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Exam 4: Choosing a Form of Business Ownership

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Question 111

Multiple Choice

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Mike Hill and Larry Wright decide to start a partnership and offer accounting services.Which of the following is the best way to start this partnership?

A) They should orally discuss how they want the partnership to work and who is responsible for certain areas.
B) They should determine the exact way the business should be run and have a witness listen to their oral discussion.
C) They should let a third party,such as a consultant or an attorney,draft whatever agreement the consultant or attorney thinks is appropriate.
D) They should carefully draft an articles of partnership together,outlining each partner's responsibilities and other important information.
E) With the help of an attorney,they should draft a partnership agreement that states each partner's duties and investments.

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Question 112

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A temporary association organized to perform a specific task requiring a large amount of capital is known as a(n)

A) conglomerate.
B) cooperative.
C) master limited partnership.
D) syndicate.
E) authority.

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Question 113

Multiple Choice

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The simplest form of business owned and operated by one person is called a(n)

B&G,Inc. ​A year ago,Carl went to work for B&G,Inc.He has worked for the finance department ever since he started.He noticed that the corporation was only taxed as though it were a partnership.This was something that he found very odd when he first started working for the company,but he later realized it was a fairly common practice.He recognized that this was one of the advantages of this type of corporation. ​While the job was challenging,Carl was not happy.He wanted to work for a company whose main goal was to provide service to the community,not to make a profit.However,Carl felt that,considering his present financial situation,he had to continue working for B&G,Inc.A week later,Carl discovered there was going to be a merger between B&G,Inc.and one of its major competitors.Carl's boss informed him that he would be getting a promotion and a raise.While he was excited about making more money,he still was not happy.He knew then that he would not be working for the company for long. -Refer to B&G,Inc.What type of organization is B&G,Inc.?

All not-for-profit corporations rely solely on volunteers to perform services of the organization.

A banker or lender is more likely to make sizable loans to a sole proprietor than to a partnership.

The purchase of one corporation by another is referred to as a

What types of information should a partnership agreement contain?

Which of the following is not an advantage of a sole proprietorship?

Joint ventures are created for a specific purpose and dissolved when that purpose is achieved.

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.

All of the following are disadvantages that Sean should consider before entering a partnership agreement with his cousin except

Denise has an idea for a freelance technical writing business that would provide text for technical journals and websites.She can write anywhere she can connect to the Internet,which will give her flexibility to participate in her other interests.She would not need an office outside of the home because she could see clients at their place of business or talk to them via Skype or another conferencing modality.She does not want to share control of the business because she feels this would harm her creativity.There are no liabilities and very few start-up costs-she already has a computer with an Internet connection.She would like to start her freelance business tomorrow and has prepared emails to send out to potential clients and a web-site,and secured various social media sites to promote the business.What would be the best business form for Denise's business?

Paul wants to start a business that provides canoe and kayak trips.He decides that it would be better to ask his brother Tad to become his partner because

The corporation,partnership,and sole proprietorship are the three most common forms of business ownership in the United States.

Describe the ownership,operation,and size of a sole proprietorship.

The form of business organization most heavily regulated by the government is the

Articles of partnership are a legal document issued by the secretary of state.

Profits of a large corporation are taxed twice,once as corporate income and again as personal income of stockholders.

A merger between firms in completely unrelated industries is known as a