Taxation

Question 13

What are the advantages of an S corporation?

Accepted Answer

As a rule of thumb, an S corporation has

Question 14

Shareholders elect the officers of a corporation.

Accepted Answer

A) True 
 B)False

Question 15

The most difficult and complicated business organization to create is the:

Accepted Answer

A)  sole proprietorship. 
B)  partnership. 
C)  limited partnership. 
D)  corporation. 
E)  limited liability partnership. 
A)  sole proprietorship. 
B)  partnership. 
C)  limited partnership. 
D)  corporation. 
E)  limited liability partnership.

Question 16

Which of the following is true about managerial control in a general partnership?

Accepted Answer

A)  The agreement has to provide for each partner to have equal voice in the firm's affairs. 
B)  Control may be divided for the firm to include controlling partners and minority partners. 
C)  The differences in the degree of control do not affect the business's success. 
D)  The possibility of deadlock is higher when there are more number of partners and an odd number of them. 
E)  Language governing issues of managerial control need to be made orally clear to all partners. 
A)  The agreement has to provide for each partner to have equal voice in the firm's affairs. 
B)  Control may be divided for the firm to include controlling partners and minority partners. 
C)  The differences in the degree of control do not affect the business's success. 
D)  The possibility of deadlock is higher when there are more number of partners and an odd number of them. 
E)  Language governing issues of managerial control need to be made orally clear to all partners.

Question 17

A limited partner, even if he/she participates in management, cannot be held liable as a general partner.

Accepted Answer

A) True 
 B)False

Question 18

A sole proprietor has limited liability for the obligations of the proprietorship.

Accepted Answer

A) True 
 B)False

Question 19

It is usual for the growth in a business to be reflected in changes in organizational forms as a part of a life cycle.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following has a perpetual existence so long as the number of shareholders is limited?

Accepted Answer

A)  Limited partnership 
B)  Partnership 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation 
A)  Limited partnership 
B)  Partnership 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation

Exam 14: Business Organizations

The creation of _____ is automatic based on business conduct and is modified by agreement.

What are the drawbacks of corporate form of organization?

When a derivative law suit is filed:

A sole proprietorship is not taxed as an organization.

Explain sole proprietorship in terms of its continuity.

A partnership:

To what extent are partners in a general partnership liable for the organization's debts?

Which of the following is true about the creation of a corporation?

Other than a sole proprietorship, why is partnership easy to form when compared to other forms of business organizations?

A corporate charter is issued following an application made by individuals known as:

In a(n) _____, the shareholders are taxed only on income distributed.

When selecting a form of business venture, considering potential conflicts and mechanisms to resolve disputes refers to which of the following factors?

What are the advantages of an S corporation?

Shareholders elect the officers of a corporation.

The most difficult and complicated business organization to create is the:

Which of the following is true about managerial control in a general partnership?

A limited partner, even if he/she participates in management, cannot be held liable as a general partner.

A sole proprietor has limited liability for the obligations of the proprietorship.

It is usual for the growth in a business to be reflected in changes in organizational forms as a part of a life cycle.

Which of the following has a perpetual existence so long as the number of shareholders is limited?

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