13.10: Review Questions
A not-for-profit business ________.
- is allowed to retain earnings for use within the organization
- must distribute profits to shareholders
- must turn over to the government any excess earnings
- can pay dividends to shareholders
The term “for-profit corporation” means which of the following?
- The business must make a profit or forfeit its status.
- The business may make or lose money without changing its status.
- The business is not allowed to sell stock to the public.
- The business must have more than 100 shareholders.
Which of the following business structures often involve two or more businesses starting a new business together?
- sole proprietorship
- general partnership
- joint venture
- corporation
How is an S corporation taxed?
- at the entity level as a corporation
- at the owner level as if it were a partnership
- at both the entity and owner levels
- at a special lower rate of income tax
A public corporation is ________.
- owned or sponsored by the government
- owned by member of the investing public
- owned by a combination of public and private investors
- none of these choices are correct
A C corporation is taxed ________.
- at the entity level
- at the individual level
- at both the entity and individual levels potentially
- only at the state level, not federal
Limited liability partnerships (LLPs) ________.
- are normally used for firms that consist of licensed professionals such as lawyers or accountants
- can be used for partnerships that sell services but not goods
- are used for firms that do business across state lines
- require that the stock be owned by fewer than 100 shareholders
A joint venture ________.
- must be a corporation
- can choose to be any type of entity
- must be either a partnership or a C corporation
- None of these choices are correct
General partners have what type of liability?
- limited
- joint and several
- joint only
- personal only
Of all the business entity choices, LLCs are the most like ________.
- S corporations
- C corporations
- sole proprietorships
- joint ventures
LLC owners are called ________.
- members
- shareholders
- limited equity investors
- directors
LLCs offer flexible tax treatment, meaning ________.
- they can be taxed like corporation
- they can be taxed like partnerships
- they can be taxed like proprietorships
- All choices are correct.
Sole proprietorships offer limited liability ________.
- if you register it with the state
- if you elect to be taxed as a corporation
- if you have an SBA loan guarantee
- Sole proprietorships never have limited liability.
A sole proprietorship ________.
- pays taxes at the highest corporate rate
- pays taxes at the lowest corporate rate
- pays taxes at the individual rate
- None of these choices are correct.
Sole proprietorships ________.
- must register with the state
- are similar to general partnerships in terms of liability
- are similar to LLCs in terms of liability
- are not allowed by law to operate outside of the US
States can levy a sales tax on items sold online to a customer in a different state if ________.
- the business has a nexus with that state
- there is an contract between the business and the state comptroller
- the items sold are over $300
- the business is one that only sells foreign-made items
As a general rule, LLCs, GPs, and SPs are taxed as ________.
- corporations
- not taxed
- individuals
- taxed twice, once as entity and once as individuals
Entrepreneurs can choose what state to incorporate in, and many choose ________.
- New York
- Delaware
- California
- Texas
Enterprise risk management includes ________.
- identifying risk
- risk assessment
- risk abatement
- All of the choices are correct.
A business owner can insure against all but which one of the following?
- earthquakes
- a bad economy
- flooding
- hurricanes
Examples of risk facing a business include ________.
- human risks
- economic risks
- natural risks
- All of the choices are correct.