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For a would-be entrepreneur, selecting the proper form of business organization is a very important first step in the process. After some consideration and an assessment of your skills and education, you have decided to start a medical billing service that will provide services to providers in the local geographical area. Ideally, you would like to service physicians, dentists and hospitals.

Determine which of the three forms of business organization (sole proprietorship, partnership or corporation) would be the most appropriate for your new business. Why did you select the form of business organization that you chose? Identify at least three things that should be taken into consideration when making this selection. (4 points)

Based on the form of business organization that you selected, answer the following questions:

a. How easy or difficult is it to set up this form of business organization? (4 points)

b. What type of liability do you have in this form of business organization? (4 points)

c. What tax implications do you need to consider for this form of business organization? (4 points)

d. What will happen to the business if something happens to you, the business owner? (4 points)

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Lelia Lubowitz
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11 Oct 2018

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Investment and financing decisions, which may beshort-term or long-term decisions are best describedas:

financial decision making.

economic decision making.

accounting decision making.

Mutual funds, pension funds, investment dealers andinsurance companies are best described as examples of:

corporate finance.

market intermediaries.

financial intermediaries.

Farmers and Merchants Bank lends money to Ruth topurchase a car from Steven Toyota. Ruth is going to insure the carwith Allstate Insurance. Which party is best described as thecreditor?

Ruth

Steven Toyota

Allstate Insurance

Farmers and Merchants Bank

Which of the following would not be described as adebenture?

An unsecured loan

A loan secured by collateral

A loan secured by the “full faith and credit” of theissuer

Morgan Stanley was the investment banking firm that tookFacebook from being a closely held company to issuing stock to thepublic for the first time. Which of the following terms mostclosely describes this?

money market security.

issuing commercial paper.

initial public offering (IPO).

debt security backed by the general credit of theissuer.

Which of the following transactions does not take placein the primary market? An investor:

buying a newly issued municipal bond.

buying shares of an initial publicoffering.

selling one hundred shares of stock through a stockbroker.

buying a U.S. Treasury bill through the governmentauction.

The majority of home purchases in the U.S. are securedwith a mortgage. A mortgage is:

an unsecured loan.

an equity investment in the property.

a debt obligation secured by a specificproperty.

Which form of business would most likely describe thefollowing, a college student other students, a retired woman whobabysits children, a teenager who mows lawns, and a partyclown?

Partnership

Corporation

Sole proprietorship

Limited liability company

Flow-through taxation is a characteristic for all butthe following forms of business?

Partnership

Corporation

Sole proprietorship

Limited liability company

Your sister wants to start a tee shirt business on e-Baywith you to help pay for college tuition. All of the following areadvantages to partnerships that you should both consider, except____________?

Easy to form

Access to capital

Business income is taxed once, at the individualpartner’s level

Which of the following takes into account takes intoaccount the opportunity cost of funds?

Net profit

Economic profit

Accounting profit

When we talk about capital structure, this refersto:

the cash, inventory, and accountsreceivable.

mix of debt and equity to finance anenterprise.

the investment in plant, property andequipment.

The uncertainty associated with the use of debt tofinance a business enterprise is best described as:

financial risk.

business risk.

operating risk.

The mix of debt and equity that is used to finance abusiness enterprise is best described as theenterprise’s:

assets.

working capital.

capital structure.

capital expenditures

Generally accepted accounting principles (GAAP) are bestdescribed as a(n):

organization that establishes the accounting principlesfor U.S. financial reporting.

accounting standards promulgated by the InternationalAccounting Standards Board (IASB.)

set of basic principles and conventions that are appliedin the preparation of financial statements.

organization that establishes the accounting principlesfor business entities in the European EconomicCommunity.

Which reporting convention requires recording revenueand expenses when the transaction occurs, regardless of when cashchanges hands?

