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Exam 6: Business Formation: Choosing the Form That Fits

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Question 101

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As a result of decreased competition and less saturated markets, McDonald's foreign franchise outlets in 2014 were greater than in the United States.

A) True
B) False

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Question 102

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Lthize ac oomwnpsa n1y,0, 0s0h es hmaareys v ooft ec oinm tmheo ne lsetcotciokn i no fM Meregrgataoto I'ns cb.o Aarsd a o sft odcirkehcotoldrse.r in

A) True
B) False

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Question 103

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Choice of ownership determines the degree to which each owner has personal liability for the firm's debts and the sources of funds available to the firm to finance future expansion.

A major advantage of limited liability partnerships (LLP) is that they offer all partners "full­shield" protection in every state.

Stockholders are the _____ of a corporation.

Identify and describe the differences between a "domestic corporation" and a "foreign corporation."

LLCs must register or qualify to operate as "foreign" companies when they do business in states other than the state in which they were organized.

One advantage of forming an LLC is that, unlike a corporation, an LLC does not require the owners to file any special paperwork or pay any fees.

James is the sole proprietor of an automobile store. He wishes to pass on his assets to his children after his death. In order to attain the best tax advantage, what will his lawyer most likely advise him to do?

Operating a franchise gives the franchisee instant brand­name recognition, which can help attract customers.

A(n) _____ is a corporate restructuring in which one firm buys another.

A general partnership avoids the problem of _____ endemic to corporations.

A corporation is the most common type of business organization in the United States.

Describe the advantages and limitations of S corporations, statutory close (or closed) corporations, and nonprofit (or not­for­profit) corporations.

Corporations can operate under a corporate charter for no more than 100 years, after which the corporation must be dissolved.

Stockholders in a corporation are always individuals.

Individuals who contribute money or property to a nonprofit organization can take a tax deduction, making it easier for these organizations to raise funds from donations.

Ralph Flores owns and operates his own business as a sole proprietor. Recently his company was sued. The fact that Ralph's business is a sole proprietorship means that Ralph is personally protected against any financial loss if the company loses the lawsuit.