SSEMI 3 Test Review

An unincorporated business owned by a single person, which may or may not have employees, is an example of a(n)

• partnership.
• corporation.
• entrepreneurship.
• sole proprietorship.

Heather is seeking to start a business. She is seeking to be in control of all aspects of the business. What is a potential risk of the business organization she should set up?

• Heather would risk nothing.
• Heather would lose her popularity.
• Heather would risk losing partners.
• Heather would be liable for all costs and damages.

Sara wants to start her own business. She is not sure if she wants to be a sole proprietor or get a partner. She asks a financial adviser about the different ways in which she might finance her company. What would an adviser tell her is a disadvantage of getting a partner?

• She is responsible for paying all shareholders.
• She has to share all of the profits with the partner.
• She has to go through a government application process.
• She is responsible for all of the debts the business incurs.

Corporate stockholders are not responsible for the debts of the corporation. This is MOST LIKELY an example of

• dividends.
• partnerships.
• limited liability.
• unlimited liability.

Which BEST describes the decision-making process for a corporate business organization?

• The shareholders run the day to day operations of the business, making all decisions.
• The partners of the firm make decisions jointly, as laid out in the articles of partnership.
• Shareholders elect the Board of Directors, who then hire the managing officers of the company, such as the CEO.
• The CFO hires a board of governors to oversee the structure of the corporation, and mid-level managers to run the day to day operations.

Five years before Facebook's IPO, Mark Zuckerberg said “I’m here to build something for the long term. Anything else is a distraction.” (Fast Company Magazine, 2007) Which business organization characteristic is embedded in this quote?

• The liability of owners of corporations, which is why Facebook became a publicly traded company in 2012.
• This quote foreshadows the lack of government regulation and oversight that corporations in America face.
• The decision-making characteristics of partnerships, which results in some owners having to struggle to see their vision through.
• This quote hints at the "unlimited life" that corporations can enjoy, because the business passes to new owners through the sale of shares and can go on indefinitely.

The owners of a corporation are taxed on the capital gains from sales of stock, as well as on dividends. Further, a corporation is legal entity subject to corporate taxes. This is known as _____ taxation.

• double
• excessive
• progressive
• single

Sally and Wally have a great business idea. They have some money to invest and hope to find more people interested in investing. They are worried about the legal aspects and the liability. The BEST business form for them is MOST LIKELY a

• corporation.
• monopoly.
• partnership.
• proprietorship.

Johnny has invested in 10 shares of a big name electronics company. Each share is worth $150.28, and the company pays Johnny $2.13 for each share that he owns. With his 10 shares he earns $21.30 per year. What is this type of earning called?

• capital gains
• dividend income
• interest income
• adjusted gross income

Pips Burrito Company, started by Mr. Pips, began as just a single man operating out of a small stand by the side of the road, but over the years it grew. Now, 50 years later, the company is listed on the NYSE, something Mr. Pips might have never imagined possible. The fact that Pips Burrito company lives on well past the original entrepreneur best characterizes which feature of corporations?

• Unlimited Life
• Double Taxation
• Limited Liability
• Unlimited Liability