mèo 7

Which one of the following statements concerning a sole proprietorship is correct?

• The life of a sole proprietorship is potentially unlimited

• A sole proprietor can generally raise large sums of capital quite easily

• Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.

• A sole proprietorship is taxed the same as a C corporation.

Which one of the following statements is correct?

• The majority of firms in the U.S. are structured as corporations

• Corporate profits are taxable income to the shareholders when earned.

• Corporations can raise large amounts of capital generally easier than partnerships can

• Stockholders face no potential losses related to their corporate investment

Which form of business structure is most associated with agency problems?

• sole proprietorship

• general partnership

• limited partnership

• corporation

The board of directors has the power to act on behalf of the shareholders to hire and fire the operating managers of the firm. In a legal sense, the directors are "principals" and the shareholders are "agents."

• TRUE

• FALSE

What is meant by the 'separation of ownership and control?

• That the owners of companies have become separated from those who control companies.

• That the law should seek to keep the owners and controllers of company apart in order to avoid an over-concentration of power

• That owners and controllers of companies should not act in concert to defeat resolutions.

• That those who control the company should be separate to those who own it.

Corporate governance revolves around the relationship between which two parties?

• shareholders and the board of directors.

• shareholders and managers

• the board of directors and managers

• none of the these.

The separation between firm ownership and management creates a(n) ____ relationship.

• governance

• control

• agency

• dependent