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Exam 4: Choosing a Form of Business Ownership

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Question 21

True/False

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The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.

A) True
B) False

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Question 22

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A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

A) sole proprietorship.
B) S-corporation.
C) closed corporation.
D) open corporation.
E) not-for-profit corporation.

F) C) and D)
G) A) and C)

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Question 23

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The ____ is a legal document that lists and explains the terms of the partnership.

Mars, Inc., maker of M&Ms and other candy, is 100 percent owned by the Mars family and is therefore referred to as a(n)

Your friend Steve owns a considerable amount of common stock in Intel, the large microchip manufacturer. He wants to cast his votes on various issues at the annual stockholders' meeting, but he does not have the time to travel a great distance to the meeting. Instead of attending the meeting, Steve decides to register his votes by

When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.

A partnership formed to operate for a specific time period or to accomplish a specific purpose is known as a

An association of individuals or firms formed for the purpose of performing a business function for all members is known as a

Stephen decides his business will begin staying open until 7 p.m. instead of 6 p.m. The next day, the shop stays open until 7 p.m. This environment of flexibility to quickly change is characteristic of what form of business organization?

A technique used to gather enough stockholder votes to control a targeted company is a

A syndicate is a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital.

The purchase of one corporation by another is called a merger.

Common stockholders have the right to elect a corporation's board of directors and vote on corporate matters.

Although a partnership pays no income tax, the Internal Revenue Service requires partnerships to file an annual information return that states the amount of distributions made to each partner.

Keisha Cook and Donnie Blackman decide to go into business together. They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities. Keisha and Donnie created a(n)

If Avon and Merck joined together to produce a cream that slows down the aging process, this would be called a(n)

Walters Company, LLC, is a wholesale distributor of industrial packaging. A primary advantage that Walters enjoys as an LLC that corporations do not have is

A limited-liability company extends the concept of personal-asset protection to small-business owners.

The partner who can lose only what he or she has invested in a business is the

The form of business organization that comprises about 19 percent of all businesses in the United States is the