Cost basis

Cash basis

Accrual basis

The summary of the company’s performance over a periodof time, typically a fiscal quarter or fiscal year

Balance sheet

Statement of stockholder’s equity

Income statement

Statement of cash flows

_______ is the cash flow from the day-to-day operationsof the business; the result of subtracting the increase in newworking capital from traditional cash flow.

Cash flow from investing

Cash flow from financing

Simple cash flow

Cash flow from operations

The debt ratio is classified as which type ofratio?

Owner

Liquidity

Efficiency

Productivity

Financial Leverage

Inventory turnover, accountsreceivable turnover, fixed asset turnover, and total asset turnoverare all classified as which type of ratio?

Owner

Liquidity

Efficiency

Productivity

Financial Leverage

ABC Company attempts tomanage its earnings by extending the useful life of all of itsequipment. Which of the following will not be an outcome of thischoice by management?

Income will be higher than it would have been underprior accounting methods.

Equipment values will be higher than they would havebeen without the change.

Depreciation expense will be lower than it would havebeen under prior accounting methods.

Depreciation expense will be higher than it would havebeen under prior accounting methods.

It is important for a companyto know the level of sales at which it covers all its variable andfixed operating costs. This level of sales is best described asthe:

gross profit margin.

contribution margin.

operating break even.

operating profit margin.

The minimum return thatinvestors expect to earn on the investment in stock is bestdescribed as:

growth rate.

risk premium.

capital gains yield.

required rate of return

If a company returns more than the required rate ofreturn on a stock, what happens to the value of thatstock?

The stock price falls.

The stock price rises.

The stock price stays the same.

When market rates are greaterthan the dividend rate, preferred shares will tradeat:

par.

a discount.

a premium.

home / study / business / accounting / accounting questions andanswers / Carol Is A Single Mother Who Owns A Wholesale Auto PartsDistributorship. The Business Is Organized ... Question: Carol is asingle mother who owns a wholesale auto parts distributorship. Thebusiness is organiz... Carol is a single mother who owns awholesale auto parts distributorship. The business is organized asa sole proprietorship. Her business has advanced, and she can nolonger devote the time necessary to do her own tax return. Becauseshe always has prepared her own return, Carol is familiar with mosttax rules applicable to her business and personal affairs. However,she has come to you for advice with respect to a number of itemsshe paid during the current year. You are to determine whether shecan take a deduction for the expenditures in the current year. A,Carol purchased a small building on March 2 to use as a warehousefor her auto parts inventory. To purchase the building, sheborrowed $180,000 on a 30-year loan and paid $20,000 in additionalcash. Carol also incurred $3,200 in legal and other fees topurchase the building. The bank charged her $3,600 in points(prepaid interest) to obtain the loan. After acquiring thebuilding, Carol spent an additional $25,000 to renovate it for useas a warehouse. The $25,000 included $8,000 for painting. B, Carolhad her office building painted at a cost of $14,000 and paid$6,000 to have it landscaped. She paid for the building renovationin part a and the office building work by borrowing $60,000 onApril 1 at 7% interest. (See part f for details of the interestpayments.) C, On April 1, Carol prepaid a 1-year fire insurancepolicy on her 2 buildings. The policy cost $1,500, and the insurerrequired the prepayment. On September 1, Carol prepaid a $5,000,2-year maintenance contract on the buildings. D, Carol started aself-insured medical reimbursement plan for her employees thisyear. Based on actuarial assumptions, she deposited $13,500 in afund to pay employees’ medical expenses. Actual payments from thefund totaled $11,200. E, Carol purchased a new automobile costing$32,000. She can document that her business use of the automobilecame to 90% and that her out-of-pocket operating costs totaled$3,600. F, Carol paid the following interest on business-relatedloans: Warehouse $15,300 Office building 4,000 Renovation loan5,400 The renovation loan was for $60,000. Because she spent only$45,000 renovating the new building and painting and landscapingthe old one, she used the additional $15,000 to purchase city ofSeattle bonds with a yield of 6%. G, Carol became active inpolitics and contributed $1,000 to the presidential campaign of anindependent candidate. She made the contribution because shebelieved that, if elected, the candidate would institute policiesbeneficial to her business. The candidate lost the election andimmediately started a grassroots lobbying organization. The purposeof the organization is to keep track of elected officials’ campaignpromises and report to the public when they vote contrary to theirstated campaign promises. Carol paid $1,600 in dues to join thelobbying organization. H, Carol’s oldest son began college duringthe current year. She paid his tuition and living expenses, a totalof $13,300, out of the company’s checking account. During thesummer, her son worked for the business, and Carol paid him $4,300,the same amount she paid other college students working during thesummer. Because she consults her son from time to time on theoperation of the business, she thinks that at least some of the$13,300 should be deductible. I, Carol has always itemized herdeductions. This year, her mother and father retired and could nolonger afford the mortgage interest and property taxes on theirhome. Rather than have them sell the house, Carol made the paymentsfor them. They received a statement from their bank indicating thata total of $8,125 in mortgage interest and taxes were paid in thecurrent year. Carol knows that mortgage interest and property taxesare deductible as itemized deductions and would like to add them toher personal interest and property tax payments. J, Because of thesuccess of her business, Carol has received many offers to investin various business ventures. One offer was to establish a chain ofnursing homes in Florida. Carol spent two weeks in Floridaevaluating the prospects of the proposed venture and incurred costsof $2,100. After careful consideration, she decided the venture wastoo risky and decided not to expand into the health-carebusiness.

