Business Ownership and Mergers Quiz

Elyssa Wood earned extra money by using her culinary skills to cater special parties. After graduation, she decided to turn her part-time job into a full-time business that she plans to expand in the future. In the meantime, she wants to maintain complete control of the business. She will most likely organize the business as a_____________.

• limited partnership.

• corporation.

• general partnership.

• sole proprietorship.

• S corporation.

Which of the following is NOT an advantage of a corporate form of ownership?

• It is easier to raise capital.

• Ownership can be transferred easily and quickly.

• The death of an owner does not terminate the corporation.

• Profits are taxed twice.

• The liability of the owners is limited.

A corporation incorporated in Texas doing business in New York is known in New York as a domestic corporation.

• Texas as a domestic corporation.

• Texas as a foreign corporation.

• New York as an alien corporation.

• The firm cannot do business in New York.

PepsiCo acquired Pizza Hut. What type of merger was this?

• Limited

• Syndicated

• Joint venture

• Horizontal

• Vertical

J. R. Imax, a financial investor, wants to control the Simex Company. So far, he has been unsuccessful in purchasing enough stock to give him control. To reach his goal, which technique should he use to gather enough stockholder votes to control the company?

• Hostile takeover

• Leveraged buyout

• Merger

• Acquisition

• Proxy fight

A corporation whose stock is owned by relatively few people is called a(n)____.

• limited corporation.

• open corporation.

• closed corporation.

• domestic corporation.

• friendly corporation.

When two business firms need large sums of money to finance a major project, they are likely to establish a___________.

• closed corporation.

• syndicate.

• new sole proprietorship business.

• S corporation

• conglomerate venture.

The ability to combine skills and knowledge is an advantage of a______.

• partnership.

• sole proprietorship.

• limited venture.

• a joint venture.

• a not-for-profit corporation.

One of the advantages of an LLC is that owners have ________ liability.

• unlimited

• restricted

• special

• limited

• taxable

Unlimited liability means_______________.

• there is no limit on the amount an owner can borrow.

• creditors will absorb any loss from nonpayment of debt.

• the business can borrow money for any type of purchase.

• the owner is responsible for all business debts.

• stockholders can borrow money from the business.