Bus 10 - Exam 3 - Chapters 4-9-10-17-18-20-Section 1 - Version B - Key

. Which form of business is the easiest to start? a. Corporation b. Partnership c. Entrepreneurship d. Sole proprietorship e. S-corporation ____ 2. When the owner of a sole proprietorship dies, what becomes of the ...

. Which form of business is the easiest to start? a. Corporation b. Partnership c. Entrepreneurship d. Sole proprietorship e. S-corporation ____ 2. When the owner of a sole proprietorship dies, what becomes of the business? a. The employees take over the business. b. It ceases to exist unless the heirs take it over or sell it. c. It is automatically auctioned to the highest bidder. d. It ceases to exist, and no one may legally take it over. e. It may continue existing but only under a new name. ____ 3. Mars, Inc., maker of M&Ms and other candy, is 100 percent owned by the Mars family and is therefore referred to as a(n) a. open corporation. b. public corporation. c. syndicate. d. cooperative. e. closed corporation. ____ 4. Boeing is incorporated in Seattle, Washington. It has a large facility in Huntsville, Alabama, and is considered a(n) ____ because it conducts business within Alabama. a. outsider b. domestic corporation c. foreign corporation d. tax write-off e. alien corporation ____ 5. Mercedes-Benz, which is chartered as a corporation in Germany but conducts much of its business in the United States, is known as a(n) ____ in the United States. a. foreign corporation b. alien corporation c. domestic corporation d. S-corporation e. private corporation ____ 6. Which of the following is a disadvantage of the corporate form of organization? a. Both the corporation and its stockholders are taxed on profits retained and distributed. b. Ownership of stock is easy to transfer. c. More capital can be raised by the corporate form. d. Corporations can hire better managers. e. The organization survives its owners. Pag e1 ____ 7. Which of the following is a requirement for an S-corporation? a. The S-corporation must be incorporated in Delaware. b. The S-corporation can have no more than 100 stockholders. c. Only common and preferred stock can be sold to investors. d. At least 30 percent of the investors must be nonresident aliens. e. Only individuals can be stockholders. ____ 8. Walters Company, LLC, is a wholesale distributor of industrial packaging. A primary advantage that Walters enjoys as an LLC that corporations do not have is a. ease of formation. b. limited liability. c. avoiding double taxation. d. one class of outstanding stock. e. income taxes. ____ 9. Recently there have been several mergers involving Big Four accounting firms. One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young. This is an example of a a. joint venture. b. horizontal merger. c. vertical merger. d. syndicate. e. conglomerate merger.