Question

business organizations

1. individuals who invest in a corporation by buying stock are:

a. subsidiaries b. conglomerates c. cooperatives d. proprietors

1. a business that is owned by the people who use its services is a:

a. nonprofit organization b. partnership c. cooperative d. corporation

1. a business that is owned and controlled by one person is a:

a. cooperative b. partnership c. sole proprietorship d. corporation

1. business organization that is treated by law as if it were an individual person (can sue and be sued) is a:

a. cooperative b. partnership c. sole proprietorship d. corporation

1. business that is owned and controlled by two or more people is a:

a. cooperative b. partnership c. sole proprietorship d. corporation

1. certificates of ownerships in a corporation are called:

a. bonds b. dividends c. stocks d. interest e. liability

1. the business organization that accounts for the most total sales in the nation is the:

a. sole proprietorship b. partnership c. corporation

1. the most common form of business organization is the:

a. sole proprietorship b. partnership c. corporation

1. which of the following applies to the corporation but not to other business organizations?

a. limited liability b. limited life c. lower organizing costs d. ease of organizing

1. which of the following groups own the corporation?

a. bondholders b. executive officers c. board of directors d. stockholders
directions - write a if the situation is an advantage. write d if the situation is a disadvantage

1. from the business viewpoint, ownership is separated from management in a corporation.
2. in a partnership, partners can specialize.
3. from stockholders viewpoint, stockholders have limited liability in a corporation.
4. in a sole proprietorship, the owner has unlimited liability.
5. in a general partnership, each partner is personally responsible for debts incurred.
6. from the business viewpoint, a corporation can raise capital by issuing shares of stock.
7. in a sole proprietorship, the owner receives the entire profit from the business.
8. in a corporation, there is double taxation(on profits and then on dividends).
9. a ___ is a locally started business that is trademarked and licensed by someone else.

Explanation:

• 10. Limited liability is a unique feature of corporations. In sole proprietorships and partnerships, owners have unlimited liability.
• 11. Stockholders own the corporation. Bondholders are creditors, executive officers manage, and the board of directors oversees management.
• 12. Separation of ownership and management in a corporation can lead to agency problems (a disadvantage). Managers may not act in the best interest of stockholders.
• 13. In a partnership, partners specializing (division of labor) can increase efficiency (an advantage).
• 14. Limited liability for stockholders (they can only lose their investment) is an advantage.
• 15. Unlimited liability (owner’s personal assets at risk) is a disadvantage of sole proprietorship.
• 16. Personal responsibility for debts (unlimited liability) in a general partnership is a disadvantage.
• 17. A corporation raising capital by issuing stock is an advantage (more funds available for growth).
• 18. Owner receiving entire profit (no sharing) is an advantage of sole proprietorship.
• 19. Double - taxation (corporate profits taxed, then dividends taxed) is a disadvantage of corporations.
• 20. A franchise is a locally started business that is trademarked and licensed by someone else.

Answer:

1. a. limited liability
2. d. stockholders
3. D
4. A
5. A
6. D
7. D
8. A
9. A
10. D
11. franchise