MIE 201 STUDY GUIDE 2026/2027 QUESTIONS AND
SOLUTIONS RATED A+
✔✔disadvantages of a partnership - ✔✔- unlimited liability for general partners
- interpersonal problems
managing partner & unproductive partners
- limited partners have no voice in the management of the business
- distribution of profits
✔✔corporations - ✔✔- businesses that are owned by many investors who buy shares of
stock
- a legal entity with the power to own property and conduct business
- can receive, own, and transfer property; make contracts; sue; and be sued
- faces limited liability because it is its own legal entity
✔✔a corporation is like what? - ✔✔- a horcrux
- they can be in so many types of business that even if you take out one component
they will still survive and thrive in all their other components of business
✔✔ownership of corporations - ✔✔- shareholders
- stock certificates
✔✔shareholders - ✔✔- owners of a corporation who are issued shares of stock in return
for their investments
✔✔stock certificate - ✔✔- represents shares of stock owned by shareholders of a
company
- may be sold or given to upon the death of the owner to someone else
✔✔types of corporations - ✔✔- public corporations
- private corporations
✔✔public corporations - ✔✔- many shareholders
- stock is publicly traded
- stock available for sale to the general public
✔✔private corporations - ✔✔- few shareholders
- stock not publicly traded
- stock is held only by a few individuals or companies and is not publicly traded
- owners retain complete control over their operations and ownership by withholding
their stock from public sale
- finance their operating costs and growth from either company earnings or bank loans
✔✔corporations change from private to public ownership and vice versa when?? - ✔✔-
their financial needs and strategic interests change
,✔✔Quasi-public corporation - ✔✔corporations owned and operated by the federal,
state, or local government
ex) NASA, and USPS
✔✔advantages of corporations - ✔✔- limited liability
- ability to raise capital
- increased liquidity
- unlimited life span
- ease of transfer of ownership
✔✔limited liability - ✔✔- a form of business ownership in which the owners are liable
only up to the amount of their individual investments
✔✔disadvantages of corporations - ✔✔- cost and complexity
- reporting requirements
- possible loss of control
- managerial demands
- double taxation
- short term orientation - stock market
✔✔dividends - ✔✔profits of a corporation that are distributed in the form of cash
payments to stockholders
✔✔corporate charter - ✔✔a legal document that the state issues to a company based
on information the company provides in the articles of incorporation
✔✔double taxation - ✔✔- feature of taxation that allows stockholders' dividends to be
taxed both as corporate profit and as personal income
✔✔special types of corporations - ✔✔- subchapter S corporation
- limited liability corporation
- subsidiary corporation
- alien v. foreign corporation
- benefit or B corporation
- domestic corporation
✔✔S corporation - ✔✔- made only for federal income tax purposes and otherwise is no
different from any other corporation
- owners receive the tax advantages of a partnership while they raise money through
the sale of stock
- income and tax deduction flow directly to the owners
, ✔✔nonprofit corporations - ✔✔focus on providing a service rather than earning a profit
but are not owned by a government entity
✔✔limited liability corporation - ✔✔- flexible business entities combine the tax
advantages of a partnership with the personal liability protection of a corporation
- not restricted in the number of shareholders they can have and members participation
in management is not restricted as it is in limited partnerships
✔✔subsidiary corporations - ✔✔- partially or wholly owned by another corporation
known as a parent company which supervises the operations of the subsidary
✔✔holding company - ✔✔- special type of a parent company that owns other
companies for investment reasons and usually exercises little operating control over
those subsidaries
✔✔benefit coropration - ✔✔- profit seeking corporation whose charter also requires it to
pursue a stated social or environmental goal
✔✔alien corporation - ✔✔- a corporation that operates in the United States but is
incorporated in another country
✔✔foreign corporation - ✔✔- a corporation that is incorporated in one state but that
does business in several other states where it is registered
- frequently happens in the state of Delaware where incorporation laws are more lenient
✔✔domestic corporation - ✔✔- a company that is incorporated in one state that does
business only in the state where it is chartered
✔✔corporate governance - ✔✔- the way in which a corporation is structured and the
effect that structure has on the corporation's behavior
- shareholders elect the board of directors who hire corporate officers who hire
employees
✔✔board of directors - ✔✔- represent the shareholders and are responsible for
declaring dividends, guiding corporate affairs, reviewing long-term strategic plans,
selecting corporate officer, and overseeing financial performance
✔✔inside directors - ✔✔Board members who are generally part of the company's senior
management team; appointed by shareholders to provide the board with necessary
information pertaining to the company's internal workings and performance.
