1.A corporation is an artificial
1.A corporation is an artificial person created by law.
True
False
2. A limited-liability company is
A. taxed like a corporation
B. taxed like a partnership
C. similar to a cooperative
D. always used to organize charitable organizations
E. the result of a horizontal merger
3.Although a partnership pays no income tax, the Internal Revenue Service requires partnerships to file an annualinformation return that states the amount of distributions made to each partner.
True
False
4.Amy owns 100 shares of General Electric preferred stock. She wants to attend the annual stockholder meeting to casther vote on company issues. Based on your knowledge from school, you caution Amy that
A. people with fewer than 1,000 shares of stock cannot vote
B. stockholders are not allowed to attend the annual meetings
C. most preferred stock does not have voting rights
D. only institutional investors are allowed to attend the meetings
E. she can vote only by proxy and not in person
5.As a limited partner in a construction business, Joe
A. has input only on major company decisions
B. contributes only his time and not his money
C. does not receive any portion of the profits
D. only risks his initial investment
E. cannot lose his investment in the partnership
6.Mike Nettles approached Nathan Lang about becoming a partner in a firm that destroys environmental waste.
While Mike would like to become a partner in the firm, he is concerned about his liability because he has recentlyinherited a lot of money. In this situation, Mike should become a
A. general partner with a majority ownership interest in the business
B. general partner with a minority ownership interest in the business
C. limited partner
D. joint venturist
E. sole proprietor
7.Prudential and several other large insurance companies have joined together to underwrite an extremely largeinsurance policy. This sort of association is referred to as a(n)
A. syndicate
B. cooperative
C. conglomerate
D. alliance
E. vertical merger
8.Samantha graduated from college and needed to decide where she wanted to work. She had several options. Heraunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual ownerof her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a greatopportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retires. Onthe other hand, she also felt that she wanted something a little more challenging; a job where she could really useher education. Her other option would be to work for a company that a friend and her husband had
started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However,Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Herlast option was to work for a large retail company, headquartered in Maryland, which had stores across the UnitedStates.
After much consideration, Samantha decided she didn’t want an opportunity and a job because someone knew her.She wanted to prove how motivated and hardworking she was. Once she weighed all the advantages anddisadvantages of her different options, she decided to work for the large retail company so that she could gain themost experience for herself.
Question – What type of company does Samantha’s friend operate?
A. Incorporation
B. Partnership
C. Franchise
D. Corporation
E. Sole proprietorship
9.Samantha graduated from college and needed to decide where she wanted to work. She had several options. Heraunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual ownerof her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a greatopportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retires. Onthe other hand, she also felt that she wanted something a little more challenging; a job where she could really useher education. Her other option would be to work for a company that a friend and her husband had
started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However,Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Herlast option was to work for a large retail company, headquartered in Maryland, which had stores across the UnitedStates.
After much consideration, Samantha decided she didn’t want an opportunity and a job because someone knew her.She wanted to prove how motivated and hardworking she was. Once she weighed all the advantages anddisadvantages of her different options, she decided to work for the large retail company so that she could gain themost experience for herself.
Question – If Samantha worked for the large retail company in Philadelphia, what type of corporation would that be?
A. Foreign
B. Alien
C. International
D. Domestic
E. Global
10.Samantha graduated from college and needed to decide where she wanted to work. She had several options. Heraunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual ownerof her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a greatopportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retires. Onthe other hand, she also felt that she wanted something a little more challenging; a job where she could really useher education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However,Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Herlast option was to work for a large retail company, headquartered in Maryland, which had stores across the UnitedStates.
After much consideration, Samantha decided she didn’t want an opportunity and a job because someone knew her.She wanted to prove how motivated and hardworking she was. Once she weighed all the advantages anddisadvantages of her different options, she decided to work for the large retail company so that she could gain themost experience for herself.
Question – Refer to Samantha’s Dilemma. Based on the information provided, what type of business does Samantha’saunt operate?
A. Incorporation
B. Partnership
C. Franchise
D. Corporation
E. Sole proprietorship
11.Ted’s partnership agreement with two other men was a bit unsound. One of the problems the men were encountering was uneven productivity among thepartners. The agreement required each partner to contribute to every aspect of the business to receive an equal portion of the profits. This agreement didnot reflect the idea that
A. all partners need not be equal; that is, there are different types of partners. Some may be fully active in
running the business, whereas others may have a more limited role.
B. limited partners are required to be active in day-to-day business operations
C. customers and creditors of a limited partnership need not be protected
D. the Uniform Partnership Act requires every general partnership to have at least one limited partner
E. each partner must agree to contracts entered into on behalf of all the others
12.Which of the following is an advantage of a sole proprietorship?
A. The owner has unlimited liability
B. The business ceases to exist when the owner dies.
C. There is a limit to the amount one person can borrow
D. Profits are taxed as individual income
E. The owner enjoys lack of continuity
13.Which of the following is an example of a vertical merger?
A. The purchase of TWA by American Airlines
B. The purchase of Marathon Oil Company by U.S. Steel
C. The purchase of Kentucky Fried Chicken by PepsiCo
D. The purchase of Malone’s Cost-Plus Supermarkets by the Kroger supermarket chain
E. The purchase of Gulf Oil by Standard Oil Company of California
14. Which of the following statements is true?
A. Economists and financial analysts agree that mergers are good for the economy
B. Takeovers always increase a firm’s productivity
C. Mergers in the first part of the twenty-first century will see an increase in debt financing.
D. Mergers in the first part of the twenty-first century will be driven by cash-rich companies looking toacquire businesses that will enhance their position in the marketplace.
E. There will be fewer mergers that involve investors from other countries
15. With regard to taxation of partnerships, which of the following statements is correct?
A. Profits are taxed twice
B. Each partner is taxed in the same way as a sole proprietor
C. Taxes are paid on a partnership’s profits, after which each partner pays taxes on his or her share of the profits.
D. A partnership is exempt from taxes
E. The partnership is taxed as a separate entity.
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