Which of the following statements about the corporate form of business organization is incorrect?

Which of the following statements about the corporate form of business organization is incorrect?
     The corporation is the easiest form of business organization to establish.
     None of these statements are incorrect
     One of the most important features of the corporate form of business organization is that stockholders have limited liability.
     In the United States, corporations generate a significantly greater percentage of total annual sales than either partnerships or proprietorships.
     Corporations generally are larger than either partnerships or proprietorships.

Answer
The corporation is the easiest form of business organization to establish.

Question
Which of the following statements concerning "agency problems" is mostcorrect?
     Agency problems probably would not exist if the important decisions of a firm were made by persons who have no vested interests, such as ownership, in the firm.
     One of the best means to control agency problems is to require the managers and other important decision makers of the firm to also be owners of the firm.
     Regardless of economic conditions, if a firm's stock price falls during the year, this indicates that the firm's managers must not be acting in the best interests of the shareholders.
     One method of controlling agency problems is to engage in the taking of "poison pills."
     None of these are correct statements.

Answer
One of the best means to control agency problems is to require the managers and other important decision makers of the firm to also be owners of the firm.

Question
In the United States, the form of business that generates most of the sales and profits is the ____, and the most common form of business is the ____.
     proprietorship; corporation
     corporation; partnership
     proprietorship; partnership
     corporation; proprietorship
     corporation; corporation

Answer
 corporation; proprietorship

Question
Compared to corporations, what is the primary disadvantage of partnerships as forms of business organizations?
     Partnerships generally are much easier to form (start up) than corporations.
     The tax rates applied to partnership are higher than the tax rates applied to corporations.
     Partnerships have unlimited lives whereas corporations do not.
     The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.
     Any dividends paid to the owners of a partnership business are taxed twice, once at the partnership level and once at the personal, or individual level.

Answer
The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.

Question
Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the primary difference between the proprietorship and partnership business forms is that
     the annual growth rate of a proprietorship is limited by law, whereas the growth rate of a partnership is always potentially unlimited.
     there are many more businesses that are formed as partnerships than proprietorships.
     a partnership generally is easier to form than a proprietorship.
     a partnership has more owners than a proprietorship.
     the combined personal liability associated with a partnership is significantly less than the combined personal liability associated with a proprietorship.

Answer
 a partnership has more owners than a proprietorship.

Question
Which of the following statements is correct?
     Procedures which govern changes in the bylaws of the corporation are contained in the corporate charter.
     The corporate bylaws are the set of rules drawn up by the state to enable managers to run the firm in accordance with state laws.
     Although most companies design a charter, only the bylaws are legally required to be filed with the secretary of state in order for a corporation to be in official existence.
     Procedures for electing corporate directors are contained in bylaws while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.

Answer
 Procedures for electing corporate directors are contained in bylaws while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.


Question
Which of the following statements is correct?
     Partnerships have difficulty attracting capital in part because of the other disadvantages of the partnership form of business, including impermanence of the organization.
     In a partnership, liability for other partners' misdeeds includes but is limited to the amount a particular partner has invested in the business.
     A fast growth company would be more likely to set up a partnership for its business organization than would a slow-growth company.
     A major disadvantage of a partnership as a form of business organization is the high cost and practical difficulty of its formation.
     Partnerships must be formed according to specific rules which include the filing of a formal written agreement with state authorities where the partnership does business.

Answer
Partnerships have difficulty attracting capital in part because of the other disadvantages of the partnership form of business, including impermanence of the organization.

Question
Which of the following are reasons for a firm to operate as a multinational corporation?
     To seek Production Efficiency
     To Seek New Markets
     These are all valid reasons
     To Avoid Political and Regulatory Hurdles
     To Seek Raw Materials

Answer
These are all valid reasons

Question
Which of the following is a factor that a multinational corporation must contend with?
     Political Risk
     These are all accurate factors
     Cultural Differences
     Exchange Rates
     Economic and Legal Ramifications
     Language Differences
 Answer
These are all accurate factors