hich of the following statements is true of general partners in a limited partnership?

1-They receive a larger share of profits after the limited partners have received their initial investment back.

2-They pay taxes when submitting the partnership tax return to the Internal Revenue Service.

3-They do not accept the risk of loss associated with the business.

4-They have limited liability for the debts of the business.

5-They invest money in the business but do not participate in its management.

Mary sells vacuum cleaners door-to-door for a company called Quick Clean, Inc. She works on a contract basis and is not an employee of this company. Mary is a

Multiple Choice

sole proprietor.

general partner.

corporate liaison.

limited partner.

cooperator.

GL Inc., a firm facing the threat of bankruptcy, did not want to be acquired by Red Phoenix Inc. because it would make drastic changes to the business, laying off employees and changing the nature of its products and processes. Thus, the management of GL Inc. approached Fortium Inc., which was willing to acquire GL Inc. and maintain the company as is. In this scenario, Fortium Inc. is referred to as a

Multiple Choice

proxy investor.

white knight.

shark repellant.

preemptive investor.

poison pill

jennifer, Liza, and Tami decided to start a freelance publishing business together. They have been working separately as independent consultants for several years, but they decided they would benefit greatly from joining forces and starting an S corporation. All of the following are benefits of starting this type of business EXCEPT

the simple method of taxation.

the limited liability of shareholders.

the ability to shift income and appreciation to others.

the ease of formation and operation.

perpetual life.

Huechi Inc., a mobile phone manufacturer, purchases its direct competitor, OnePhone Inc., by buying most of its stocks. In this scenario, Huechi is involved in a(n)

Multiple Choice

franchise.

leveraged buyout.

acquisition.

vertical merger.

equity swap.

andy Emporium is a legal entity whose assets and liabilities are separate from its owners. It can receive, own, and transfer property, enter into contracts with individuals or other legal entities, and sue and be sued in court. What type of business is Candy Emporium?

Multiple Choice

cartel

general partnership

proprietorship

corporation

limited partnership

ian and Greg want to acquire Custom Craft, a wood furniture business. However, they don't have the funds, so they borrow money from the bank, using Custom Craft's assets to guarantee repayment of the loan. What kind of business transaction is this?

Multiple Choice

a poison pill

a horizontal merger

a vertical merger

a leveraged buyout

a conglomerate merger

Which of the following is an advantage of mergers?

Multiple Choice

Mergers boost employee morale and productivity.

Mergers help companies meet foreign competition.

Mergers prevent companies from taking on heavy debt burdens.

Mergers improve the quality of the companies' products.

Mergers allow managers to focus on managing effectively and profitably.

hen Russell turned 21-years-old, his father gave him a management position at the family's hardware store. He explained to Russell that his family had owned and operated this store for five generations, and that someday, he would be able to pass it on to his children. He made Russell promise that he would never sell the company or any of its stock or hire managers from outside the family. This business is a

Multiple Choice

sole proprietorship.

limited partnership.

public corporation.

cooperative.

private corporation.