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TEST 3 REVIEW Chapters 25 – 27, 31, 32. MULTIPLE CHOICE WWhich of the following is not subject to double taxation? a)S corporation b)Corporation c)LLC.

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Presentation on theme: "TEST 3 REVIEW Chapters 25 – 27, 31, 32. MULTIPLE CHOICE WWhich of the following is not subject to double taxation? a)S corporation b)Corporation c)LLC."— Presentation transcript:

1 TEST 3 REVIEW Chapters 25 – 27, 31, 32

2 MULTIPLE CHOICE WWhich of the following is not subject to double taxation? a)S corporation b)Corporation c)LLC d)All of the above

3 MULTIPLE CHOICE WWhich of the following is not a director duty? a)deciding salary for officers b)determine basic policy c)deemed legally responsible for the corporation due to negligent or willful acts that cause a loss d)delegate tasks to officers that keep the company running smoothly

4 MULTIPLE CHOICE  What document contains the basic facts of the ‘would be’ corporation? a)articles of incorporation b)corporate charter c)bylaws d)shares of stock

5 MULTIPLE CHOICE  A partner who invests more capital, brings in more business, or works harder and longer than his or her associates is entitled to a)a larger percentage of the business b)a larger share of the profits c)extra pay d)no extra compensation unless all partners agree

6 MULTIPLE CHOICE  A corporation has the power a)of perpetual succession b)to make its own bylaws c)to use any legal means to conduct authorized business d)all of these

7 MULTIPLE CHOICE  Shareholders do not have the right to a)inspect corporate books of account b)possess any corporate property c)transfer shares d)shareholders have the right to all of these

8 MULTIPLE CHOICE  The bankruptcy law that involves liquidation of nonexempt property is a)Chapter 7 b)Chapter 11 c)Chapter 12 d)Chapter 13

9 MULTIPLE CHOICE  The last to be paid from the proceeds of liquidation would be a)administrative expenses b)certain unpaid taxes c)secured creditors d)stockholders

10 MULTIPLE CHOICE  What enables shareholders to protect their proportionate voting power and interest in past and future profits? a)Proxy b)Preemptive Right c)Minority Position d)Cumulative Voting

11 MULTIPLE CHOICE  A partnership agreement does NOT need to be in writing unless required by which item below? a)Stare Decisis b)Preemptive Right c)Statute of Fraud d)Federal Trade Commission

12 SHORT ANSWER  What is double taxation? When a corporation is taxed on corporate income and corporate shareholder owners taxed on dividends

13 SHORT ANSWER  What is a dividend? Distributions of corporate earnings

14 SHORT ANSWER  What is one advantage and one disadvantage to corporate form? ADV – Perpetual life, limited liability, easy transfer of owner interest DISADV – double taxation, cost to create, extensive regulation

15 SHORT ANSWER  What is a Subchapter S Corporation? A tax status (not a corporate form), exempt from double taxation

16 SHORT ANSWER  Leonardo, Kevin, and Lonny operate a snow removal business during the winter months. Leonardo plows snow for their clients. Kevin clears snow from sidewalks and also drives the company’s salt truck. Lonny spends five hours a week keeping the partnership’s records. Who should receive the largest share of profits? Explain your answer.

17 SHORT ANSWER  Dr. Shasheen Rathi recently converted Rathi Vision Associates to an LLP form of business. Her partners include three other optometrists and one ophthalmologist. Dr. Stanislaw is a new partner who has just performed a laser vision correction procedure on Alan Wildman’s right eye. Alan claims his cornea was scratched during the surgery, and he is suing Rathi’s for malpractice. Can Dr. Rathi be held liable in this malpractice suit? Explain

18 SHORT ANSWER  The board of directors for the GreenTree Corporation decided to sell 1,000 new shares of stock to generate additional capital. The stock was sold to outside investors. Andres, an original shareholder, protested this decision. Is Andres acting within his rights as a shareholder? Explain your answer.


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