BUS 311 Week 3 Chapter 019
- There is only one organizational form that is available for a business structure.
- Businesses are generally structured as one of the following: (1) sole proprietorship, (2) partnership, (3) corporation, or (4) limited liability company.
- An advantage to a sole proprietorship is that the owner has complete authority, within the boundaries of the law, for the running of the business.
- The major disadvantage of a sole proprietorship is the fact that the owner of the establishment has limited liability.
- Dissolution of a partnership is governed by the partnership contract and usually occurs due to the retirement of one of the partners.
- When individuals become partners for only a short period of time, or for only a single project, they are engaged in a joint venture.
- When a partner acts with either actual or apparent authority, all other partners are not liable for his or her acts.
- Corporations are owned by shareholders, who purchase shares of stock in the corporation.
- A corporation drafts articles of incorporation that lists the liabilities of the company.
- The major advantage of a corporation is the fact that the shareholders have unlimited liability.
- The major disadvantage of a corporation is the fact that the corporation is required to pay separate income taxes at a special corporate rate for any year during which a profit is earned.
- The duty of loyalty means that a director has no legal or ethical obligation to administer to the affairs of the corporation with personal integrity, honesty, and candor.
- The duty of care means that a director has a legal and ethical obligation to act diligently and prudently in conducting the affairs of the corporation.
- The limited liability companies provide all of the owners with limited liability, while allowing them to participate in the management of the business.
- Organizations that are referred to as not-for-profits and can include charitable organizations but not organizations such as universities, political parties, labor union, social clubs, and others.
- Many people in the United States have an entrepreneurial spirit that encourages them to pursue the "American Dream" of:
A. traveling throughout the world.
B. having employment security.
C. having a leisurely life.
D. owning and operating their own business.
- A business owned and operated by one person is called a(n):
A. identical commerce.
B. sole proprietorship.
C. corporation aggregate.
D. 501 corporation.
- In a sole proprietorship, the entrepreneur has to obtain a general ____________from his or her local municipality.
A. fiscal access
B. stock reserve
C. business license
D. corporate authority
- All but one of the following organizational forms has limited liability. This exception is the:
A. sole proprietorship.
B. subchapter C corporation.
C. subchapter S corporation.
D. limited partnership.
- A business owned and operated by two or more persons is a(n):
B. sole proprietorship.
C. subchapter C corporation.
D. subchapter S corporation.
- The death or disability of one of the partners in a business causes:
- At times, individuals can become partners for only a short period of time, or for only a single project. This activity is defined as a:
A. joint venture.
C. sole liability.
D. union charge.
- In a business, each partner has a right to share in the value of the firm's:
- In a business, there may be times when partners disagree on how the business should be run. This serves as a(n):
- A limited partner will be deemed by the courts to be a general partner if he or she:
A. constantly refuses to sign a proxy.
B. participates regularly in the duty of loyalty and duty of care.
C. participates in the overall management of the business.
D. unintentionally violates the duty of care owed to the corporation.
- A business that is formed as a separate legal entity is a(n):
- The document that lists the general powers of a corporation is called the:
A. memorandum of hierarchy.
B. memorandum of association.
C. articles of entrepreneurship.
D. articles of incorporation.
- The company usually has_________, which provide rules for the meetings of the corporation.
A. common laws
B. international laws
D. statutory laws
- The major advantage of a corporation is the fact of ____________to shareholders.
A. restricted authority
B. unlimited credibility
C. limited liability
D. unrestrained reliability
- The corporation is required to pay separate income taxes at a special corporate rate for any year during which a profit is earned. At the time profits are distributed to:
- The expense associated with forming and maintaining the company in a corporation serves as a(n):
C. accounting strategy.
- The company must comply with tax regulations, such as the restriction that there are a limited number of shareholders, in order to qualify as a:
A. subchapter S corporation.
B. sole proprietorship.
C. limited partnership.
D. subchapter C corporation.
- Shareholders vote for __________ who are responsible for managing the overall strategy and operations of the firm over the long term.
- In a corporation, directors and officers of the company in which they hold their positions have a _____________ towards the company.
B. mandatory duty
C. time bound duty
D. fiduciary responsibility
- A director has a legal and ethical obligation to act diligently and prudently in conducting the affairs of the corporation. This is called the:
A. mandatory duty.
B. psychological duty.
C. legal responsibility.
D. duty of care.
- The Limited Liability Company provides all of the owners with:
A. licensing authority.
B. limited liability.
C. limited profits.
D. limited reputation.
- Which of the following organizational forms has in place a management team whose members share in the overall control of the business?
A. Charity organizations.
B. Sole proprietorship.
C. religious organizations.
D. Limited Liability Company.
- As is true for all small firms, the owners of a Limited Liability Company frequently have difficulty in raising:
A. additional funds.
D. joint ventures.
- Organizational forms that are referred to as not-for-profits may include:
A. limited liability corporations.
B. charitable organizations.
C. business organizations.
D. industrial corporations.
- The not-for-profits organizations include all of the following, EXCEPT:
C. political parties.
D. social clubs.