1. Chris has a great idea for a new company and approached Daryl about possibly partnering in the company. Daryl thinks the idea is great, but does not have time to be a part of the management team. While Chris seems knowledgeable about the business, Daryl is also worried about becoming personally liable if the company fails. What type of business structure would be best for Daryl and Chris to agree on?
a. General Partnership.
b. Limited Partnership.
c. Sole Proprietorship.
d. Corporation.
2. The Winston family owns a chain of restaurants in California by partnership. Due to liability concerns, they want to be protected from unlimited liability but still maintain discretion in the operations. They do not want to make their share of stock open to the public so they can maintain management control. What type of corporation would be best for them?
a. Close corporation.
b. Publicly held corporation.
c. There is not a type of corporation that would provide these benefits.
d. Professional corporation.
3. GTS, Inc. has developed a new product and would like to build a new facility to run the production. They need money to do this and are looking for a source of debt financing. Which of the following would meet their needs?
a. Issuing Bonds.
b. Common Stock.
c. Preferred Stock.
d. Cumulative Stock.
4. Clay, Devin and Elliott decide to go into business together and open a bowling alley in their hometown. They have invested $100,000 each and all 3 want to share in the management decisions, however they do not want to have unlimited liability. Which business structure would be best for them?
a. General Partnership.
b. Public Corporation.
c. Limited Partnership.
d. Limited Liability Company.
5. Jordan has just purchased 50 shares of stock in Kolman, Inc. The stock gives Jordan the right to vote at stockholder's meetings but does not guarantee a dividend and does not have priority in receiving dividends if they are paid. What type of stock does Jordan hold?
a. Preferred Cumulative Stock.
b. Common Stock.
c. Preferred Stock.
d. Bonds.