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Homework answers / question archive / 1) Establishing a sole proprietorship generally requires the owner to organize formally through the state government and file a legal ownership agreement
1) Establishing a sole proprietorship generally requires the owner to organize formally through the state government and file a legal ownership agreement.
a) True
b) False
2) A corporation is a legal entity created by the authority of a state government, separate and distinct from its owners.
a) True
b) False
3) Articles of incorporation, prepared by a business that wishes to incorporate, normally include (among other things) the corporation's name and purpose, its location, and provisions for capital stock.
a) True
b) False
4) Corporations are usually more heavily regulated by governments than are sole proprietorships and partnerships.
a) True
b) False
5) The stock of a closely-held corporation generally does not trade on a stock exchange.
a) True
b) False
6) The difficulty of transferring ownership is one disadvantage of organizing a company as a corporation.
a) True
b) False
7) Most corporations are subject to extensive government regulation.
a) True
b) False
8) The stock market crash in 1929 led to the beginning of extensive regulation of trading on stock exchanges.
a) True
b) False
9) The Securities and Exchange Commission was established in response to the accounting scandals that occurred in 2001 and 2002.
a) True
b) False
10) Double taxation is a significant disadvantage of the partnership form of business organization.
a) True
b) False
1) False The formation of sole proprietorship very simple, so it does not require the owner to organize formally through the state government and file a legal ownership.
2) True It is not an easy thing to start a corporation. It requires one to complete the legal formalities of the state government, separate and distinct from its owners.
3) True Articles of incorporation is prepared by the corporation should include the corporation's name and purpose, its location, and provisions for capital stock.
4) True Sole proprietorship and partnerships are easy to form and do not require the registration of the government, unlike a corporation, for which registration is compulsory.
5) True A closely-held corporation has a limited number of shareholders and they are not allowed to trade on a stock exchange.
6) False The ownership of share or stock of any corporation can be easily transferred by selling it in the market, but it is difficult to transfer the ownership in sole proprietorships and partnerships.
7) True The formation of corporation is difficult, it requires the permission and registration of the government.
8) True To protect the interest of the common investors and create the transparency in the market, extensive regulations of trading on stock exchanges began at this time.
9) False The Securities and Exchange Commission handles cases related to the stock market and was created under FDR in 1934.
10) False Double taxation is a significant disadvantage of the corporation, as corporations are seen as a single 'person' by the law, the profits are taxed once as a corporation, then again to the personal income taxes of the owners.
