Question 1

The shareholders elect a board of directors, primarily from within the
corporation, who manage the company.

Accepted Answer

The shareholders elect a board of directors, but the board is typically composed of individuals both from within and outside the corporation. The board oversees the management of the company, but the day-to-day management is usually handled by the company's executives.

Question 2

The most important benefit of incorporation is the limited liability to which the owners are exposed.

Accepted Answer

When a business is incorporated, it becomes a separate legal entity from its owners. This means that the owners, also known as shareholders or members, are not personally responsible for the debts and liabilities of the corporation. Instead, the corporation itself is responsible for its own debts and liabilities. This provides owners with limited liability, which is a key benefit of incorporation.

Question 3

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out _____.

Accepted Answer

When a corporation distributes a portion of its income to shareholders in the form of cash payments, it is known as paying out dividends. Shares, allotments, and capital surpluses are all other financial terms that do not apply to this specific situation.

Question 4

Which of the following is a of the corporate form of organization?

Accepted Answer

The answer of Which of the following is a of...

Question 5

In corporations, the individuals who own and manage a business are the same
people.

Accepted Answer

The individuals who own a business are the shareholders, while the individuals who manage the business are the executives and board of directors. These groups may overlap to some extent, but they are not always the same people.

Question 6

Because it restricts the transferability of its stock, Generation Now is a _____ corporation.

Accepted Answer

A corporation that restricts the transferability of its stock is called a private corporation. This means that shares cannot be freely bought or sold on a stock exchange and are typically held by a small group of investors or family members. Limited corporations are a type of corporation that limits the liability of shareholders, public corporations are those whose stocks are publicly traded on a stock exchange, and classified corporations is not a recognized term in corporate law. Therefore, the best choice is D.

Question 7

Any corporation can raise more money than a partnership because it has better
credit.

Accepted Answer

Corporations can raise more money than partnerships primarily because they can issue stocks and bonds, not necessarily because they have better credit.

Question 8

The shareholders elect a ___________, a group of people who are legally responsible for governing the corporation.

Accepted Answer

The term used to describe the group of people who are legally responsible for governing the corporation is the board of directors. This board is elected by the shareholders and typically consists of experienced business leaders who provide oversight and make strategic decisions on behalf of the company. The other answer choices (A, C, and D) do not accurately describe this group or its role in the corporate governance structure.

Question 9

The board of directors of a corporation sets the company's policies, goals and decisions, and approves the distribution of dividends.

Accepted Answer

The board of directors is responsible for setting the company's policies, goals and decisions, and has the authority to approve the distribution of dividends to shareholders.

Question 10

Some corporate founders of Smith Company want to restrict the transferability of their stock and hold it in the hands of only a few individuals who are not
Allowed to sell it to the general public.What type of company is Smith
Company?

Accepted Answer

A private corporation is a type of company that is not publicly traded and has restrictions on who can own and sell its stock. In this case, the founders of Smith Company want to restrict the transferability of their stock to a few individuals, indicating that it is a private corporation. B) public corporation is incorrect because in a public corporation, the stock is available for sale to the general public. C) restricted corporation is not a recognized type of company. D) partnership is also incorrect as it is a type of business structure where two or more people share ownership and profits.

Question 11

Corporations account for _____percent of all U.S.businesses but generate almost _____percent of the revenues.

Accepted Answer

According to the data provided, corporations account for only 18% of all U.S. businesses, but they generate almost 82% of the revenues. None of the other answer choices match these percentages.

Question 12

A _____ is entirely separate from the parties who own it.

Accepted Answer

A corporation is a legal entity that is separate from its owners or shareholders. This means that the corporation can own property, sue or be sued, and conduct business in its own name without involving the personal liability of its owners. Limited partnerships may have some separation of liability, but they still have at least one general partner who is personally liable for the partnership's debts. General partnerships and unlimited proprietorships have no separation of liability between the business and its owners.

Question 13

Grainger Company is a major automotive parts manufacturer operating in six countries.It has no restrictions on stock sales and the stock is available to the
General public.Grainger Company is a _____ corporation.

