chapter 7

Question 1

corporation

Answer 1

registered by a state
operates apart from owners
stock
lives on after owners

Question 2

sole proprietorship

Answer 2

owned and operated by one person

Question 3

subchapter s cooperation

Answer 3

taxed like a partnership

profits taxed once at shareholders tax rate

Question 4

limited partners

Answer 4

liability limited to investment

cannot be actively involved in managing the business

Question 5

partnership

Answer 5

two or more owners

share decisions, assets, liabilities, and profits

Question 6

limited liability company

Answer 6

owners and managers have limited liability
some tax benefits
avoids restrictions with subchapter s corporations

Question 7

liability protection insurance

Answer 7

insurance against the debts and actions of a business

Question 8

nonprofit corporation

Answer 8

makes money for reasons other than the owners profit

can makes a profit, but it must remain in company

Question 9

liable

Answer 9

responsible for debts and actions in a business

Question 10

c corporation

Answer 10

pays taxes on earnings

shareholders pay taxes

Question 11

personality conflicts

Answer 11

possible during a partnership
may end business
disagreement over authority

Question 12

advantages of sole proprietorship

Answer 12

easy and inexpensive
complete authority
least regulated
no taxes; income taxed at rate of owner

Question 13

disadvantages of sole proprietorship

Answer 13

unlimited liability
raising capital difficult
business reliant on owners skills
death of owner dissolves business

Question 14

advantages of partnership

Answer 14

inexpensive
general partners have complete control
share ideas
secure investment capital easy and great amounts

Question 15

disadvantages of partnership

Answer 15

difficult to dissolve partner interest
personality conflicts
held liable for others actions

Question 16

advantages of corporation

Answer 16

status
limited liability
raise investment money
perpetual existence
employee benefits
tax advantages

Question 17

disadvantages of corporation

Answer 17

expensive to set up
income heavily taxes
double taxation
taxes on profits
taxes on dividends