Intro to Business Chapter 6 review activity

Thiago has spent a long time working in various commercial establishments owned by some of his close relatives. He now wishes to establish his own business, a sporting goods retail store. Thiago plans to manage the store single-handedly. In the context of the various business ownership options, Thiago's store will be an example of a:

• conglomerate

• sole proprietorship

• limited liability company

• statutory close corporation

Max and Lucio start a retail store. They take turns to manage the store, and they share the profits equally. Max and Lucio understand that they are personally liable for any debts or losses that the store may incur in the future. This type of business venture exemplifies a ___.

• sole proprietorship

• corporation

• general partnership

• limited liability corporation

Gerrilyn works for a business firm that manufactures breakfast cereal. The firm is owned by many individuals who are not personally responsible for any debts or losses incurred by it. Legally, the firm is considered a separate artificial person. In this scenario, Gerrilyn is working for a ___.

• partnered company

• corporation

• regulatory body

• proprietorship

Which of the following is an advantage of sole proprietorships?

• Limited workload and reduced responsibilities

• Ease of formation

• Permanence of the venture

• Maximized ability to attract talented employees

Which of the following statements is true of sole proprietorships?

• Owner receives the entire share of the firms' profits.

• Owner of the firm is able to enjoy limited liability.

• Firms are treated as a separate legal entity.

• Firms are not affected by the withdrawal of the owner.

Which of the following is a disadvantage of sole proprietorship?

• The company legally ceases to exist if the owner withdraws.

• The profit gets shared equally among all employees.

• The formation of the company requires investing a large sum of money.

• The owner cannot have complete control over the management of the company.

Which of the following statements is a similarity between general partnerships and sole proprietorships?

• Both are considered legal entities separate from their owners.

• Both allow owners to enjoy limited liability.

• Both allow owners to avoid double taxation.

• Both are formed by filing articles of incorporation.

Which of the following is a disadvantage of general partnerships?

• Double taxation

• Complex formation procedures

• Unlimited liability

• Close monitoring by the Internal Revenue Service

Silva and Ron start a taxi service together. Ron only invests money in the venture and does not actively participate in managing the business. Silva, on the other hand, manages the venture entirely. According to the agreement between Silva and Ron, Silva is personally responsible for the debts and losses while Ron takes responsibility of the debts only up to a certain amount. The agreement also mentions that Ron cannot participate in the management of the business. In this scenario, Ron and Silva have formed a ___.

• corporation

• sole proprietorship

• general union

• limited partnership

Which of the following statements best describes a C corporation?

• It is a form of corporation that avoids double taxation by having its income taxed as a partnership.

• It is a form of business ownership in which two or more members act as co-owners and have unlimited liability.

• It is a form of business ownership in which the firm is considered by law merely as an extension of its owner.

• It is a legal business entity that offers limited liability to all of its owners, who are called stockholders.