ENG106: Academic Oral Communication Skills for Managerial Ethics (BU103)
Ch. Bauer-Ramazani

 

LECTURE QUIZ

Types of Business Organization / Forms of Business Ownership

                                                                                   

DIRECTIONS: Use the notes you took in class to complete the following questions.  T/F, MC, and Fill-in-the-blank questions count 1 point; points for essay questions vary (see points in parentheses).

 

1.     LIST the four  forms of business ownership discussed and give examples of each one.  (6 pts)

      a.
b.
c.
d.

 

2.   T/F A law firm or a doctor's office is a typical example of a single proprietorship.

 

3.   Synonyms of stockholders are _____________, _______________, and ___________. 

 

4.  The most distinguishing characteristic of corporations is that they _____________________.

 

5.  T/F   The number of corporations in the US is greater than the number of single proprietorships.

 

6.  T/F    A sale is generated (made) by exchanging money for a good or service.

 

8.    T/F   The partnership has similar advantages and disadvantages as the single proprietorship.

 

9.  T/F   Corporations dominate the dollar value of business.

 

10. T/F  There are so many single proprietorships in the US because there are many advantages associated
 with single proprietorships.

 

11.    EXPLAIN why the single proprietorship has a tax advantage (over the corporation).

 

 

 

12.  T/F  In a single proprietorship, the profit that the business makes is included in the owner’s personal income tax.

 

13.  The risk of losing one's car or house in case a single proprietorship goes bankrupt is called __________________________________.

 

14.  T/F If a business fails, the bank can seize the owner’s personal assets.

 

15.  NAME the 2 reasons why it is difficult for sole proprietors to raise money (funds) for expanding the business.

 

 

 

16.  In a sole proprietorship, the ____________________ makes all the decisions and has all the control.

 

17.   DEFINE continuity

 

 

 

18.  T/F It is easy and quick to sell a single proprietorship or partnership.

 

19.   DEFINE bankrupt.  (2 pts)

 

 

 

 

20.  T/F Single proprietors can issue stock.

 

21.  T/F In a stock issue, a company sells stock to shareholders, and the shareholders pay money to the company for the stock.

 

22.  If you have invested $100 in a corporation by buying its stock, and the company goes bankrupt, how much money can you lose?  ___________________

 

23.  If you want to buy stock in a corporation, you call a ______________________.

 

24.  The fact that we can buy and sell stock on the Internet or over the phone in about 5 minutes shows the concept of _________________________________. 

 

25.   T/F  An investor in a corporation can lose his car and house if the corporation goes bankrupt.

 

26.   The corporation is a legal entity and has perpetual life.  What do these 2 terms mean? 

 

 

27.  T/F  A corporation can sign contracts, borrow money, own property, sue, and be sued in court.

 

28.  T/F  When one shareholder sells all of his investment (stock) to another shareholder (investor), the corporation will cease to exist (= die).

 

29.  NAME the 2 reasons why corporations have easier access to capital to grow their business.

 

 

 

30.  Look at the corporation’s income statement.  Write it here.  How can you calculate pre-tax income?

 

 

 

 

 

 

 

 

31.   Money that the company pays out to its shareholders on a regular basis is called ____________________. 

           

32.  T/F    Dividends are income to the investor.

 

33.  T/F   All companies pay dividends to their stockholders.

 

34.  T/F   Investors are taxed by the government on their dividends.

 

35./36.  Corporations have to pay income taxes to the government.  When corporations declare a dividend, the shareholders have to pay income taxes on the dividend.  This business principle is called ________________________________ and is a major ADVANTAGE / DISADVANTAGE of the corporation.

 

37.  T/F  Corporations are more complex and costly to form than sole proprietorships.

 

38.  Publicly-held corporations are subject to disclosure requirements.  This means that they must provide the public with information on __________________________________.

 

39.  T/F   Stockholders are always employees of an organization.

 

40.  T/F   The Board of Directors is a group of employees of a company.

 

41.  LIST at least 3 rights and risks of the stockholders.  (Extra credit for more than 3)

RIGHTS  RISKS
   
   
   
           

42.  T/F   When a company goes bankrupt, the stockholders are the first to receive the money owed to them.

 

43.  T/F   The Board of Directors is a group of representatives of all the company's stockholders.

 

44.  T/F   The Board of Directors is elected by the stockholders.

 

45.   LIST at least 3 responsibilities of the Board of Directors.     (Extra credit for more than 3)  

 

 

 

 

 

46.  T/F   The CEO (Chief Executive Officer) manages the day-to-day operations of the company.

 

47.  T/F    A Limited Liability Corporation (LLC) provides limited liability for its owners but is taxed only once, at the personal income level.

 

48. The owners' investment in a company is called ____________________.

 

49. Return on Equity (ROE) measures how much ____________________________________________________________ (2 points)

 

50. When a business has a net income of $100,000 and its investors have invested $1,000,000 in equity, it has a return on equity of ________ %.

 

51.  ROE is calculated by dividing ____________ into _______________.

 

52.  When a business has an ROE of 10%, this means that for every dollar the shareholders invested, they earned (returned)

           a. $1

           b. 10 cents

           c. $100

           d. $1,000 

  

53.  When a larger company buys a smaller company, this is called a(n) __________________.

 

54.  When a company divides its business into 2 or 3 new businesses, this is called a _________________________.

 

55.  When two companies set up a new company together, this is called a _________________________.

 

56.  List the four stakeholders in a business.

 

57.  Each type of business impacts stakeholders differently. For each of the four stakeholder groups, state one positive and one negative impact.

     
Stakeholder Positive impact Negative Impact
     
     
     
     
                                                       

 

  2011  Christine Bauer-Ramazani, Saint Michael's College. Last updated: September 7, 2017