BA109 Quiz 5 UPDATED Exam Questions and CORRECT Answers

BA109 Quiz 5 UPDATED Exam Questions
and CORRECT Answers
Acme Corporation is chartered in Delaware, but its primary area of operation is in South
Carolina. In South Carolina, Acme would be considered a(n) ________ corporation. - Correct
Answer- foreign


T/F State law requires that individuals creating a partnership file the Articles of Partnership
with the secretary of state. - Correct Answer- False


T/F "Double taxation" refers to the fact that corporations are required to pay both federal and
state income taxes. - Correct Answer- False


T/F The corporation has the advantage of transferable ownership, which easily enables the
corporation to sell shares to others or to transfer stock through inheritance. - Correct Answer-
True


Which form of ownership generally has the least ability to accumulate capital? - Correct
Answer- Sole proprietorship


T/F Liquidating an S corporation involves several steps, including paying all taxes and debts,
obtaining the written approval of shareholders to dissolve the company, filing a statement of
intent to dissolve with the secretary of state's office and, finally, distributing all remaining
assets of the corporation to shareholders. - Correct Answer- True


T/F One disadvantage of an S corporation is that the cost of many benefits-insurance, meals,
lodging, and others-that are paid to shareholders with 2 percent or more of stock-cannot be
deducted as business expenses for tax purposes and are considered taxable income. - Correct
Answer- True


T/F In a professional corporation, all shares of stock must be owned and held by individuals
licensed in the profession of the corporation. - Correct Answer- True


T/F If a partnership agreement does not exist, the partnership will be governed by the
Uniform Partnership Act. - Correct Answer- True

, T/F An S corporation can issue both voting and nonvoting common stock to its shareholders.
- Correct Answer- True


T/F Changing from one form of ownership to another once a business is up and running can
be difficult, expensive, and complicated. - Correct Answer- True


T/F There is no limit to the number of general partners a partnership may have, but it must
have at least one general partner. - Correct Answer- True


Which of the following statement(s) is/are true? - Correct Answer- All of these


T/F Stockholders in the corporation have the same kind of liability as do general partners in a
partnership. - Correct Answer- False


T/F The limited liability company, like an S corporation, is a form of ownership that is a cross
between a partnership and a corporation. - Correct Answer- True


T/F Choosing S corporation status is usually beneficial to startup companies anticipating net
losses and to highly profitable firms with substantial dividends to pay out to shareholders. -
Correct Answer- True


T/F A corporation formed and chartered in Kansas is considered a domestic corporation when
doing business in Kansas, and a foreign corporation when doing business in Missouri. -
Correct Answer- True


T/F The partnership, like the proprietorship, avoids the disadvantage of double taxation. -
Correct Answer- True


T/F A professional corporation is created in the same way as a regular corporation, and exists
to provide the advantages of corporate ownership, including limited liability, to professionals
such as doctors and lawyers. - Correct Answer- True


T/F Company founders can become minority stockholders in a corporation but can never lose
their final authority or control over business decisions because they are the founders. -
Correct Answer- False