| | | Accountants must maintain working papers for one year starting on the last day of the audit. 2) Which types of business organizations are terminated upon death of the owners? | | | Corporations and partnerships, but not sole proprietorships. | | | | Sole proprietorships and partnerships, but not corporations. | | | | Sole proprietorships, partnerships, and corporations. | | | | Sole proprietorships, partnerships, and corporations continue to exist after the death of any owner. | | | | Sole proprietorships and corporations, but not partnerships. 3) [Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock. Which of the following terms describes Grow True Corporation in its attempt to buy any or all of Grassroots Corporation's voting shares | | | Pusher | | | | Incentive giver | | | | Aggressor | | | | Bully | | | | Demander 4) [Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock. The attempt of Grow True Corporation to take over Grassroots Corporation despite the objection of management and the board of Grassroots Corporation is referred to as which of the following? | | | Strategic takeover | | | | Under the table takeover | | | | Hostile takeover | | | | Surprise takeover | | | | Planned takeover 5) [Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock. In the attempt of Grow True Corporation to gain control, which of the following terms describes Grassroots Corporation? | | | Hostile corporation | | | | Target corporation | | | | Weak corporation | | | | Accessible corporation | | | | Vulnerable corporation 6) [Green Trees] Keith, the president of Grow True Corporation, a company that provides landscaping services, wanted his corporation to purchase Grassroots Corporation, another corporation providing landscaping services. The board of Grassroots Corporation, however, did not wish to sell. The board of Grow True Corporation decided to buy any or all of Grassroots Corporation's stock in order to gain control of Grassroots Corporation. The management of Grassroots Corporation and its board strongly objected to the attempt by Grow True Corporation to take over the company. Grow True Corporation offered to purchase stock held by Grassroots shareholders at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Grow True Corporation offered to give shareholders of Grassroots Corporation stock in Grow True Corporation in return for their Grassroots Corporation stock. By offering to purchase the stock of Grassroots Corporation at a price above its current market value, Grow True Corporation made a[n] ________. | | | Hostile offer | | | | Tender offer | | | | Cash purchase offer | | | | Above market offer | | | | Substantial offer 7) [Tutoring Concerns] Andr and Sasha want to go into business together and plan on offering a tutoring service to high school and college students. Andr proposes that they share control of the business and split profits equally and not bother with a written agreement. Sasha, however, is concerned about being able to pay their debts, since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Andr that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Andr that they should form a corporation to shield their personal assets. Andr, however, tells Sasha that their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would result in a tax being imposed twice. What type of arrangement did Andr propose when he suggested that they share control of the business and split profits equally, not bothering with a written agreement? | | | A joint sole proprietorship | | | | An S corporation | | | | A corporation | | | | A partnership | | | | A limited partnership 8) [Tutoring Concerns] Andr and Sasha want to go into business together and plan on offering a tutoring service to high school and college students. Andr proposes that they share control of the business and split profits equally and not bother with a written agreement. Sasha, however, is concerned about being able to pay their debts, since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Andr that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Andr that they should form a corporation to shield their personal assets. Andr, however, tells Sasha that their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would result in a tax being imposed twice. Is Andr correct in his assertion that by sharing control of the business and splitting profits equally there could be no personal liability for debts? | | | Yes, because they will be considered a partnership regardless of whether any agreement is in writing. | | | | Yes, so long as they sign no contracts by which they agree to be personally liable. | | | | Yes, because so long as they have nothing in writing, their arrangement will be considered a joint venture. | | | | Yes, he is correct so long as they do not reach an agreement in writing. | | | | No, he is incorrect. 9) [Tutoring Concerns] Andr and Sasha want to go into business together and plan on offering a tutoring service to high school and college students. Andr proposes that they share control of the business and split profits equally and not bother with a written agreement. Sasha, however, is concerned about being able to pay their debts, since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Andr that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Andr that they should form a corporation to shield their personal assets. Andr, however, tells Sasha that their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would result in a tax being imposed twice. Which of the following is true regarding Andr's assertion regarding taxes? | | | Andr is incorrect but only because the law involving taxation of corporations does not apply until there are at least 10 shareholders. | | | | Andr is correct but only because his proposal does not involve a writing and the filing of paperwork with the secretary of their state. | | | | Andr is incorrect because all businesses are taxed in the same manner. | | | | Andr is correct insofar as the corporation would be required to pay taxes on its profits, and the shareholders would also be required to pay taxes on dividends. | | | | Andr is incorrect but only because the law involving taxation of corporations does not apply until there are at least 75 shareholders. 10 ) [Tutoring Concerns] Andr and Sasha want to go into business together and plan on offering a tutoring service to high school and college students. Andr proposes that they share control of the business and split profits equally and not bother with a written agreement. Sasha, however, is concerned about being able to pay their debts, since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Andr that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Andr that they should form a corporation to shield their personal assets. Andr, however, tells Sasha that their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would result in a tax being imposed twice. Which of the following is true regarding Andr's and Sasha's quest to find the best form of business organization? | | | An unincorporated cooperative combines the tax advantages of a partnership with the limited liability of a corporation. | | | | A limited liability company combines the tax advantages of a partnership with the limited liability of a corporation. | | | | A joint venture is a type of undertaking involving joint stock which is treated as a corporation in regard to double taxation and limited liability. | | | | An S corporation provides the tax advantages of a partnership but does not avoid personal liability for shareholders. | | | | A double sole proprietorship avoids corporate double taxation and also shields assets of the owners from tort claims of third parties although creditors may reach the personal assets of the owners. | | | | | | | | | |
