Question 1

Two or more individuals, an individual and a corporation, a partnership and a corporation, or any combination of these entities may agree to create a(n):

Accepted Answer

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

Question 2

A limited partnership is solely made up of limited partners.

Accepted Answer

A) True 
 B)False

Question 3

How is the liability factor a disadvantage of sole proprietorship?

Accepted Answer

A sole proprietor is personally obligate

Question 4

Are partnerships taxable entities? Explain.

Accepted Answer

Partnerships are not a taxable entity. T

Question 5

Jonathan wants to start a business. Which form of business organization will give him the most complete and exclusive control over business decisions?

Accepted Answer

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

Question 6

"Creation" means:

Accepted Answer

A)  the legal steps required to form a particular business organization. 
B)  the concept of a business. 
C)  the intent to create a business. 
D)  a paradigm shift in a business. 
E)  the relation of the organization's existence to its owners. 
A)  the legal steps required to form a particular business organization. 
B)  the concept of a business. 
C)  the intent to create a business. 
D)  a paradigm shift in a business. 
E)  the relation of the organization's existence to its owners.

Question 7

A dissolution essentially terminates the business of a partnership.

Accepted Answer

A) True 
 B)False

Question 8

A periodical review of the criteria used to select a form of organization enables the advantages of an organizational form to be balanced against the disadvantages.

Accepted Answer

A) True 
 B)False

Question 9

Usually, the cost of creation of a business entity is not a major factor in considering which form of operation to choose.

Accepted Answer

A) True 
 B)False

Question 10

A corporation created under the authority of a foreign country may be called a(n) _____ corporation.

Accepted Answer

A)  imported 
B)  offshore 
C)  alien 
D)  distant 
E)  external 
A)  imported 
B)  offshore 
C)  alien 
D)  distant 
E)  external

Question 11

In a closely held corporation, the majority shareholders:

Accepted Answer

A)  have no influence on management. 
B)  elect the members of the board of directors. 
C)  cannot be employed by the corporation. 
D)  have the same impact on policy as minority stockholders. 
E)  bring upon derivative suits on behalf of the corporation. 
A)  have no influence on management. 
B)  elect the members of the board of directors. 
C)  cannot be employed by the corporation. 
D)  have the same impact on policy as minority stockholders. 
E)  bring upon derivative suits on behalf of the corporation.

Question 12

Which of the following is true about an S corporation?

Accepted Answer

A)  It has the same legal characteristics as any other corporation except for the issue of taxation. 
B)  It is the official designation for a corporation with 500 or less employees. 
C)  It is the same as any other corporation except for management participation by stockholders. 
D)  It is exactly the same as any other corporation. 
E)  It need not file an information return with the IRS since it does not pay any taxes. 
A)  It has the same legal characteristics as any other corporation except for the issue of taxation. 
B)  It is the official designation for a corporation with 500 or less employees. 
C)  It is the same as any other corporation except for management participation by stockholders. 
D)  It is exactly the same as any other corporation. 
E)  It need not file an information return with the IRS since it does not pay any taxes.

Question 13

When one person, or a very few persons, own all the shares of stock in a corporation, it is considered a _____ organization.

Accepted Answer

A)  publicly held 
B)  narrowly held 
C)  closely held 
D)  tightly held 
E)  minority held 
A)  publicly held 
B)  narrowly held 
C)  closely held 
D)  tightly held 
E)  minority held

Question 14

Limited partners:

Accepted Answer

A)  are personally responsible for debts of the business. 
B)  control operations of the limited partnership. 
C)  may dissolve the limited partnership by assigning their interest in a business to another person. 
D)  may have their surnames used in the partnership's name. 
E)  may act as a guarantor of the partnership's obligations. 
A)  are personally responsible for debts of the business. 
B)  control operations of the limited partnership. 
C)  may dissolve the limited partnership by assigning their interest in a business to another person. 
D)  may have their surnames used in the partnership's name. 
E)  may act as a guarantor of the partnership's obligations.

Question 15

The formal application for a corporate charter is called the:

Accepted Answer

A)  articles of confederation. 
B)  articles of incorporation. 
C)  articles of partnership. 
D)  articles of association. 
E)  articles of integration. 
A)  articles of confederation. 
B)  articles of incorporation. 
C)  articles of partnership. 
D)  articles of association. 
E)  articles of integration.

Question 16

Whenever two or more people wish to own a business together, they enter into a formal agreement called the:

Accepted Answer

A)  articles of confederation. 
B)  articles of incorporation. 
C)  articles of partnership. 
D)  articles of association. 
E)  articles of integration. 
A)  articles of confederation. 
B)  articles of incorporation. 
C)  articles of partnership. 
D)  articles of association. 
E)  articles of integration.

Question 17

The failure to consider how to overcome disputes involving managerial control can cause business activities to suffer and the organization to fail.

Accepted Answer

A) True 
 B)False

Question 18

What is the purpose of a buy and sell agreement and when are they needed?

Accepted Answer

The buy and sell agreement, which is ent

Question 19

The owners of LLCs are called:

Accepted Answer

A)  shareholders. 
B)  partners. 
C)  proprietors. 
D)  members. 
E)  directors. 
A)  shareholders. 
B)  partners. 
C)  proprietors. 
D)  members. 
E)  directors.

Question 20

An LLC is created through filing the _____ with a state official, usually the secretary of state.

Accepted Answer

A)  articles of confederation 
B)  articles of incorporation 
C)  articles of organization 
D)  articles of association 
E)  articles of integration 
A)  articles of confederation 
B)  articles of incorporation 
C)  articles of organization 
D)  articles of association 
E)  articles of integration

Exam 14: Business Organizations

Two or more individuals, an individual and a corporation, a partnership and a corporation, or any combination of these entities may agree to create a(n):

A limited partnership is solely made up of limited partners.

How is the liability factor a disadvantage of sole proprietorship?

Are partnerships taxable entities? Explain.

Jonathan wants to start a business. Which form of business organization will give him the most complete and exclusive control over business decisions?

"Creation" means:

A dissolution essentially terminates the business of a partnership.

A periodical review of the criteria used to select a form of organization enables the advantages of an organizational form to be balanced against the disadvantages.

Usually, the cost of creation of a business entity is not a major factor in considering which form of operation to choose.

A corporation created under the authority of a foreign country may be called a(n) _____ corporation.

In a closely held corporation, the majority shareholders:

Which of the following is true about an S corporation?

When one person, or a very few persons, own all the shares of stock in a corporation, it is considered a _____ organization.

Limited partners:

The formal application for a corporate charter is called the:

Whenever two or more people wish to own a business together, they enter into a formal agreement called the:

The failure to consider how to overcome disputes involving managerial control can cause business activities to suffer and the organization to fail.

What is the purpose of a buy and sell agreement and when are they needed?

The owners of LLCs are called:

An LLC is created through filing the _____ with a state official, usually the secretary of state.

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