Lesson 3-7 Review

What is a corporation?

• A sole proprietorship owned by one individual

• A non-profit organization

• A partnership between two or more individuals

• A business organization recognized by law as a separate legal entity

How do investors become owners of a corporation?

• By being elected as CEO

• By buying common or preferred stock

• By founding the corporation

• By applying for a job in the corporation

What is the role of the board of directors in a corporation?

• To handle customer service inquiries

• To design new products

• To run the company on a day-to-day basis

• To oversee the strategy and long-term goals of the corporation

What is the biggest advantage of forming a corporation?

• Unlimited liability

• High startup costs

• Limited liability

• Complex regulations

What allows corporations to be more efficient in manufacturing and transport?

• Limited partnerships

• Economies of scale

• Partnerships

• Sole proprietorship

How can corporations raise capital quickly?

• By taking out personal loans

• By issuing bonds

• By decreasing their stock value

• By reducing their workforce

What is a disadvantage of corporations?

• They are easy to start up

• They have limited liability

• They offer unlimited personal liability

• They are expensive to start up

What happened to Steve Jobs in the 1990s related to Apple Computers?

• He founded the company

• He was promoted to CEO

• He bought the company

• He was fired by the board of directors

Why are the profits of a corporation taxed twice?

• Because they are considered a non-profit organization

• Because they are exempt from federal taxes

• Because the corporation and the shareholders are taxed separately

• Because they are considered a sole proprietorship

What is a stock?

• A type of bond

• A legal document for starting a corporation

• A certificate of debt

• A certificate of ownership in a corporation