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Exam 3: Selecting a Form of Business Ownership

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Question 1

Multiple Choice

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_________are earnings distributed to shareholders by a corporation.

A) dividends
B) distributions
C) earned income
D) stock

E) A) and B)
F) A) and C)

Correct Answer

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A

Question 2

Multiple Choice

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The Bill and Melinda Gates Foundation is an example of a _____.

A) cooperative
B) limited liability company
C) not-for-profit organization
D) partnership

E) A) and B)
F) A) and C)

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Question 3

Multiple Choice

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Jerry Foster is a sole proprietorship who owns a canoe renting business. Jerry’s employee, Terry Gibbs, greets customers at the company’s office, loads the customers and their rented canoes onto a van, provides them with safety instructions and drives them upstream. Once unloaded the canoers are on their own to float back to the company’s office to check in. Although there have been minor accidents, no one has drowned in the nine years the business has been in operation. Jerry plans to add kayaks and rubber rafts next year. The scenery is beautiful and each day people see wild animals come down to the water. -If someone does drown this year,who will be held liable?

The combination of Adidas and Reebok was an example of a(n) _____.

Which of the following is not true about not-for-profit corporations:

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

A partnership is a business that is jointly owned by two or more people.

Teeth for Life would be better suited for a _____ than a sole proprietorship.

Which industry has the highest percentage of cooperatives?

In Ben and Jerry's hostile takeover they feared that their _____ would end.

A _____ is a business owned and operated jointly by two or more people.

Which of the following statements is not true about sole proprietors?

Corporations are limited to large,well-known companies.

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.

Which statement is true about partnerships in the United States?

They would most likely form a public corporation.

A limited partnership is restricted to joint ownership by two people.

If George Johnson died,the company would cease to exist.

Jane,Karla,and Brenda have set up an accounting firm.An essential part of their partnership agreement is the division of the business income.

Studies show that partnerships are more successful than sole proprietorships.