Chapter 4

Question 0

Sole proprietorships are most common in ….

Answer 0

Retail, service and agriculture

Question 1

A business that is owned (and usually operated) by one person

Answer 1

Sole proprietorship

Question 2

Two main advantages of sole proprietorship

Answer 2

Simplicity and individual control

Question 3

Holds a business owner personally responsible for all the debt of the business

Answer 3

Unlimited liability

Question 4

A voluntary association of two or more persons to act as co-owners of a business for profit

Answer 4

Partnership

Question 5

A person who assumes full or shared responsibility for operating a business

Answer 5

General partner

Question 6

— is a person who invests money I’m a business but has no management responsibility or liability for losses beyond what he or she has in vested in the partnership

Answer 6

Limited partner

Question 7

Refer to an agreement listing and explaining the terms of the partnership

Answer 7

articles of partnership

Question 8

Partnership agreement should state

Answer 8

Who makes financial decisions 
Partners duties 
Investment of each partner 
Profit or loss each receive or lose 
What happens is partner wants to dissolve or partner dies

Question 9

Least popular form of business ownership

Answer 9

Partnership

Question 10

An artificial person created by law with most of the legal rights of a real person including the right to start and operate a business, to buy or sell property, to barrow money, to sue or be sued, and to enter into binding contracts

Answer 10

Corporation

Question 11

The shares of ownership of a cooperation.

Answer 11

Stock

Question 12

Corporation who’s stock is owned by a relatively few people and is not sold to the general public

Answer 12

Closed corporation

Question 13

A corp. who stock can be bought and sold to any individual

Answer 13

Open corporation

Question 14

A corporation in the state in which it is incorporated

Answer 14

Domestic corporation

Question 15

A corp. in any state which it does business exept the one in which it is incorporated

Answer 15

Foreign corporation

Question 16

A corporation chartered by a foreign government and conducting business within the us

Answer 16

Alien corp.

Question 17

Stock owned by individuals or firm who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others

Answer 17

Common stock

Question 18

Stock owned by individuals or firms who usually do not have voting rights but who’s claims on dividends are paid before those of common stock owners

Answer 18

Preferred stock

Question 19

A distribution of earnings to the stockholders of a corporation

Answer 19

Dividend

Question 20

A legal form listing issues to be decided at a stockholders meeting and enabling stockholders to transfer their voting rights to some other individual or individuals

Answer 20

Proxy

Question 21

The top governing body of a corporation the members which are elected by the stockholders

Answer 21

Board of directors

Question 22

Where to incorporate. Two main factors that help determaim where to incorporate are…

Answer 22

The cost of incorporating in one state compared to another

The advantages and disadvantages of each states corporate law and tax structure

Question 23

Articles of incorporation usually include

Answer 23

Firms name + address 
Incorporaters name +address
Purpose of corporation 
Max amount and types of stock to be issued 
Rights/privledges of stockholders
Length of time the corp. is to exist

Question 24

The two basic types of stock are

Answer 24

Common + preferred

Question 25

Top governing body of a corporation and is elected by the stockholders

Answer 25

Board of directors

Question 26

The chairman of the board, president, executive Vice President, corporate secretary, treasurer, and any other top executive appointed by the board of directors

Answer 26

Corporate officers

Question 27

A feature of corporate ownership that limits each owners financial liability to the amount of money that he or she has paid for the corporations stock

Answer 27

Limited liability

Question 28

Both ... Corp. and .. Corp. are taxed like a partnership.

Answer 28

LLC and S-corporation

Question 29

S-corporAtion

Answer 29

A corp. that is taxed as though it were a partnership

Question 30

To qualify for s-corp. a firm must meet the fallowing requirements

Answer 30

``` No more than 100 stockholders Stock holders must be individuals estates or certain trusts 3) only one class of outstanding stock 4) domestic corp. 5)no alien stockholder 6) all stockholders must agree to from an S-corp. ```

Question 31

A form of business ownership that combines the benefits of a corporation and a partnership whil avoiding some of the disadvantages of both

Answer 31

LLC

Question 32

An agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time

Answer 32

Joint venture

Question 33

A temporary association of invididuals or firms organized to preform a specific task that requires a large amount of Capitol

Answer 33

Syndicate

Question 34

The Purchase of one corporation by another

Answer 34

Merger

Question 35

A situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger

Answer 35

Hostile takeover

Question 36

An offer to purchase the stock of a firm targeted for acquisition at a price just high enough to temp stockholders to sell their shares

Answer 36

Tender offer

Question 37

A technique used to gather enough stockholder votes to control a targeted company

Answer 37

Proxy fight

Question 38

Three types of growth by merger are

Answer 38

Horizontal merger Vertical merger Conglomerate merger

Question 39

...is a merger between two firms that make or sell similar products in similar markets

Answer 39

Horizontal merger

Question 40

Is a merger between two firms that operate at different levels in the production and marketing of a product Generally one of the merging firms is either a supplier or a customer of the other

Answer 40

Vertical merger

Question 41

Merger that takes place between firms in completely different industries

Answer 41

Conglomerate merger

Question 42

Is essentially the same thing as a merger, but the term usually is use to describe a large corporations purchase of other corporations

Answer 42

Acquisition

Question 43

72% of all American business firms are

Answer 43

Sole proprietorships

Question 44

4 percent of total revenues come from this type of business ownership

Answer 44

Sole proprietorship

Question 45

It is allways a good idea to have s written agreement or...... When setting forth the terms of s partnership

Answer 45

Articles of partnership

Question 46

Is a carefully constructed guide for the person starting a business

Answer 46

Business-plan

Question 47

12 parts to a business plan

Answer 47

1) introduction 2)executive summary 3) benefits to the community 4) company and industry 5) management team 6) manufacturing/operations plan 7) labor force 8) marketing plan 9) financial plan 10) exit strategy 11)critical risks/assumptions 12) appendix

Question 48

A corporation organized to provide a social, educational, religious, or other service rather than to earn a profit

Answer 48

Not-for-profit corporation

Question 49

Various charities, museums, private schools, colleges, and charitable organizations are organized as not-for-profit corporations Primarily to ensure....

Answer 49

Limited liability

Question 50

Once non-profit corps meet specific Internal Revenue Service guidelines they can obtain...

Answer 50

Tax-exempt status

Question 51

A form of business that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership

Answer 51

LLC limited liability company

Question 52

In theory stockholders are able to control the activities of the corporation because they...

Answer 52

Elect the board of directors who appoint the corporate officers

Question 53

Small business 3 major categories Production Distribution Service

Answer 53

Production 19% Distribution 33% Service 48%

Question 54

Small business VS not small

Answer 54

Sometimes it's measured by employee count and sometimes by revenue In manufacturing and mining anything less than 500 employees is small business

Question 55

70% of entrepreneurs are between the ages of what and what

Answer 55

24-44 30-34 is the highest with 21%

Question 56

3 major reasons why some entrepreneurs fail

Answer 56

Lack of Capitol Lack of management Over expansion