FINAL: Section 7: Business Formation

Tasmeen owns a retail business along with four other people. Like the other owners,  Tasmeen is not personally responsible for the debts of the company. Her personal  assets are thus protected in case the company incurs losses. Given this information,  it can be assumed that Tasmeen _____. 

• owns a corporation

• has a general partnership

• has a limited partnership

• owns a proprietorship

A sole proprietorship is a form of business ownership in which: 

• the company is considered a legal entity that is separate from its owners.

• a single owner actively manages the company. 

• two or more people act as co-owners of the company.

• the owners of the business are offered limited liability and flexible tax  treatment.

A _____ refers to a partnership in which all partners can take an active role in  managing the business and have unlimited liability for any claims against the firm.

• limited partnership 

• general partnership

• limited liability partnership

• publicly traded partnership

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners. 

• sole proprietorship 

• partnership 

• cooperative 

• corporation

Which of the following types of business ownership offers limited personal liability to  the owners? 

• Sole Proprietorship 

• LLC

• General Partnership

• Partnership

Albert is the owner of a car service center. As a sole proprietor, any profit that he  earns is: 

• subjected to double taxation. 

• treated as Albert's personal income. 

• not subjected to any form of taxation. 

• taxable only when he acquires shareholders.

When people use the term "corporation" without specifying which type, they are  generally referring to a(n) _____. 

• statutory close corporation 

• nonprofit corporation 

• S corporation 

• C corporation

An owner of a C corporation is called a _____. 

• director

• sole proprietor

• stockholder 

• chief executive officer

A textile corporation has two hundred odd stockholders. As it is inconvenient for so  many stockholders to manage the company, the stockholders elect a group of  individuals to oversee the company's operation and to represent their interests. In  this scenario, the stockholders elect a _____. 

• board of valuers 

• board of directors 

• board of corporators 

• board of regents 

Which of the following is a difference between a C corporation and an S  corporation? 

• The members of a C corporation have unlimited liability, whereas the  members of an S corporation enjoy limited liability. 

• The members of a C corporation have limited liability, whereas the members  of an S corporation have unlimited liability. 

• A C corporation is double taxed, whereas an S corporation is taxed once.

•  A C corporation is taxed as a partnership, whereas an S corporation is  double taxed.