FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: How to Form a Business

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In a limited liability partnership, each partner's risk of losing personal assets is

A) unlimited.
B) limited to losses that result from his/her own acts and omissions and the acts and omissions of those who work under his/her supervision.
C) determined entirely by the maximum loss provision established by the articles of co-partnership.
D) nonexistent.

E) B) and C)
F) B) and D)

Correct Answer

verified

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

A multinational corporation is a firm that operates in several countries.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

Carter is a stockholder in ExtremeTrax, Inc., a C corporation that designs and manufactures amusement park roller coasters. The company recently lost a major court decision and is being forced into bankruptcy. In fact, the damages being awarded are so large that, even if all company assets are sold and the proceeds are used to pay its debts, ExtremeTrax is likely to still owe money to its creditors. If ExtremeTrax goes bankrupt, Carter and the other stockholders will

Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, the company is a chartered C corporation, but the owners are interested in switching to be an S corporation. After consulting a lawyer, they learned that Zorn Enterprises does not qualify to be designated as an S corporation. Which of the following characteristics of Zorn Enterprises would prevent it from becoming an S corporation?

Being your own boss means

Most states have legal restrictions that prevent individuals from incorporating.

One difference between partnerships and sole proprietorships is that partnerships

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

Taking a firm private involves converting a firm from a corporation to a general partnership.

If a corporation has after-tax profits of $360,000, and elects to distribute this amount in the form of dividends to its stockholders, these distributions are free and clear of taxes because the corporation paid taxes on this amount prior to distribution.

The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond

In order to establish a C corporation, it is a requirement that investors run the company, whereas in an S corporation, this is not the case.

If a group of stockholders or management obtain all the stock of a previously publicly traded firm for themselves, this is referred to as

Franchising is popular in the United States, but legal barriers have limited its popularity in foreign countries.

A general partner takes an active role in the management of the business.

When two or more people legally agree to become co-owners of a business, the form of business is called a partnership.

A ________ is two firms combining to form one company.

Midwest Auto Experts, Inc. sells franchises to prospective businesspersons who want to use the Midwest Auto Experts name and offer its products. In a franchise arrangement, Midwest Auto Experts would be the ________, and the buyer of the franchise is the ________.

When comparing general partnerships to sole proprietorships, an advantage of partnerships is that they

A major objective of a leveraged buyout is to enable investors to gain control of a company by issuing new shares of ownership, thus minimizing the use of debt.