Question 1

A public corporation is

Accepted Answer

A public corporation is one whose shares are available for sale to the general public. This means that anyone can buy and own a part of the company by purchasing shares on the open stock market. Examples of public corporations include companies like Apple, Google, and ExxonMobil.

Question 2

Which of the following is a private corporation?

Accepted Answer

Cirque du Soleil is a private corporation, as it is not publicly traded on any stock exchange. It was privately owned for many years, and although it has changed hands through various private equity transactions, it remains a private entity, not owned by public shareholders.

Question 3

Two architects are considering forming a partnership.Both want a partnership agreement.All of the following should be part of their agreement except

Accepted Answer

While all of the other options are important parts of a partnership agreement, how new employees will be hired is not essential to the agreement itself. It may be discussed and included as a clause, but it is not a necessary aspect to be included.

Question 4

An outside director is

Accepted Answer

An outside director is someone who is not an employee of the company and is brought in to provide independent oversight and guidance.

Question 5

Jeanne is not an active participant in Highline Food Company,but she has contributed a significant amount of capital as a partner to the business.Jeanne is known as a(n)________ partner.

Accepted Answer

Jeanne is a limited partner because although she has contributed capital, she is not actively participating in managing the business. Limited partners are investors who contribute capital but do not have a say in the day-to-day operations of the business.

Question 6

What is the fundamental difference between a sole proprietorship and a corporation?

Accepted Answer

The fundamental difference between a sole proprietorship and a corporation is that a corporation is a legal entity that is separate from its owners, while in a sole proprietorship, there is no such distinction. This means that the corporation can own property, enter into contracts, and be sued separately from its owners. In a sole proprietorship, the owner and the business are one and the same, which means the owner has unlimited liability for any debts or legal issues the business may face.

Question 7

Computers-B-Us is a new company.Its owners all have no personal liability for any debts of the company.All five of its owners invested the same amount and will share equally in the profits.The structure of Computers-B-Us is most likely a

Accepted Answer

Computers-B-Us is most likely a private corporation because its owners have no personal liability for the company's debts, which is a characteristic of corporations. Additionally, the equal investment and profit-sharing among the owners align with the structure of a corporation rather than the other options listed.

Question 8

An organization designed to avoid paying corporate tax by distributing all or most of their earnings to their shareholders is

Accepted Answer

An income trust is an organization designed to avoid paying corporate tax by distributing all or most of their earnings to their shareholders. This type of organization is popular in Canada, where it was widely used in the 2000s as a tax-advantaged investment vehicle. However, changes to Canadian tax laws have since made income trusts less attractive.

Question 9

There are two basic types of partners: ________ and ________.

Accepted Answer

The two basic types of partners are general and limited partners. General partners have unlimited liability and are actively involved in the management of the partnership, while limited partners have limited liability and do not participate in the management of the partnership. The other options, such as dormant/active or secret/open, do not accurately describe the different types of partners.

Question 10

What is the difference between a public and private corporation?

Accepted Answer

The main difference between public and private corporations is that public corporations issue shares that are widely held, meaning they are traded on stock exchanges and can be owned by many individual investors. Private corporations, on the other hand, do not issue shares to the public and are typically owned by a small group of individuals or even a single person.

Question 11

Disadvantages of the general partnership form of business organization include

Accepted Answer

The general partnership form of business organization lacks continuity, meaning that the partnership dissolves if one partner leaves or dies. This can create uncertainty and difficulties in the operation of the business. Additionally, partners in a general partnership have unlimited liability, meaning they are personally responsible for the partnership's debts and legal obligations. This can be a significant disadvantage compared to limited liability forms of organization such as corporations or limited liability companies. The other options listed (A, B, D, E) are not disadvantages of the general partnership form of business organization.

Question 12

Paul invests $50 000 in a partnership with his sister to operate a computer sales outlet.Paul is not involved in the operation of the store and has limited liability through the written partnership agreement.What kind of partner is Paul?

Accepted Answer

Paul is a limited partner because he has limited liability and is not involved in the operation of the store.

Question 13

The two most widely used methods to form a corporation include

Accepted Answer

The two most widely used methods to form a corporation are federal and provincial incorporation, which refers to whether the corporation is registered under Canadian federal law or provincial law. This choice is important because it determines the legal requirements and regulations the corporation must follow to operate in Canada.

Question 14

What was the largest corporation in Canada in 2017,as measured by sales revenue?

Accepted Answer

The answer of What was the largest corporation in Canada...

Question 15

Bill is starting up a new business.In order to raise the capital needed for the business,Bill has sold shares of his company to a few close relatives.This type of structure is known as a

Accepted Answer

Selling shares to a small group of individuals, such as close relatives, is characteristic of a private corporation. A sole proprietorship is owned and operated by a single individual, while a public corporation sells shares to the general public. Macroenterprise is not a recognized business structure.

Question 16

What is the most important advantage of general partnerships?

Accepted Answer

The most important advantage of general partnerships is the ability to grow with the addition of new talent and money. This is because general partnerships allow for multiple partners to contribute both capital and expertise, which can lead to increased growth and success for the business. Additionally, general partnerships also offer the advantages of shared decision-making and pooling of resources, which can lead to increased efficiency and productivity.

Question 17

________ is the governing body of a corporation.

Accepted Answer

The board of directors is the governing body of a corporation that makes decisions about the overall strategic direction of the company and hires and oversees the CEO. The majority shareholders committee and the audit committee are typically subcommittees of the board of directors, and a shareholders' board is not a commonly used term. The CEO is a senior executive who reports to and is accountable to the board of directors.

Question 18

Ann and David want to form a partnership.They should consider all of the following except

Accepted Answer

Partnerships often face difficulty in transferring ownership compared to corporations, as the transfer usually requires the consent of all partners. This makes "ease in transferring ownership" a less relevant consideration when forming a partnership.

Question 19

What do both sole proprietorships and partnerships lack?

Accepted Answer

Both sole proprietorships and partnerships lack continuity, meaning that the business entity may be terminated if the owner(s) dies or decides to leave the business.

Question 20

In a partnership,

Accepted Answer

In a partnership, each partner is responsible for the debts even if the debt was the result of the actions of only one partner. This is known as joint and several liability, meaning that each partner is individually responsible for the entire debt.

Quiz 4: Entrepreneurship,small Business,and New Venture Creation