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Exam 4: Selecting a Form of Business Ownership

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Question 31

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A not-for-profit corporation is formed to serve some public purpose and not for financial gain.

A) True
B) False

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Question 32

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Continuity is an advantage of a corporation; however, ease in transferability is a disadvantage.

A) True
B) False

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Question 33

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In a limited partnership the limited partners' losses are limited to their investment in the business and not their personal assets.

In a limited partnership, a single _____ runs the business and is responsible for all of the business liabilities.

In a corporation, all of the owners help run the business.

How did Ben Cohen and Jerry Greenfield start one of the best-known ice cream companies in the country?

Limited liability company (LLC) owners must be U.S. citizens.

Pat Smith and George Johnson own five flower shops in Manhattan. They want to open a wholesale flower business to supply their shops as well as others in their geographical area. They currently operate as a partnership but are considering changing their legal form of organization. One reason for doing this is to increase the likelihood that they will be able to raise the funds needed to expand. -The partners should consider converting to a corporation.

In a limited partnership, although one partner runs the business, any number of the others may have partial involvement in the business.

Pat Smith and George Johnson own five flower shops in Manhattan. They want to open a wholesale flower business to supply their shops as well as others in their geographical area. They currently operate as a partnership but are considering changing their legal form of organization. One reason for doing this is to increase the likelihood that they will be able to raise the funds needed to expand. -An S-corporation would give them a more favorable tax treatment than a regular corporation.

Scuffy the Tugboat is a family-run business that makes tugboats. It is owned by three brothers, Jack, Frank, and Bob. Their first tugboat is still towing ships in Boston Harbor, and over the years, success has allowed them to grow the company by plowing money back into it. Now, however, they want to expand but they are not sure how they should do this. They are also unsure about which legal form of organization is best for them. -They could expand their operations by acquiring another tugboat company. This type of deal is called a merger.

Who were the original shareholders in Ben and Jerry's

Which of the following is a disadvantage of the corporate form of organization

In deciding on a legal form of organization, you should ask yourself all of the following questions except______________

About what percent of U.S. businesses are partnerships

Which of the following is not a requirement of an S-corporation

A sole proprietorship is a legal form of business ownership.

It is not necessary to decide if the business should survive the owner(s) in the startup stage.

The shareholders elect a board of directors, primarily from within the corporation, who manage the company.

Compare and contrast mergers and acquisitions.