Discussion: you will assume the role of an entrepreneur. Youwill create a fictional organization and consider some costingconcepts as you create it.

First, compose a full paragraph that describes the organization.Be sure to include the name of your company, the product (orproducts) or services that it provides, and who your intendedcustomer base would be. Think strategically about what you canoffer that a customer base would see as valuable, and what basicbusiness model would help you to be most profitable.

1.Once you have outlined the company and its goals, pleaseconsider and answer the following questions:

2.Identify at least one fixed and one variable cost you willhave in producing your product(s) or service(s).

3.Identify at least one potential sunk cost.

4.Identify a potential relevant cost decision you would have tomake and explain which aspects of the decision might be relevantand which ones would not be relevant.

5. Explain how opportunity costs could apply to one or more ofyour products and/or services.

6. Identify at least one outsourcing decision in which you would“buy” and at least one outsourcing decision in which you would“make." Keep in mind these can be not only production issues butissues related to how your business is structured. Explain theanalysis you would use in arriving at an item you would “buy” andthe analysis you would use in arriving at an item you would“make.”

Your initial posting should be between 300 to 400 words and usea minimum of three sources (one of which may be the textbook). Citeyour sources and references using APA format (a tutorial isprovided in the Class Tutorials Section of the course).

You will use two items to complete Part II. First, go back andreview the company that you created for the Discussion. Thinkstrategically about the company, its products and services, andissues related to cost. Then, review the case study on Boeing(http://web.mit.edu/ctpid/lara/pdfs/abccasestudy.pdf) to understandhow activity-based costing and activity-based management can impactmanagerial decisions within firms. Once you have completed thesetwo activities, respond to the following questions in the spaceprovided below. You should use source materials, citations ANDreferences (in APA format) to help support your answers. Generally,3-5 sources (or more) should be used. Remember to double space youranswers as well.

Topic A (10 points) – Using the company you created in Module 2,if you were to conduct an ABCM pilot in the organization, thenwhich stakeholders would be most likely to support the project?Which stakeholders would find the project threatening orproblematic? Why?

Answer:

Topic B (10 points) – Do you believe that make-buy decisionswould be better, worse, or no different with an ABCM system inplace? Why do you reach this conclusion?

Answer:

Topic C (10 points) – Do you believe that continuous improvementefforts would be strengthened by such a system? Why or why not?

Answer:

Topic D (10 points) – Do you have enough evidence here to decidewhether you would support or oppose an ABCM initiative within yourcompany? If so, then explain. If not, then what additional data orinformation would you need?

Answer:

References: (10 points)

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