Home / Questions / Corporate profits that are not reinvested in the corporation are distributed to a.consume
Corporate profits that are not reinvested in the corporation are distributed to
a.consumers in the form of lower prices
b.management and bondholders
c.management and the board of directors
d.shareholders in the form of interest
e.shareholders in the form of dividends
22. Which of the following is a disadvantage that proprietorships face and corporations do
not?
a.company size too big to manage effectively
b.access to familiar and even family labor
c.owners’ control over day-to-day operations
d.double taxation
e.unlimited liability
23. The major difference between a proprietorship and a partnership is the
a.double taxation laws
b.change in the liability of the owners
c.profit earned
d.number of owners
e.ownership control over day-to-day operations
24. Which of the following does not provide the corporation access to capital financing?
a.issuing new preferred stock
b.paying shareholder dividends
c.acquiring a bank loan
d.issuing new corporate bonds
e.issuing new common stock
25. Who receives corporate interest before any disbursement of profit is made to others?
a.employees
b.management
c.shareholders
d.banks
e.bondholders
31. Suppose you decide to set up your fishing enterprise as a corporation. The first thing you
need to do is
a. issue stock
b. determine dividend levels
c. become a stockholder
d. obtain a charter from your state government
e. notify insurers of your liability
32. A corporation has sold 1,000 shares of stock at a value of $100 each. Bob is a
stockholder. If the corporation fails and has $3 million dollars of debt and only $500,000
in assets, what is the most Bob can lose if Bob owns 25 shares of stock?
a. $100
b. $250
c. $1,000
d. $2,500
e. 0
33. The difference between a sole proprietorship and a partnership is
a. a partnership is a separate legal being apart from its owners
b. ability to issue stock
c. limited liability
d. the distribution of dividends
e. the number of owners
34. Unlimited liability applies
a. to partnerships and sole proprietorships
b. only to partnerships
c. only to sole proprietorships
d. only to corporations
e. to corporations and partnerships
35. If a business is run as a sole proprietorship,
a. it is not allowed to borrow money
b. the financial liability of the owner is limited to the amount invested in the business
c. all of the profits earned in the business flow to the proprietor
d. at least two persons are involved in all management decisions
e. it cannot hire nonfamily members to work in the business
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