159. A voluntary association of two or more people acting as co–owners of a business is known as a partnership.
a. True
b. False
160. A general partner is responsible for any debts of the partnership, regardless of whether he or she was directly
involved in the transaction that created the debt.
a. True
b. False
161. Since someone must be responsible for a partnership‘s debts, a limited partnership must have at least one general
partner.
a. True
b. False
162. In a limited partnership, a limited partner’s name must be included in the partnership‘s name.
a. True
b. False
163. Every partnership must have at least one limited partner.
a. True
b. False
164. Articles of partnership are a legal document issued by the secretary of state.
a. True
b. False
165. The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.
a. True
b. False
166. Compared to a corporation, a partnership is more difficult and expensive to establish.
a. True
b. False
167. A banker or lender is more likely to make sizable loans to a sole proprietor than to a partnership.
a. True
b. False
168. The weakness of one partner may be offset by another partner’s strength.
a. True
b. False
169. Although a partnership pays no income tax, the Internal Revenue Service requires partnerships to file an annual
information return that states the amount of distributions made to each partner.
a. True
b. False
170. Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not
concerned about unlimited liability.
a. True
b. False
171. As with a sole proprietorship, one disadvantage of a partnership is a lack of continuity.
a. True
b. False
172. A corporation is an artificial person created by law.
a. True
b. False
173. Unlike a person, a corporation exists only on paper.
a. True
b. False
174. Corporations account for about 82 percent of all sales revenues.
a. True
b. False
175. The Reader’s Digest Association began as an open corporation and later changed to a closed corporation.
a. True
b. False
176. A corporation chartered in Kansas and doing business in Kansas is known as a domestic corporation.
a. True
b. False
177. A corporation chartered in Canada and doing business in the United States is known as a foreign corporation in the
United States.
a. True
b. False
178. When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.
a. True
b. False
179. Common stockholders have the right to elect a corporation‘s board of directors and vote on corporate matters.
a. True
b. False
180. Preferred stockholders receive dividends before dividends are paid to common stockholders.
a. True
b. False
181. Most stockholders attend a corporation’s annual meeting and vote in person.
a. True
b. False
182. Corporate officers are elected by the stockholders.
a. True
b. False
183. Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.
a. True
b. False
184. A corporation is perhaps the easiest form of business to organize.
a. True
b. False
185. Profits of a large corporation are taxed twice, once as corporate income and again as personal income of
stockholders.
a. True
b. False
186. Shareholders of an S-corporation are taxed as if they were owners in a partnership.
a. True
b. False
187. An S-corporation can have no more than twenty stockholders.
a. True
b. False
188. A limited-liability company is taxed like a corporation.
a. True
b. False
189. A limited–liability company extends the concept of personal-asset protection to small business owners.
a. True
b. False
190. Surplus funds of a not-for-profit organization are distributed to members of the board of directors.
a. True
b. False
191. All not-for-profit corporations rely solely on volunteers to perform services of the organization.
a. True
b. False
192. Experts predict that mergers in the first part of the twenty-first century will be the result of cash–rich companies
looking to acquire businesses that will enhance their position in the marketplace.
a. True
b. False
193. All corporations operate primarily for profit.
a. True
b. False
194. Joint ventures are created for a specific purpose and dissolved when that purpose is achieved.
a. True
b. False
195. Corporations are forbidden by law to enter joint ventures.
a. True
b. False
196. A syndicate is a temporary association of individuals or firms organized to perform a specific task that requires a
large amount of capital.
a. True
b. False
197. The purchase of one corporation by another is called a merger.
a. True
b. False
198. A tender offer is an offer to purchase stock from existing stockholders.
a. True
b. False
199. A common tactic of corporate raiders is to start a proxy fight.
a. True
b. False
200. A horizontal merger is a merger between firms in completely unrelated industries.
a. True
b. False
201. A vertical merger is a merger between firms that operate at different but related levels in the production and
marketing of a product.
a. True
b. False
202. Economists, financial analysts, corporate managers, and stockholders all agree that mergers are good for both the
company and the economy.
a. True
b. False
203. Financial experts agree that takeovers enhance corporate profitability and productivity.
a. True
b. False