1.) The basic rules governing how a corporation is organized and how it conducts its business are known as _____.

	a.	certificates of organization
	b.	corporate bylaws
	c.	prospectuses
	d.	articles of incorporation

2.) A _____ is a legal business entity that offers limited liability to all of its owners.

	a.	Limited partnership
	b.	General partnership
	c.	Sole proprietorship
	d.	C corporation

3.) How is the formation of limited liability companies (LLCs) similar to the formation of corporations?

	a.	Similar to corporations, LLCs do not have to pay filing fees for incorporating the articles of organization.
	b.	Owners of most LLC are also called stockholders, just like in corporations.
	c.	Organizers of most LLCs draft an operating agreement, which is similar to the bylaws of a corporation.
	d.	As with corporations, LLCs are not required to file documents.

4.) Limited partnerships and limited liability partnerships are just two names for exactly the same type of business organization.

True

False

5.) Liza owns 1,000 shares of common stock in Mergato Inc. As a stockholder in the company, she may vote in the election of Mergatos board of directors.

True

False

6.) Rob is an engineer who works in nuclear power plants. He is considering starting his own engineering company. Due to the nature of work at his new company, Rob wants to avoid unlimited liability. Which of the following forms of business ownership is most suitable for Rob?

	a.	A sole trader
	b.	A corporation
	c.	A partnership
	d.	A sole proprietorship

7.) John is a partner in Mike's Motorcycles Inc., which has been a partnership for a decade. Recently, the partners agreed to change the structure of the business to a C corporation. As a result, John will now be a _____.

	a.	limited liability partner
	b.	shareholder
	c.	board member
	d.	limited partner

8.) States cannot impose separate income taxes on C corporations because the dividends paid to stockholders are taxed as personal income.

True

False

9.) Which of the following is an advantage of sole proprietorship?

	a.	Retention of control
	b.	Ease of pooling financial resources
	c.	Ability to attract talented employees
	d.	Limited liability

10.) A key advantage of a sole proprietorship is that:

	a.	it is easy and inexpensive to form this type of business.
	b.	the business has perpetual life.
	c.	the owner has limited liability for the debts incurred.
	d.	it is very easy to raise financial capital for this type of business.