1) The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is

(a) the corporation.

(b)not known.

(c)the partnership.

(d) the sole proprietorship.

2) Stockholders of a corporation directly elect

(a)the president of the corporation.

(b)all of the employees of the corporation.

(c)the board of directors.

(d) the treasurer of the corporation.

3) A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

(a) corporation is subject to more federal and state government regulations.

(b)corporation is an accounting economic entity.

(c)corporation is organized for the purpose of making a profit.

(d)corporations temporary accounts are closed at the end of the accounting period.

4) The concept of an "artificial being" refers to which form of business organization?

(a)Partnership

(b)Sole proprietorship

(c)Corporation

(d)Limited partnership

5) The two ways that a corporation can be classified by ownership are

(a)publicly held and privately held.

(b)inside and outside.

(c)stock and non-stock.

(d)majority and minority.

6) Which of the following is not true of a corporation?

(a)The acts of its owners bind the corporation.

(b)It may sue and be sued.

(c)It may buy, own, and sell property.

(d)It may enter into binding legal contracts in its own name.

7) Which of the following statements reflects the transferability of ownership rights in a corporation?

(a)A stockholder may dispose of part or all of his shares.

(b)A stockholder must obtain permission from the board of directors before selling shares.

(c)If a stockholder decides to transfer ownership, he must transfer all of his shares.

(d) A stockholder must obtain permission from at least three other stockholders before selling shares.

8) A typical organization chart showing delegation of authority would show

(a)the board of directors delegating to stockholders.

(b)stockholders delegating to the board of directors.

(c)the chief executive officer delegating to the board of directors.

(d)the controller delegating to the chief executive officer.

9) The ability of a corporation to obtain capital is

(a)restricted because of the limited life of the corporation.

(b)less than a partnership.

(c)about the same as a partnership.

(d)enhanced because of limited liability and ease of share transferability

10) Which of the following statements concerning taxation is accurate?

(a)Corporations pay federal and state income taxes.

(b)Corporations pay federal income taxes but not state income taxes.

(c)Only the owners must pay taxes on corporate income.

(d)Partnerships pay state income taxes but not federal income taxes.