Mars, Inc. is a closely held corporation. Which of the following is NOT true? It

Question

Mars, Inc. is a closely held corporation. Which of the following is NOT true?

Its profits are subject to federal and state corporate profit tax.

Its owners have limited liability.

It has a perpetual existence in accordance with the laws of the state in which it is incorporated.

Its stock can be bought and sold on a public stock exchange.

4 points   

QUESTION 22

If a partnership is sued for negligence:

only the partnership assets can be used to satisfy any judgment resulting from the suit.

each limited partner can be personally liable for any judgment resulting from the suit.

only one partner can be held liable for any judgment resulting from the suit.

each general partner can be personally liable for any judgment resulting from the suit.

4 points   

QUESTION 23

Which of the following securities represents debt issued by a corporation like Hewlett Packard, Inc.?

employee compensation

bonds

preferred stock

common stock

4 points   

QUESTION 24

In a limited partnership, a limited partner has:

limited personal liability.

an equal right in managing the partnership.

the right to the same share of profits as a general partner.

a legal right to compete with the partnership for personal gain.

4 points   

QUESTION 25

The shareholders of McDonald's corporation:

are speculators who bought McDonald’s stock because they expected its price to rise.

are McDonald’s legal owners.

are personally liable for McDonald’s debts or negligence torts.

are McDonald’s legal creditors.

Its profits are subject to federal and state corporate profit tax.

Its owners have limited liability.

It has a perpetual existence in accordance with the laws of the state in which it is incorporated.

Its stock can be bought and sold on a public stock exchange.

Explanation / Answer

Answer 21

d. Its stock can be bought and sold on a public stock exchange.

Explanation : closely held corporation is generally controlled & managed by an individuals or a family or a group of people thus its stocks are not for public offereing on a public stock Exchange.

Answer 22

d.)  each general partner can be personally liable for any judgment resulting from the suit.

Explanation : Since in genernal partnership liability of all the prtners are unlimited , thus all partners are personally liable for debts or court judgment result.

Answer 23

b,)  bonds

Explantion : Bonds are Interest paying debt securities issued by corporation whoes interest payment dates and maturity is fixed .

Answer 24

a.) limited personal liability.

Explanation : In a limited partnership, a limited partner is not personally liable for anyamount beyond capital invested by him ie he has limited personal liability.

Answer 25

b) are McDonald’s legal owners.

Explanation : Shareholders  are ulimate & legal owners of a company or a corporation. The ownership percentage is decided by the numbers of shares hold by each shareholder.

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