Chapter 4 Intro to Business

Unlimited liability is an advantage of a sole proprietorship.

• True

• False

Preferred stockholders elect the board of directors that manage the day-to-day business activities of a corporation.

• True

• False

A conglomerate merger takes place between firms in completely different industries.

• True

• False

A limited partner is responsible for any debts of the partnership, regardless of whether he or she was directly involved in the transaction that created the debt.

• True

• False

The articles of partnership is a written contract describing the terms of a partnership

• True

• False

Compared to a corporation, a partnership is more difficult and expensive to establish.

• True

• False

The S corporation form of organization allows a corporation to avoid double taxation.

• True

• False

Corporate officers are elected by the firm’s stockholders.

• True

• False

The board of directors is directly responsible to the stockholders.

• True

• False

The amount paid for stock is the most a stockholder can lose in the corporate form of ownership.

• True

• False