21) The ________ is elected by the stockholders and is responsible for setting policy and appointing officers.
A) board of directors
B) chief executive officer (CEO)
C) chief financial officer (CFO)
D) advisory council
22) Which type of business organization transacts the most business and is the largest in terms of assets, income, and number of employees?
A) Proprietorship
B) Partnership
C) Limited-liability company
D) Corporation
23) The entity assumption does NOT apply to a:
A) proprietorship.
B) limited liability partnership.
C) limited-liability company.
D) The entity assumption applies to all the above.
24) Which of the following is a TRUE statement about the characteristics of partnerships?
A) Limited partners have mutual agency and unlimited liability for the partnership's debts.
B) General partners have mutual agency and limited liability for the partnership's debts.
C) Net income and loss of the partnership "flows through" to the partners.
D) The partnership agreement must be in writing.
25) Owners of an LLC are called:
A) partners.
B) proprietors.
C) members.
D) stockholders.
26) Advantages of a corporation include:
A) each stockholder can enter into agreements that legally bind all the stockholders.
B) the double taxation of distributed profits.
C) limited liability of the stockholders for the corporation's debts.
D) each stockholder can conduct business in the name of the corporation.
27) Shareholders of a corporation:
A) have limited liability for the corporation's debts.
B) have unlimited liability for the corporation's debts.
C) have unlimited liability for the actions of other stockholders.
D) receive dividends from the corporation without having to pay tax on the distribution.
28) An important fact to consider when determining how to organize a business is that:
A) members of an LLC have unlimited liability and are taxed like members of a partnership.
B) for accounting purposes, a proprietorship is a distinct entity from the proprietor.
C) the records of a partnership can include each partner's personal assets and debts.
D) the proprietor and the proprietorship are separate legal entities.