7) A corporation possesses all but one of the following characteristics. Which of the following is NOT a characteristic of a corporation?
A) If a corporation cannot pay its debts, lenders can take the owners' personal assets to satisfy the obligations.
B) A corporation is a distinct entity in the eyes of the law.
C) Corporation ownership is divided into shares of stock.
D) A corporation is owned by shareholders or stockholders.
8) Corporate ownership is a very popular type of ownership in the United States because:
A) corporate shareholders have limited liability for the debts of the corporation.
B) most corporations are small or medium-sized companies.
C) the life of a corporation is limited by the death of an owner.
D) a corporation is usually managed by the owners.
9) Which of the following is NOT
a characteristic of a traditional partnership?
A) A partnership is owned by shareholders or stockholders.
B) If a partnership cannot pay its debts, lenders can take the owners' personal assets to satisfy the obligations.
C) A partnership joins two or more individuals as co-owners.
D) Each partner has the authority to commit the entire partnership to a binding contract.
10) Which of the following is TRUE for a proprietorship?
A) A proprietorship joins two or more individuals as co-owners.
B) The proprietor is not personally liable for the debts of the proprietorship.
C) A proprietorship has a single owner.
D) A proprietorship has an indefinite life.
11) Which of the following is a characteristic of a limited liability partnership (LLP)?
A) A limited liability partnership issues shares of stock to shareholders.
B) Each partner is liable only for the actions under his or her control.
C) A limited liability partnership is owned by a single investor.
D) The limited liability partners are subject to "double taxation."
12) Caleb Brown has been the sole owner of a bicycle sales and repair shop for many years. Which of the following business types would best protect Caleb's personal assets from product liability exposure?
A) Partnership
B) Limited liability company
C) Proprietorship
D) Not-for-profit
13) Dylan Chase is a partner in a CPA practice. One of Dylan's partners sometimes takes a very aggressive position when auditing clients. Which of the following business types would protect Dylan's personal assets from malpractice liability for his partner's aggressive auditing tactics?
A) Limited liability partnership
B) Traditional partnership
C) Not-for-profit
D) Proprietorship
14) Phillip and Reed have developed a new technology for home computer systems. However, they need to raise a large amount of capital to build the production and support facilities to market their product successfully. Which of the following business types would be best suited to help the company raise the necessary capital to begin production?
A) Corporation
B) Proprietorship
C) Partnership
D) Limited liability partnership
15) David has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in effect, has he chosen?
A) Limited liability company
B) Partnership
C) Corporation
D) Proprietorship