| Reinforcement Problems | ||
| LG | 5-1. | |
| a. How many owners form a proprietorship? |
One
owner
|
|||
| b. What document brings a corporation into existence? |
The
charter
|
|||
| c. What is the length of life of a partnership? |
The
lesser of the existing group of partners or the term
written in the partnership agreement.
|
|||
| d. What entity is most difficult to form? |
A
corporation
|
|||
| e. What
entity is technically easy to form but for practical purposes has many potential complications? |
A
partnership (A partnership technically can
be formed with a verbal agreement and by individuals behaving as partners, but this is very unwise.) |
|||
| f. What
entity is a legal “person” that incurs liability separate from the owners of the entity? |
A
corporation
|
|||
| g. The owners of what business are called “stockholders” or ”shareholders”? |
A
corporation
|
|||
| h. As
an owner, you will have personal liability if you form what type of entity? |
A
proprietorship or general partnership
|
|||
| i. What is the most common form of business? |
A
proprietorship
|
|||
| j. What form of business is easiest to create? |
A
proprietorship
|
|||
| k. What are the three biggest advantages of a corporation? |
(1)
No personal liability, (2) potentially greater resources,
(3) often easier to transfer ownership
than a partnership |
|||
| l. How many owners form a partnership? |
Two
or more
|
|||
| m. How many owners form a corporation? |
One
or more (One person can own all the stock.)
|
|||
| n. What is the length of life of a corporation? |
Unlimited
life
|
|||
| o. What are the main disadvantages of a proprietorship? |
(1)
Personal liability,
(2) limited resources |
|||
| p. The owner of a proprietorship writes herself a check from the business bank account. What is this payment called? |
This
is called a “withdrawal” or a “drawing.”
(It is not a salary expense of the business.) |
|||
| q. What indicates ownership in a corporation? |
Common
stock
|
|||
| r. What
is the type of entity that potentially can obtain the most money from investors? |
A
corporation
|
|||
Learning
Goal 5, continued
SOLUTIONS
| S2 |
Section
I · What Is a Business?
|
|
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