Chapter 6

Question 1

Sole proprietorship

Answer 1

A for of business in which a single owner does business himself or herself and requires only a license to open

Question 2

Unlimited personal liability

Answer 2

The sole proprietor is personally liable for all business debts. (Disadvantage)

Question 3

Access to Capital

Answer 3

In short, proprietors, unless they have great personal wealth , find it difficult to raise additional money while maintaining sole ownership. They usually put all of what they have into the business and often use their personal resources as collateral on existing loans

Question 4

Continunity

Answer 4

If the proprietor dies or becomes incapacitated, the business automatically terminates

Question 5

C-Corporation

Answer 5

The most common form of business ownership. A corporation is a separate legal entity apart from its owners and may engage in business, issue contracts, sue and be sued, and pay taxes.

Question 6

Stockholders

Answer 6

Owners of the business.

Question 7

Board of directors

Answer 7

The board establishes the general policies of the company and, to a greater or lessor extent depending on the particular corporation, can become involved in various details of the operating activities.

Question 8

Corporate Officers

Answer 8

The functions of each officer are defined by the board of directors. the corporate officers include the President, Secretary (clerk), and Treasurer

Question 9

President

Answer 9

In charge of day to day operations under the directives of the board of directors

Question 10

Secretary

Answer 10

Is in charge with handling the paperwork of the corporation, such as preparing minutes of stockholder and director meetings, sending out notices, and preparing stock certificates

Question 11

Treasurer

Answer 11

Is charged with guardianship of the corporate finances.

Question 12

State incorporation/registration

Answer 12

If your business incorporates in a particular state, the corporation can be sued in that state even you do not conduct any activities there.

Question 13

Corporate Stock

Answer 13

The ownership of a corporation lies in the stockholders and is evidenced by stock certificates issued to the shareholders

Question 14

Issued shraes

Answer 14

the stock that a company sells to investors to generate capital

Question 15

Transferability of ownership

Answer 15

If stockholders in a corporation are displeased with the progress of the business, they can sell their shares to another individual, subject only to restriction on transfer of shares

Question 16

Double taxation

Answer 16

Corporations are taxed on their profits up to 35%. When shareholders are distributed profits in the form of dividends they can also be taxed up to 35%.

Question 17

S-Corporation

Answer 17

A corporation that elects under federal and state tax laws to be taxed like a partnership.

Question 18

General Partnership

Answer 18

An association with two or more people carrying on as co-owners of a business for profit

Question 19

Limited Partnership

Answer 19

Limits the liability of the partners to the extent of their capital contributions

Question 20

Unlimited Liability

Answer 20

At least one member of every partnership must be a general partner. That partner has unlimited personal liability.

Question 21

Limited liability company

Answer 21

A blend of some of the best characteristics pf corporations, partnerships, and sole proprietorships. It is a separate entity like a corporation, but is entitled to be treated as a sole proprietorship or a partnership for tax purposes.