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Choosing the Right Business Structure, Exams of Business Finance

California State Polytechnic University (CPP) - Pomona Business Finance

An overview of the different types of business structures, including sole proprietorships, partnerships, corporations, and limited liability companies (llcs). It covers the key characteristics, advantages, and disadvantages of each structure, helping entrepreneurs and small business owners make an informed decision on the best legal entity for their business. Important factors to consider, such as liability, taxation, ownership, and management, to guide readers in selecting the most suitable business structure that aligns with their goals, resources, and legal requirements. By understanding the nuances of each business structure, readers can make a well-informed choice that sets their venture up for success.

Typology: Exams

2024/2025

Available from 10/12/2024

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McGraw Hill's Taxation BUSINESS 101 –

Exam with A+ Graded.

1. Which structure of business is the easiest to start?

a. Partnership

b. Sole proprietorship

c. S Corporation

d. C Corporation - ✔✔b. Sole proprietorship

2. What is correct from the descriptions below?

a. Hiring an employee does not mean legal obligations.

b. Do not use temporary staff from leasing companies.

c. Consider more about the idea of employees.

d. Make an employee manual even if you only have an assistant. -

✔✔d. Make an employee manual even if you only have an

assistant.

3. Putting your personal assets on the line for your business debts

and financial obligations is also known as...?

a. Offset Income

b. Full and Direct Control

c. Unlimited Liability

d. Legal Entity - ✔✔c. Unlimited Liability

4. What type of business structure is the easiest to start with?

A. Sole Proprietorship

B. Partnership

Partial preview of the text

Download Choosing the Right Business Structure and more Exams Business Finance in PDF only on Docsity!

McGraw Hill's Taxation BUSINESS 101 –

Exam with A+ Graded.

Which structure of business is the easiest to start? a. Partnership b. Sole proprietorship c. S Corporation d. C Corporation - ✔✔b. Sole proprietorship
What is correct from the descriptions below? a. Hiring an employee does not mean legal obligations. b. Do not use temporary staff from leasing companies. c. Consider more about the idea of employees. d. Make an employee manual even if you only have an assistant. - ✔✔d. Make an employee manual even if you only have an assistant.
Putting your personal assets on the line for your business debts and financial obligations is also known as...? a. Offset Income b. Full and Direct Control c. Unlimited Liability d. Legal Entity - ✔✔c. Unlimited Liability
What type of business structure is the easiest to start with? A. Sole Proprietorship B. Partnership

C. C Corporation D. S Corporation - ✔✔A. Sole Proprietorship

Which following is not a type of partnership? A. General Partnerships B. Specialized Partnerships C. Limited Partnerships D. Limited Liability Partnerships - ✔✔B. Specialized Partnerships
Which following is not an advantage for LLC? A. LLC Members have more flexibility than they would in a Corporation, and are free to decide how to split the profits and losses of the business. B. An LLC can operate under whatever management procedures the Members want. C. The advantages of an LLC are that you face less complications in an Operating Agreement. D. There is no limit to the number of Members an LLC can have (unlike an S Corporation). - ✔✔C. The advantages of an LLC are that you face less complications in an Operating Agreement.
Which business structure can only have one owner? A. LLC B. Partnership C. C Corporation

What is a partner in an LLP NOT personally responsible for? A. The professional errors of the other partners B. The business' debts and legal liabilities C. The partner's own professional acts D. Problems of persons under the partner's supervision - ✔✔A. The professional errors of the other partners
Which legal structure is easier to start? A. LLC B. Partnership C. Sole Proprietorship D. C Corporation - ✔✔C. Sole Proprietorship
What is the difference between LLC and LLP? A. LLP is an entity that has many characteristics of a partnership and a corporation. B. LLC is a general partnership that offers limited liability to all investors. C. LLC's members can participate in the management of the company. D. LLP's partners have unlimited personal liability. - ✔✔C. LLC's members can participate in the management of the company.
There are several choices of business entities to select from when deciding on a Legal Structure. Compared to the Limited Liability Company (LLC), The C Corporation...

(Select all that apply) A: Can not go public. B: Can be recognized internationally. C: Can issue shares to founders, employees, and investors. D: Is preferred by investors. E: Makes investors personally liable for business debts and obligations. F: Taxed once or Twice: you're free to choose which can help minimize taxes. - ✔✔B: Can be recognized internationally.

What is one characteristic of a SOLE PROPRIETORSHIP A: Business debt can be shared B: You will have full responsibility C: It is not possible to offset income with business losses - ✔✔B: You will have full responsibility
Building a successful team requires fluid communication, same goals, accountability, and much more. Which one of these is not a good strategy to begin a successful team? A: Creating a clear map for everyone to follow. B: Being a broken record on the priorities of the goal. C: Sticking to your team's values even if they are vague. D: Setting a good tone as the leader to have everyone respect each other - ✔✔C: Sticking to your team's values even if they are vague.
Which business structure(s) may have unlimited individual owners and may have all their

Which of the following reflects the difference between "C" Corporation and "S" corporation? A. "C" corporation is taxed for both corporation and individual level while "S" does not. B. "C" corporation can only be owned by US citizen while "S" does not. C. "C" corporation has limited number of shareholders while "S" does not. D. "C" corporation has to pay self-employment tax while "S" does not. - ✔✔A. "C" corporation is taxed for both corporation and individual level while "S" does not.
Which business structure is formed under state law? A. Partnership B. "C" or "S" corporation C. Limited liability D. Sole proprietorship - ✔✔B. "C" or "S" corporation
What are the 5 different legal structures to choose from when starting a business? A. Open Business, Closed Business, Partnership, Corporation, LLP B. Sole Proprietorship, Partnership, C or S Corporation, LLC, LLP C. Partnership, Open Market, Closed Market, LLC, LLP D. C or S Corporation, Limited Partnership, General Partnership, LLC, LLP - ✔✔B. Sole Proprietorship, Partnership, C or S Corporation, LLC, LLP

