CLA Questions with CORRECT Answers
Question:
disadvantages of sole proprietorship
Answer:
business and owner are one; Owner has to come up with all
capital; company liabilities are also of the owner; duration limited by life of the owner
Question:
formation of partnership
Answer:
articles of partnership (written partnership agreement); sales tax license or
other license; state and federal ID #'s
Question:
financial structure
Answer:
Initial capitalization comes from partner contributions; may or may not be equal;
profits are divided equally according to capital contribution
Question:
S corporations have forty shareholders
Answer:
true
Question:
Noncumulative preferred stock receives dividends for all years before dividends are paid to
common
stockholders
Answer:
false
Question:
Stock splits reduce the price per share
Answer:
true
Question:
disadvantages of sole proprietorship
Answer:
business and owner are one; Owner has to come up with all
capital; company liabilities are also of the owner; duration limited by life of the owner
Question:
formation of partnership
Answer:
articles of partnership (written partnership agreement); sales tax license or
other license; state and federal ID #'s
Question:
financial structure
Answer:
Initial capitalization comes from partner contributions; may or may not be equal;
profits are divided equally according to capital contribution
Question:
S corporations have forty shareholders
Answer:
true
Question:
Noncumulative preferred stock receives dividends for all years before dividends are paid to
common
stockholders
Answer:
false
Question:
Stock splits reduce the price per share
Answer:
true