Accepted Answer

Grainger Company is a public corporation as it has no restrictions on stock sales and the stock is available to the general public, indicating that it is publicly traded. Private corporations are not available for public investment, closely held corporations have a limited number of shareholders, and limited liability corporations offer liability protection to their owners but are not necessarily publicly traded.

Question 14

One drawback to incorporation-one that often discourages small businesses
from incorporating-is the fact that corporations are costly to set up.

Accepted Answer

Incorporating can involve legal fees, filing fees, and other costs associated with drafting and filing documents with the state government.

Question 15

The most important benefit of incorporation is the _____ feature of corporations.

Accepted Answer

The most important benefit of incorporation is the limited liability feature of corporations. This means that the owners (shareholders) are not personally responsible for the debts or liabilities of the corporation, which is a significant advantage over sole proprietorships and partnerships where owners have unlimited liability.

Question 16

Continuity is an advantage of a corporation; however, ease in transferability
is a disadvantage.

Accepted Answer

Corporations have the advantage of ease in transferability of ownership through the buying and selling of stock, while continuity is also an advantage as the corporation can continue to exist independently of its owners.

Question 17

A major reason many people choose to incorporate is because of the costs
involved and double taxes that must be paid.

Accepted Answer

Incorporating can provide tax benefits and reduce the overall cost of doing business, as well as allow for better protection of personal assets. Without incorporation, businesses may be subject to double taxation and higher personal liability.

Question 18

_________are earnings distributed to shareholders by a corporation.

Accepted Answer

Dividends are specifically defined as earnings distributed to shareholders by a corporation. The other choices may be related to corporate earnings or stock ownership, but do not specifically refer to the distribution of earnings.

Question 19

CEO, Jack Yates oversees the operations of Johnson Company, a corporation with 1,200 employees.Yates reports to the company's board of directors.
Who owns Johnson Company?

Accepted Answer

Shareholders own the company and have ultimate authority over its operations and decision-making, as they are the ones who invest capital into the company in exchange for ownership in the form of shares. The board of directors is responsible for representing the shareholders' interests and overseeing company management, including Yates. The employees work for the company and are not owners. While Yates has significant responsibility for the company's operations, he ultimately answers to the board of directors, who represent the shareholders.

Question 20

A disadvantage of a corporation is that managers and shareholders may have goals that conflict.

Accepted Answer

Managers may seek to maximize profits, while shareholders may want the company to invest in research and development or social responsibility initiatives. This conflict of interest can lead to challenges in decision-making and prioritization.

Quiz 3: Selecting a Form of Business Ownership

The shareholders elect a board of directors, primarily from within the corporation, who manage the company.

The most important benefit of incorporation is the limited liability to which the owners are exposed.

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out _____.

Which of the following is a of the corporate form of organization?

In corporations, the individuals who own and manage a business are the same people.

Because it restricts the transferability of its stock, Generation Now is a _____ corporation.

Any corporation can raise more money than a partnership because it has better credit.

The shareholders elect a ___________, a group of people who are legally responsible for governing the corporation.

The board of directors of a corporation sets the company's policies, goals and decisions, and approves the distribution of dividends.

Some corporate founders of Smith Company want to restrict the transferability of their stock and hold it in the hands of only a few individuals who are not Allowed to sell it to the general public.What type of company is Smith Company?

Corporations account for _percent of all U.S.businesses but generate almost _percent of the revenues.

A _____ is entirely separate from the parties who own it.

Grainger Company is a major automotive parts manufacturer operating in six countries.It has no restrictions on stock sales and the stock is available to the General public.Grainger Company is a _____ corporation.

One drawback to incorporation-one that often discourages small businesses from incorporating-is the fact that corporations are costly to set up.

The most important benefit of incorporation is the _____ feature of corporations.

Continuity is an advantage of a corporation; however, ease in transferability is a disadvantage.

A major reason many people choose to incorporate is because of the costs involved and double taxes that must be paid.

_________are earnings distributed to shareholders by a corporation.

CEO, Jack Yates oversees the operations of Johnson Company, a corporation with 1,200 employees.Yates reports to the company's board of directors. Who owns Johnson Company?

A disadvantage of a corporation is that managers and shareholders may have goals that conflict.