Question 1

Large manufacturers have been known to form strategic alliances with small manufacturers in order to benefit from the smaller firms'

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Question 2

An owner in a professional corporation is shielded from

Accepted Answer

In a professional corporation, owners are shielded from the liability of other owners, meaning they are not personally liable for the malpractice or negligence of their colleagues. However, they are still liable for their own actions.

Question 3

Linda has assembled a list of potential directors for he board. Whom should she not include?

Accepted Answer

An attorney cannot serve as a director of a corporation.

Question 4

The compensation paid to board members

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The answer of The compensation paid to board members
...

Question 5

Fiction County Sheltered Workshop is a 501(c)(3) corporation. Day Services, a C corporation operating in the same county, has offered to buy FCSW. If this transaction occurs, what happens to the money Day Services will pay for FCSW?

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Question 6

Which organizational form would be best if the new company owners intend to provide extensive fringe benefits for owners or employees that would not be treated as taxable income to employees?

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Question 7

An advisory board, as compared to a board of directors,

Accepted Answer

An advisory board is usually non-binding and provides advice and guidance to the owner or management team. They do not have legal or fiduciary responsibilities and therefore, may be perceived as less of a threat to an owner than a board of directors.

Question 8

The limited liability company form of organization

Accepted Answer

Limited Liability Companies (LLCs) avoid the double taxation of C corporations because they are typically taxed as pass-through entities, meaning profits are taxed only at the individual level, not at the corporate level.

Question 9

For a small firm, which step will increase chance for success of a strategic alliance?

Accepted Answer

Ensuring the alliance is a "win-win" opportunity is crucial as it aligns the interests of both parties, fostering cooperation and mutual benefit, which are essential for the success of a strategic alliance.

Question 10

A corporation's board of directors

Accepted Answer

The board of directors is responsible for overseeing the management and direction of a corporation, making important decisions, and setting strategic goals. They are the highest governing body of the corporation and have fiduciary responsibilities to shareholders. Option B is incorrect as the board of directors does not manage the day-to-day operations of the corporation. Option C is incorrect as the taxability of dividends is determined by tax laws and regulations, not the board of directors. Option D is incorrect as designing the organizational structure of the firm is typically the responsibility of top management, not the board of directors.

Question 11

Lothian has asked five of his friends to serve on the board of director of his new corporation. Why is this not a good idea?

Accepted Answer

Friends may feel obligated to agree with the owner on matters brought before the board, even if they have reservations or disagree with the proposed actions. This can lead to a lack of diverse perspectives and potentially poor decision-making for the corporation.

Question 12

A strategic alliance is

Accepted Answer

A strategic alliance is an organizational relationship that links two separate businesses in a mutually beneficial partnership. It allows the businesses to combine their strengths and resources to achieve common goals and maximize their opportunities for growth and profitability. Strategic alliances are becoming increasingly important in today's global business environment as companies seek to expand their reach, develop new markets, and navigate complex regulatory and economic conditions.

Question 13

Hannah makes delicious baked goods but has no retail space. She has contracted with a local grocer to sell her wares in the grocery store. This arrangement is known as a(n):

Accepted Answer

This arrangement is known as a strategic alliance, which is a cooperative relationship between two or more independent firms to achieve a specific business objective. In this case, Hannah has formed a strategic alliance with the local grocer to sell her baked goods in their store. A professional company is not a recognized business term, a joint venture involves the creation of a new entity by two or more firms, and a partnership involves the sharing of profits and losses between two or more owners.

Question 14

Jeanne, a Canadian citizen, would like to invest in Ingrid's startup. If Ingrid organizes her business as a(n) ________________________, Jeanne is prohibited from investing.

Accepted Answer

S Corporations have strict ownership requirements and do not allow non-US citizens to invest or own shares in the company.

Question 15

A risk for a small firm creating a strategic alliance with a larger company is

Accepted Answer

A small firm may be financially squeezed in a strategic alliance with a larger company, as the larger company may have more bargaining power and may demand a larger share of the profits or cost savings. This can put a strain on the small company's finances and impact their ability to invest in other areas of the business.

Question 16

The strategic alliance between The Center for Systems Management and Technovative Marketing is an example of how

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Question 17

Ingrid has asked 110 of her closest friends to invest in her company, promising them protection from personal liability. Which form of ownership would you recommend Ingrid use?

Accepted Answer

In this scenario, Ingrid should use a limited liability company (LLC) as it provides personal liability protection to its owners (called members) while also allowing for flexibility in management and taxation. It also does not restrict the number of owners, making it suitable for Ingrid's situation where she has 110 friends investing in her company. The other options, professional corporation, nonprofit corporation, and S corporation, may not provide the same level of personal liability protection or may have limitations on the number and type of owners.

Question 18

Collin's Classic for Children with Cancer is a 501(c)3 nonprofit corporation that sells shirts. The organization will be taxed as a ____________.

Accepted Answer

501(c)(3) nonprofit organizations are exempt from federal income tax, meaning they are not taxed on their income.

Question 19

To be eligible to be an S corporation, a firm must

Accepted Answer

According to IRS regulations, in order to be eligible for S Corporation status, all the shareholders must be either citizens or residents of the United States. Nonresident alien stockholders are not allowed. The other options mentioned (A, C, and D) are not requirements for S Corporation status.

Question 20

Larry Knave, MD, is an owner in a professional corporation. If Dr. Knave is sued for malpractice, what is the liability of the rest of the owners?

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Quiz 8: The Organizational Plan: Teams, Legal Structures, Alliances, and Directors