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The major difference between partnerships and proprietorships is a.the limit to liability

The major difference between partnerships and proprietorships is

a.the limit to liability

b.the opportunity to sell shares

c.the reduced cost of capital

d.shared responsibility and profit

e.tax advantages

12.              One of the reasons that successful proprietors may be reluctant to borrow money from a
                            bank to expand their business is that

a.expanded businesses generally generate lower rates of profit

b.the bank would become a part owner

c.unlimited liability cramps ambition

d.the bank’s liability insurance isn’t sufficient to cover expected liabilities

e.issuing stock to finance the expansion is less costly

13.              Ownership of a corporation is divided into shares that are claims on the firm’s
                            __________ and these shares are also referred to as ____________.

a.assets and liabilities; bonds

b.assets and liabilities; stocks

c.liabilities and earnings; stocks

d.assets and earnings; stocks

e.assets and earnings; bonds

14.              A corporate bond is issued when a corporation ____________ and promises to pay
                            ____________.

a.sells stocks; future profit

b.sells stocks; agreed upon interest

c.sells common shares; future profit

d.borrows money; the principal and interest

e.lends money; the principal and interest

15.              A sole proprietorship is typically a relatively small business because

a.its operations must stay within state borders

b.it is operated out of the proprietor’s home

c.there are no employees, only working family members

d.there are no bank loans available for expansion

e.expansion often requires a partner or conversion to another form of business
organization

16.              If two partners have a firm with more debt than assets,

a.the business is a success

b.the partners are equally liable for the debt

c.there is a limit to their personal liability

d.each one’s liability is limited to the investment made in the business

e.the burden of debt is proportionate to the partners’ original investment

17.              One of the costs of shifting from a business form that has unlimited liability to one that
                            has limited liability is the

a.reduction in profit levels

b.loss of expansion opportunity

c.loss of a white knight

d.loss of complete control over all aspects of the business

e.unlimited debt potential

18.              A corporation is not

a.a legal identity separate from shareholders

b.eligible to issue stock as a method of acquiring capital to expand operations

c.allowed to file for bankruptcy protection

d.a business form allowing owners to earn income

e.a business organization whose ownership is the same as management

19.              If a proprietorship converts to a corporation form of business organization, it gives up
                            control of day-to-day operations to the

a.bondholders

b.shareholders

c.owners

d.management

e.board of directors

20.              If a corporation does not distribute profit to its stockholders, it might be that

a.no profit was earned by the corporation

b.profit was used to pay out dividends

c.the corporation has no stockholders

d.its losses were as large as its profit

e.profit was used to pay its board of directors, the first claimants to corporate profit

 

Dec 11 2019 View more View Less

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