Chapter 7 Bus Ownership

Which one is NOT an Advantages of Buying an Existing Business

• The existing business already has the necessary equipment, suppliers, and procedures in place.

• Capital is required

• Financial arrangements can be easier.

• There are prior records of revenues, expenses, and profits.

Which one is NOT a Disadvantages of Buying an Existing Business

• Many businesses are for sale because they have been in business too long.

• Serious problems may be inherited.

• Capital is required.

• There may be staff problems.

Which is NOT a Step in Buying a Business

• Meet with business sellers or brokers to investigate specific opportunities.

• Visit outside of business hours to avoid interruption of the business

• Ask for important information in written form.

• Determine how you would finance the business.

Which of the following is not included in a partnership agreement?

• Names of the partners

  
  

• How dividends are to be distributed

• Conditions under which the partnership can be dissolved

• Rights of each partner to review accounting documents

Many companies establish themselves as S corporations...

• so that individual shareholders do not have to pay taxes on the profits they earn.

• to avoid strict government regulation.

  
  

• to avoid tedious recordkeeping procedures.

• because they lose money in their early years.

An advantage of a partnership is that

• it faces very little government regulation.

  
  

• it has the legal rights of a person.

• the personal assets of partners may not be taken to pay off debts of the partnership.

• it is easy to raise capital.

Owners of a limited liability company are known as

• shareholders

• directors

• members

• officers

Unlike regular corporations, an S corporation is not taxed as a business.

• true

• false

A business that has the legal rights of a person and may have many owners is a

• corporation

• sole proprietorship

• partnership

• dual partnership

A business is a sole proprietorship if it

• has fewer than ten employees

• has the legal rights of a person

• is owned exclusively by one person

• all of these