LGS 200 Final Exam Study Guide 2023

LGS 200 Final Exam Study Guide 2023 Business Judgement Rule - Correct Answer The business judgment rule is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. Entrepreneurs - Correct Answer -Owner is actually the business. -Business is not a separate legal entity. -Most common form of business organization in the United States. -It's important for entrepreneurs to choose the right type of business organization, for example, sole proprietorship, general partnership, limited partnership, limited liability partnership, limited liability company, or corporation. Sole Proprietorship - Correct Answer -Owner is actually the business. -Business is not a separate legal entity. -Most common form of business organization in the United States. Advantages of Sole Proprietorship - Correct Answer -Ease and low cost of formation. -Proprietor can make all management decisions. -E.g. hiring and firing employees. -No other approvals required. -Proprietor owns entire business. -Has the right to receive all profits. -Easily transferred or sold. Disadvantages of Sole Proprietorship - Correct Answer -Access to capital is limited to: personal funds plus and any loans owner can obtain -Proprietor legally responsible for business's contracts. -Proprietor responsible for torts committed in course of employment.