<p> Multiple Choice Questions 1. A sole proprietorship: (a) Must file a tax return (b) Requires no formal steps for its creation (c) Must register with the secretary of state (d) May sell stock (e) Provides limited liability to the owner Answer: B.</p><p>2. CPA QUESTION Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has: (a) Both common and preferred stockholders (b) A partnership as a stockholder (c) Seventy-five or fewer stockholders (d) The consent of a majority of the stockholders Answer: C. CPA Examination, May 1992, #15. Strategy: Review the list of requirements for an S corporation. (See the “Result” at the end of this section.)</p><p>3. A limited liability company: (a) Is regulated by a well-established body of law (b) Pays taxes on its income (c) May issue stock options (d) Must register with state authorities (e) Protects the owners from personal liability for their own misdeeds Answer: D.</p><p>4. CPA QUESTION A joint venture is a(n): (a) Association limited to no more than two persons in business for profit (b) Enterprise of numerous co-owners in a nonprofit undertaking (c) Corporate enterprise for a single undertaking of limited duration (d) Association of persons engaged as co-owners in a single undertaking for profit Answer: D. CPA Examination, November 1989, #4.</p><p>5. A limited liability partnership: (a) Has ownership interests that cannot be transferred (b) Protects the partners from liability for the debts of the partnership (c) Must pay taxes on its income (d) Requires no formal steps for its creation (e) Permits a limited number of partners Answer: B. </p>