Bus Mgmt Ch 10 Managing the Forms of Business Ownership

New businesses almost always fail for purely financial reasons. T or F?

False

A business plan helps entrepreneurs see the risks and responsibilities involved in starting a business. T or F?

True

Financing the business one of the responsibilities of the business owner. T or F?

True

The most common form of business ownership is the partnership. T or F?

False

A business with a balance sheet showing assets valued at $100,000 and capital valued at $100,000 is in a weak financial position. T or F?

True

A partnership could be owned by as many as ten or more partners. T or F?

True

Corporations usually have a tax advantage over partnerships. T or F?

False

If one partner is unable to pay his or her portion of the business' debts, the other partners must pay it. T or F?

True

A disadvantage of a partnership that fails is that a partner can lose personal assets in addition to the amount of money invested in the business. T or F?

True

If a partner enters into a contract against the wishes of the other partners, the other partners are legally responsible for the contract. T or F?

True

A partnership continues even after one partner dies. T or F?

False

It is difficult to withdraw from a partnership. T or F?

True

To form a corporation a charter is needed. T or F?

True

A corporation can make contracts, borrow money, and be sued. T or F?

True

Stockholders decide when dividends are to be distributed. T or F?

False

A stockholder has the same financial responsibility as a partner. T or F?

False

The stockholders make up the ruling body of a corporation. T or F?

False

Each stockholder has only one vote regardless of the number of shares owned. T or F?

False

A nonprofit corporation pays small dividends to shareholders. T or F?

False

A cooperative provides members with both cost and profit advantages they would not have individually. T or F?

True

Approximately how many new businesses fail within the first four to five years?

50 percent

The most common form of business organization is the

proprietorship

Which one of the following statements is true about entrepreneurs?

Entrepreneurs usually work hard and for long hours.

If assets are valued at $500,000 and capital amounts to $350,00, the liabilities of the business are

$150,000

In a sole proprietorship

creditors have first claim against assets

One of the main reasons many proprietorship fail within a short time is that

the owner lacks needed skills

The type of business that can be operated suitably as a proprietorship is one that

can be manager by the proprietor or by persons hired by the proprietor

An advantage of partnerships when compared to proprietorships is

more capital is usually available

In which type of partnership is the liability of a partner limited to the amount of the partner's investment?

limited partnership

In a limited partnership

at least one partner must be a general partner with unlimited liability

An official document giving power to run a corporation is a

charter

A corporation is authorized to act as if it were a single person by the

state in which it is incorporated

Ownership of a corporation is measured in

shares

If the corporation fails, stockholders are responsible for

only the amount invested in the corporation

A stockholder who cannot attend a shareholders' meeting can submit votes by

proxy

An agreement among two or more businesses to work together to provide a good or service is called a

joint venture

An advantage of corporations in relation to partnerships is that

shareholders can transfer ownership easily

A written agreement between two or more people identifying how they will add capital, labor, or other assets and divide any profits or share any losses in their business is called a

partnership agreement

A nonprofit corporation is an organization that

does not pay taxes and does not exist to make a profit

Quasi-public corporations are often supported by

subsidies

business plan

a written document that describes how to achieve the goals of a business

stockholders

owners of a corporation

assets

property owned by a business

creditors

parties who have first claim against assets

balance sheet

a statement of financial position

liabilities

money owed by a business

capital

difference between assets and liabilities

intrapreneur

an employee who is given funds and freedom to create a special unit or department within a company in order to develop a new product, process, or service

officer

top executive who is hired to manage a business

close corporation

corporation that does not offer its shares of stock for public sale