Which of the following involve a more limited amount of personal liability? A. LLC and Partnership B. C Corporation, Sole Proprietorship, and LLC C. S Corporation, C Corporation, and LLC D. Sole Proprietorship, and Partnership - ✔✔C. S Corporation, C Corporation, and LLC
Which of the following statements are true about an LLC? A. To set up an LLC, one would need a lawyer and prepare an operating agreement. B. All LLCs can operate under whatever management procedures the members want. C. An LLC can have an unlimited number of members. D. All of the statements above are true. - ✔✔D. All of the statements above are true.
What should you keep in mind when writing up a business plan? A. Keep the language simple and avoid using too many technical terms or jargon. B. Don't underestimate the difficulties in growing a business nor the strengths of your competitors. C. Be able to effectively convey the potential for profit and the strength of your team. D. All of the above. - ✔✔D. All of the above.

Which one of the structures is taxed at the corporate level? A. Sole Proprietorship B. LLC C. C Corporation D. S Corporation - ✔✔C. C Corporation
What's the standard way to figure out an hourly rate? A. Overhead + 20% profit / 1,500 billable hours = hourly rate. B. Overhead / 1,500 billable hours = hourly rate. C. Overhead + 5% profit / 1,500 billable hours = hourly rate. D. Overhead + 50% profit / 1,500 billable hours = hourly rate. - ✔✔A. Overhead + 20% profit / 1,500 billable hours = hourly rate.
What kind of business structure cannot have more than one business owner? A. Partnership B. Sole Proprietorship C. LLC D. S Corporation - ✔✔B. Sole Proprietorship
Which of the following is not a characteristic of LLC? A. It includes the ability to limit the Member's personal liability, and to obtain

pass-through tax treatment B. You need a lawyer to set up an LLC, especially to prepare a good Operating Agreement C. The government's cost of forming an LLC varies from state to state.

D. All Shareholders must sign and file special IRS forms, as well as state tax forms. - ✔✔D. All Shareholders must sign and file special IRS forms, as well as state tax forms.
What kind of partnership can have more than one partner? A. Limited partnership B. General partnership C. Limited Liability Partnership (LLP) D. Corporation - ✔✔B. General partnership
What is the minimum annual Franchise tax for an LLC? A. $500. B. $1,000. C. $250. D. $800.00 - ✔✔D. $800.
2.What is a pro rata share? A. The percent of the business a shareholder owns B. The dividends owned by the officers in a corporation C. The percent of preferred stock owned by a corporation D. The shares owned by the board of directors - ✔✔A. The percent of the business a shareholder owns

Which type of Business Structure is most recommended for a beginner tech startup with 2 or more people? A. "C" Corporation B. Sole Proprietorship C. Partnership D. LLC - ✔✔C. Partnership
What is a clear benefit of an "S" Corporation over a "C" Corporation? A. Limited Liability B. Unlimited Number of Shareholders C. No income tax at the corporate level D. Unlimited Board of Directors - ✔✔C. No income tax at the corporate level
Which business structure do investors typically prefer to invest in? A. Limited Liability Partnership (LLP) B. Limited Liability Company (LLC) C. S Corporation D. C Corporation - ✔✔D. C Corporation
Which of these is a prime cause for small business failure? A. Filing taxes improperly B. Poor planning C. bad budgeting

D. Poor leadership - ✔✔B. Poor planning

What type of stock dividends are negotiable when purchased? A.Prefered B.Common C.Both D.Neither - ✔✔A.Prefered
What percentage of gross sales should allocate towards promo campaigns to your target clients? A. 3 - 6% B. 2 - 5% C. 1 - 4% D. 6 - 9% - ✔✔B. 2-5%
3)Which one of the following options is a feature of LLC? A The members are personally responsible for debts. B Income is taxed at corporate level and then to members. C Losses can be passed through to and deducted by the members of the business. D There is a limit for the number of owners. - ✔✔C Losses can be passed through to and deducted by the members of the business.
Looking professional is important. In order to get a corporate identity package, what should be invested in?

b) Overhead + 20% profit ÷ 1,500 billable hours = Your Hourly Rate c) Overhead ÷ 1,500 billable hours = hourly rate d) 1500 billable hours x overhead rate = hourly rate - ✔✔b) Overhead + 20% profit ÷ 1, billable hours = Your Hourly Rate

Identify the FALSE statement about corporations a) Corporations are the hardest to sell of all business entities b) There are two types of corporations c) You'll need a lawyer to set one up d) Unless voluntarily dissolved, they generally last forever - ✔✔a) Corporations are the hardest to sell of all business entities
What business structure has restrictions on eligible owners? a) C corporation b) S corporation c) Partnership d) LLC - ✔✔a) C corporation
What is a business plan used for? a) It conveys information about your business to investors b) It can measure and monitor your performance c) It helps you grow your business and make it successful

d) All of the above - ✔✔d) All of the above

Both a partnership and C corporation a) Are limited to amount of investment b) Are owned by an individual c) No limit to amount of owners - ✔✔c) No limit to amount of owners

Choosing the Right Business Structure, Exams of Business Finance

Related documents

Partial preview of the text

Download Choosing the Right Business Structure and more Exams Business Finance in PDF only on Docsity!

McGraw Hill's Taxation BUSINESS 101 –

Exam with A+ Graded.