learning objective 1 5 1 in an llc the business not the owners are responsible for t 4311654
Learning Objective 1-5
1) In an LLC, the business-not the owners-are responsible for the corporation's debts.
2) Corporations are subject to stricter regulation than other forms of businesses, so it is more difficult for corporations to raise large amounts of investment capital.
3) The most an investor in a corporation can lose-in the event the business fails-is limited to the amount the party has invested.
4) Stockholders of a corporation each have “mutual agency,” meaning they are authorized to carry out transactions on behalf of the corporation.
5) The first step in incorporation is to:
A) have the board of directors designate a president.
B) agree to a set of bylaws.
C) issue the first shares of stock.
D) obtain a charter from the state.
6) In an LLC, who is responsible for the company's debts?
A) The company itself
B) The partners
C) The individual investors
D) The proprietor
7) A corporation is a legal entity entirely distinct from its:
A) proprietors.
B) vendors.
C) customers.
D) stockholders.
8) A corporation has all of the following EXCEPT:
A) a state charter.
B) a board of directors.
C) unlimited liability for shareholders.
D) shares of stock.
9) A financial examination of a company's financial records is called a(n):
A) audit.
B) criminal investigation.
C) financial analysis.
D) appraisal.
10) If a corporation cannot pay its debts, the creditors may make claims against the:
A) assets of the shareholders.
B) assets of the company only.
C) assets of the board of directors.
D) employees of the company.
11) The owner(s) of a business will most likely face “double taxation” if their business is organized as a(n):
A) corporation.
B) LLC.
C) partnership.
D) proprietorship.
12) The ability to raise large amounts of capital is a key characteristic of a:
A) partnership.
B) not-for-profit.
C) corporation.
D) proprietorship.
13) The separation between the owners and the managers of a business is most distinct in a(n):
A) corporation.
B) LLP.
C) partnership.
D) proprietorship.
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