Title: Types of Corporations
Course: Demo 1

Q: If the owners of a business were to die, which of the following entities would continue to exist:
- a corporation
- a partnership
- a sole proprietorship
A: a corporation; a partnership

Q: A ________ is a legal entity completely separate from the entities who own it.
- sole proprietorship
- limited liability partnership
- corporation
A: corporation

Q: A corporation is legally governed by:
- majority stockholders
- primary stakeholders
- its board
A: its board

Q: When a corporation makes payments to its shareholders these are called:
- stock buy-back
- stock benefits
- dividends
A: dividends

Q: If a corporation offers 1,000 shares of stock and you buy 300 shares:
- you are legally entitled to a seat on the company’s board
- you are liable for any debts of the corporation or lawsuits against the corporation
- you are a shareholder
A: you are a shareholder

Q: You purchase 10 shares of stock in a company at a price of $1,000 per share, You shares represent 10% ownership of the company. One year later the company is sued by a competitor. It spends significant resources defending itself in the lawsuit. The company loses the lawsuit and is ordered to pay $2,000,000 in damages. In addition, the company has $1,300,000 in outstanding debt. Unable to pay the judgment and its creditors, the company closes its doors and files for bankruptcy. How much money do you stand to lose?
- $330,000
- $340,000
- $10,000
A: $10,000

Q: Corporations whose stock can be sold to the general public are, by definition:
- S corporations
- B corporations
- public corporations
A: public corporations

Q: The disadvantages to starting and running a corporation include:
- cost
- double taxation
- limited liability
A: cost; double taxation

Q: Which of the following entities are subject to limited liability?
- partnerships
- sole proprietorships
- corporations
A: corporations

Q: Which of the following entities are subject to double taxation?
- partnerships
- sole proprietorships
- corporations
A: corporations

Q: Which of the following entities provide neither protection or limitations to personal liability nor double taxation?
- S corporations
- limited liability companies
- sole proprietorships
A: S corporations; limited liability companies; sole proprietorships

Q: You are forming a new company that delivers food to students across college campuses. You have a number of partners, but your primary goals are to avoid personal liability and double taxation. You want to pay each of the partners based on the percentage of the company that they own. You could accomplish this by forming a(n):
- C corporation
- partnership
- S corporation
A: S corporation

Q: You are forming a new company that delivers food to residents across college campuses. You have a number of partners, but your primary goals are to avoid personal liability and double taxation. You want to pay each of the partners based on their contribution to the success of the company, which is NOT equal to their percentage ownership. You could accomplish this by forming a(n):
- S corporation
- C corporation
- limited liability company
A: limited liability company

Q: You form an LLC to protect yourself from personal liability. The business fails and there are debts remaining. Under which of the following circumstances would you be personally liable for business debts.
- You signed documents personally securing the debts of the business
- You engaged in illegal activities that resulted in the failure of the business and/or its debts
- You did not have sufficient experience to make good decisions on behalf of the business
A: You signed documents personally securing the debts of the business; You engaged in illegal activities that resulted in the failure of the business and/or its debts

Q: Which of the following entities can pursue a broader mission that may sometimes be at odds with maximizing profits for shareholders:
- S corporation
- limited liability company
- B corporation
A: B corporation

Q: A ________ seeks to provide a return to shareholders while pursuing other goals that benefit community or society.
- C corporation
- limited liability company
- B corporation
A: B corporation