Chapter 4 ITB

One of the disadvantages of the sole proprietorship is that the owner has unlimited liability.

• true

• false

In a limited partnership, all of the partners have limited liability.

• true

• false

Dissolving a partnership is easier than dissolving a sole proprietorship.

• true

• false

In 2004, Albertson's Inc. purchased Southern California's premier fresh, gourmet, and specialty food retailer, Bristol Farms. This was an example of an acquisition.

• true

• false

The most common form of business organization is the:

• general partnership

• corporation

• sole proprietorship

• cooperative

• limited partnership

Which of the following is an advantage of sole proprietor ownership?

• limited liability

• freedom from government regulation

• ease with which capital can be raised

• ease with which qualified employees can be found

• none of the above

Which of the following is a disadvantage of sole proprietor ownership?

• ease and low cost of formation

• freedom from government regulation

• all profits to the owner

• unlimited liability

• ease of dissolution

Sole proprietorships:

• are double taxed

• have unlimited liability

• are more difficult to dissolve than partnerships

• find it easy to raise needed capital

• are more closely regulated by the government than other forms of business

Stewed Tomatoes was an "all-girl power-pop trio." Its three members realized that many musicians feel stifled when making music in a sterile studio environment while the clock ticked away expensive hours, so the three girl band members created Materville Studios, a multimedia production house and recording studio in downtown Chicago. They share work responsibilities and profits equally. Materville Studios is a(n):

• S corporation

• cooperative

• sole proprietorship

• partnership

• double proprietorship

Aaron Medford has invested $600 in the corporate stock of a manufacturer of offshore oil drilling equipment. If the company goes bankrupt, the most Medford could lose would be:

• half of his investment

• the par value of his stock

• $600

• $600 plus foreclosure costs

• nothing--the company must reimburse him his investment