FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: How to Form a Business

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing is called a(n) :

A) Golden parachute.
B) Arbitrage agreement.
C) Factor transaction.
D) Leveraged buyout.

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

One disadvantage of a limited liability company is that it:

A) Requires all earnings of the business be taxed at the corporate rate.
B) Has a limited life span.
C) Requires the owners to divide up profits and losses in a fixed proportion.
D) Has a more restrictive ownership requirement than S corporations.

E) C) and D)
F) B) and C)

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

In a limited partnership, the general partners should encourage the limited partners to take a more active role in the operations of the business. After all, the limited partner has comparable liability in the business, even though he/she may not be a partner for as long a period of time as the general partners.

"Double taxation" means:

One of the major disadvantages of a partnership is that profits must be divided equally.

The stockholders of large, publicly traded corporations have a daily pulse on the operation of the business.

Double taxation means that a corporation pays twice the amount of taxes as a sole proprietorship or partnership.

If a group of stockholders or management obtain all the stock of a previously publicly traded firm for themselves, this is referred to as:

A master limited partnership (MLP) is:

Liam owns a Far Horizons Travel Agency franchise. As a franchisee, Liam is guaranteed the right to retain all of his franchise's revenues and profits.

Tess and Tijuana have considered starting their own business but are concerned about the possibility of losing their personal assets if the business fails. One way for Tess and Tijuana to avoid this risk would be to organize their firm as a(n) :

Some ask members/customers to work at the organization for a number of hours a month as part of their duties.

To change ownership in a corporation you simply sell your stock to someone else.

If a corporation has after-tax profits of $360,000, and elects to distribute this amount in the form of dividends to its stockholders, these distributions are free and clear of taxes because the corporation paid taxes on this amount prior to distribution.

The limited liability company requires a minimum of 10 members.

A few years back, your three U.S. born friends that live in the State of Wyoming inherited a dude ranch that they plan to turn into a retirement haven for race horses. Peaceful Pastures wants to open its doors by spring, 2010. After attending several small business seminars, the three friends are certain they need limited liability. The high-risk, labor-intensive business will require a sizeable investment including an air-conditioned barn, several fenced-in pastures and loads of animal feed. You recently heard that one form of business ownership requires owners to pay self-employment taxes on the entire amount of earnings. You are fairly certain this is one tax loophole your friends would like to avoid. You recommend:

Twenty-six years ago, several small vineyard owners in California joined voluntarily to market their grapes and wine in an attempt to get better prices. Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services. The arrangement established by these vineyard owners is an example of a(n) :

Stockholders in a corporation exert a significant degree of control over the company's daily operations.

Franchising is popular in the United States, but legal barriers have limited its popularity in foreign countries.

It is not unusual for members of cooperatives to work for and help manage their cooperative.