7.1.11: Review Questions
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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
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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.
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Which of the following business structures often involve two or more businesses starting a new business together?
- Sole proprietorship
- General partnership
- Joint venture
- Corporation
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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
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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
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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
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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
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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
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General partners have what type of liability?
- Limited
- Joint and several
- Joint only
- Personal only
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Of all the business entity choices, LLCs are the most like ________.
- S corporations
- C corporations
- Sole proprietorships
- Joint ventures
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LLC owners are called ________.
- Members
- Shareholders
- Limited equity investors
- Directors
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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.
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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.
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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.
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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
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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
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As a general rule, LLCs, GPs, and SPs are taxed as ________.
- Corporations
- Not taxed
- Individuals
- Taxed twice, once as entity and once as individuals
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Entrepreneurs can choose what state to incorporate in, and many choose ________.
- New York
- Delaware
- California
- Texas
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Enterprise risk management includes ________.
- Identifying risk
- Risk assessment
- Risk abatement
- All of the choices are correct.
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A business owner can insure against all but which one of the following?
- Earthquakes
- A bad economy
- Flooding
- Hurricanes
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Examples of risk facing a business include ________.
- Human risks
- Economic risks
- Natural risks
- All of the choices are correct.