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Exam 4: Forms of Business Ownership

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Question 1

Multiple Choice

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Articles of incorporation do NOT include:

A) the name and address of the corporation
B) a list of all stockholders' names
C) the objectives of the corporation
D) the minimum capital requirements
E) the classes of stock

F) B) and D)
G) A) and B)

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Question 2

Multiple Choice

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Rebecca Siddoway own and operate Country Candies.Siddoway specializes in making rich, creamy toffees that she packages in attractive gift boxes and sells through the mail.What would be the advantage to Siddoway if she decides to incorporate her business?

A) Corporations have fewer government restrictions and regulations.
B) Corporations have guaranteed loans for expansion.
C) Corporations pay lower and fewer taxes.
D) Corporations have an enhanced ability to attract financing.
E) Customers and suppliers would treat her with greater respect if she operated her business as a corporation instead of a sole proprietorship.

F) A) and B)
G) A) and C)

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D

Question 3

True/False

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The sole proprietorship is considered a legal entity; therefore, it is taxed separately from the owner.

The development of new drugs is very expensive.For this reason Genentech, a large biotechnical company, has entered into a _____ with Swiss-owned Roche to develop a vaccine for tuberculosis.When the vaccine is developed or when the two biotechnical companies determine the vaccine cannot be developed using their current methodology, this relationship will dissolve.

Corporations face many more government restrictions and regulations than sole proprietorships and partnerships.

One of the disadvantages of the sole proprietorship is that the owner has unlimited liability.

Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses.As the sole proprietor of the business, he has unlimited liability, which means:

Dissolving a partnership is easier than dissolving a sole proprietorship.

A _____ is the combining two or more firms to form one new company.

Miniature Precision Corporation, a microprocessor manufacturer, recently acquired Cameron-Price, a plastics mold manufacturer.Miniature Precision financed the transaction with 90 percent borrowed money and used Cameron-Price's assets as collateral.This type of merger is commonly known as a(n) :

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship.As the business grew, she realized that she did not want to be personally liable for the business's debts and wanted her business accounts to be separate from her personal accounts.Therefore, she should have:

When Wachovia Bank, acquired First Union Bank Dim S.A., it was an example of a conglomerate merger.

Articles of incorporation usually specify the life of a corporation as a certain number of predetermined years.

A firm's stockholders have the right to do all of the following EXCEPT:

Which of the following is an advantage of sole proprietor ownership?

A _____ merger brings together companies in unrelated businesses to reduce risk.

For partnerships to be legal, they must be established in writing.

Taxing a corporation's earnings and taxing the stockholder's dividends from the corporate earnings is called _____ taxation.

Which of the following demographic groups is having the greatest impact on the growth of the franchising industry?

The merger of McKesson, the leading U.S.drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a(n) _____ merger.