BE Ch 6 Reivew

There are three main types of business organizations: sole proprietorship, partnerships, and corporations.

• TRUE

• FALSE

About half of all businesses in the United States are sole proprietorship.

• TRUE

• FALSE

Income from a corporation is taxed twice.

• TRUE

• FALSE

A major disadvantage of owning a sole proprietorship is that the owner has limited liability.

• TRUE

• FALSE

An advantage of owning a partnership is that banks are more often willing to lend money to a partnership rather than a sole proprietorship.

• TRUE

• FALSE

The most common type of business in the United States are...

• corporations

• sole proprietorships

• partnerships

• mom and pop stores

A dividend is...

• The cost of a share of stock

• A tax paid by the stockholder

• The money made as a result of owning share of stock

• The money lost on a share of stock

Unlimited liability means...

• the owner is responsible for only accidents that occur on business property.

• the owner is responsible for the company's debts

• the owner must have insurance

• the owner shares the liability with the company's stockholders

An advantage of a partnership is...

• that the partners make decisions together

• that the banks are often more willing to lend money to a partnership than a sole proprietorship

• that the partners often bring different skills and talents to the business

• all of the above

In order to start a corporation, the first thing one must do is...

• obtain a corporate charter from the state government

• hire an accountant and attorney

• hire employees

• start bank accounts