✔✔outside directors - ✔✔board members who are not employees of the firm, but who
are frequently senior executives from other firms or full-time professionals
SOLUTIONS RATED A+
✔✔disadvantages of a partnership - ✔✔- unlimited liability for general partners
- interpersonal problems
managing partner & unproductive partners
- limited partners have no voice in the management of the business
- distribution of profits
✔✔corporations - ✔✔- businesses that are owned by many investors who buy shares of
stock
- a legal entity with the power to own property and conduct business
- can receive, own, and transfer property; make contracts; sue; and be sued
- faces limited liability because it is its own legal entity
✔✔a corporation is like what? - ✔✔- a horcrux
- they can be in so many types of business that even if you take out one component
they will still survive and thrive in all their other components of business
✔✔ownership of corporations - ✔✔- shareholders
- stock certificates
✔✔shareholders - ✔✔- owners of a corporation who are issued shares of stock in return
for their investments
✔✔stock certificate - ✔✔- represents shares of stock owned by shareholders of a
company
- may be sold or given to upon the death of the owner to someone else
✔✔types of corporations - ✔✔- public corporations
- private corporations
✔✔public corporations - ✔✔- many shareholders
- stock is publicly traded
- stock available for sale to the general public
✔✔private corporations - ✔✔- few shareholders
- stock not publicly traded
- stock is held only by a few individuals or companies and is not publicly traded
- owners retain complete control over their operations and ownership by withholding
their stock from public sale
- finance their operating costs and growth from either company earnings or bank loans
✔✔corporations change from private to public ownership and vice versa when?? - ✔✔-
their financial needs and strategic interests change
,✔✔Quasi-public corporation - ✔✔corporations owned and operated by the federal,
state, or local government
ex) NASA, and USPS
✔✔advantages of corporations - ✔✔- limited liability
- ability to raise capital
- increased liquidity
- unlimited life span
- ease of transfer of ownership
✔✔limited liability - ✔✔- a form of business ownership in which the owners are liable
only up to the amount of their individual investments
✔✔disadvantages of corporations - ✔✔- cost and complexity
- reporting requirements
- possible loss of control
- managerial demands
- double taxation
- short term orientation - stock market
✔✔dividends - ✔✔profits of a corporation that are distributed in the form of cash
payments to stockholders
✔✔corporate charter - ✔✔a legal document that the state issues to a company based
on information the company provides in the articles of incorporation
✔✔double taxation - ✔✔- feature of taxation that allows stockholders' dividends to be
taxed both as corporate profit and as personal income
✔✔special types of corporations - ✔✔- subchapter S corporation
- limited liability corporation
- subsidiary corporation
- alien v. foreign corporation
- benefit or B corporation
- domestic corporation
✔✔S corporation - ✔✔- made only for federal income tax purposes and otherwise is no
different from any other corporation
- owners receive the tax advantages of a partnership while they raise money through
the sale of stock
- income and tax deduction flow directly to the owners
, ✔✔nonprofit corporations - ✔✔focus on providing a service rather than earning a profit
but are not owned by a government entity
✔✔limited liability corporation - ✔✔- flexible business entities combine the tax
advantages of a partnership with the personal liability protection of a corporation
- not restricted in the number of shareholders they can have and members participation
in management is not restricted as it is in limited partnerships
✔✔subsidiary corporations - ✔✔- partially or wholly owned by another corporation
known as a parent company which supervises the operations of the subsidary
✔✔holding company - ✔✔- special type of a parent company that owns other
companies for investment reasons and usually exercises little operating control over
those subsidaries
✔✔benefit coropration - ✔✔- profit seeking corporation whose charter also requires it to
pursue a stated social or environmental goal
✔✔alien corporation - ✔✔- a corporation that operates in the United States but is
incorporated in another country
✔✔foreign corporation - ✔✔- a corporation that is incorporated in one state but that
does business in several other states where it is registered
- frequently happens in the state of Delaware where incorporation laws are more lenient
✔✔domestic corporation - ✔✔- a company that is incorporated in one state that does
business only in the state where it is chartered
✔✔corporate governance - ✔✔- the way in which a corporation is structured and the
effect that structure has on the corporation's behavior
- shareholders elect the board of directors who hire corporate officers who hire
employees
✔✔board of directors - ✔✔- represent the shareholders and are responsible for
declaring dividends, guiding corporate affairs, reviewing long-term strategic plans,
selecting corporate officer, and overseeing financial performance
✔✔inside directors - ✔✔Board members who are generally part of the company's senior
management team; appointed by shareholders to provide the board with necessary
information pertaining to the company's internal workings and performance.
✔✔outside directors - ✔✔board members who are not employees of the firm, but who
are frequently senior executives from other firms or full-time professionals
