Question 1

One difference between partnerships and sole proprietorships is that partnerships:

Accepted Answer

A)  Take less work to form.
B)  Are managed by an elected board of directors.
C)  Have the advantage of limited liability.
D)  Have a greater chance of long term survival due to the accountability of each partner to the other.E) A) and B)
F) B) and D)

Question 2

A horizontal merger refers to a merger between two companies that serve entirely different markets.

Accepted Answer

A) True 
 B)False

Question 3

In a limited partnership,the general partners should encourage the limited partners to take a more active role in the operations of the business.After all,the limited partner has comparable liability in the business,even though he/she may not be a partner for as long a period of time as the general partners.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following people would be most interested in participating in a business organized as a cooperative?

Accepted Answer

A)  Joe is intrigued by the idea of combining his time and resources with many other people to operate a business providing a good or service that they all will use.
B)  Joan wants to be an owner of a business and share in its profits,but has no desire to take an active role in managing the company or participating in its daily operations.
C)  Jeff wants to work for a government-owned business because he believes government ownership ensures a more equitable distribution of income and wealth.
D)  Jennifer prefers to work for a charitable organization that emphasizes helping people who are less fortunate than she is.E) A) and B)
F) None of the above

Question 5

Which of the following is normally considered a disadvantage of the corporate form of business?

Accepted Answer

A)  Unlimited liability of owners.
B)  Difficult transfer of ownership.
C)  Limited life.
D)  Double taxation of earnings.E) B) and D)
F) All of the above

Question 6

Being your own boss means:

Accepted Answer

A)  Reducing your working hours.
B)  Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business.
C)  Accepting accountability for the mistakes of the business.
D)  Having limited financial resources to throw into the business.E) All of the above
F) B) and D)

Question 7

Hole In One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf,Inc. ,one of its major competitors.Hole In One Golf Company's plans are an example of a merger.

Accepted Answer

A) True 
 B)False

Question 8

Connie is a general partner in a retail cookie store.Her personal assets are legally protected from the debts of the business.

Accepted Answer

A) True 
 B)False

Question 9

Liam owns a Far Horizons Travel Agency franchise.As a franchisee,Liam is guaranteed the right to retain all of his franchise's revenues and profits.

Accepted Answer

A) True 
 B)False

Question 10

Joe Jackson operates a sole proprietorship,but he is in poor health and may be unable to continue running the business.If Joe becomes incapacitated,his business:

Accepted Answer

A)  Automatically continues under new management as a sole proprietorship.
B)  Automatically converts into a public corporation with stock sold to interested investors.
C)  Ceases to exist unless sold or taken over by Joe's heirs.
D)  Becomes the property of the most senior employee who wishes to continue operating the firm.E) B) and C)
F) C) and D)

Question 11

A few years back,your friends who are horse fanatics inherited several acres of land that they turned into a retirement haven for racehorses.Peaceful Pastures was recently incorporated as a limited liability company.The members are re-evaluating this form of ownership.Unlike an S-corporation,they now pay self-employment taxes on all company profits - not just on the salaries they pay themselves.

Accepted Answer

A) True 
 B)False

Question 12

One reason that companies participate in mergers and acquisitions is:

Accepted Answer

A)  To do the same thing as the competition because it makes for a highly leveraged company.
B)  To convert a sole proprietorship into a partnership.
C)  To expand within their own field or enter new markets.
D)  To take the first step toward a join venture.E) All of the above
F) A) and C)

Question 13

The form of business ownership that usually requires the most detailed record keeping is the:

Accepted Answer

A)  Corporation.
B)  Partnership.
C)  Sole proprietorship.
D)  Limited partnership.E) B) and C)
F) A) and D)

Question 14

Stockholders in a corporation accept unlimited liability for the corporation's debts.

Accepted Answer

A) True 
 B)False

Question 15

Jocelyn belongs to a food cooperative in her community.As a member,she can expect to have a vote in the election of the cooperative's board of directors.

Accepted Answer

A) True 
 B)False

Question 16

A ______________ merger unites firms at different stages of related businesses.

Accepted Answer

A)  vertical
B)  horizontal
C)  diagonal
D)  conglomerateE) B) and C)
F) A) and D)

Question 17

A conglomerate merger will:

Accepted Answer

A)  Diversify business operations and investments.
B)  Allow the firm to have a less dominant position in its market.
C)  Enable the firm to enjoy a higher degree of specialization.
D)  Give the firm a more secure access to needed materials and components and better control over quality.E) C) and D)
F) None of the above

Question 18

An attempt by employees,management,or a group of investors to purchase an organization primarily through borrowing is called an) :

Accepted Answer

A)  Golden parachute.
B)  Arbitrage agreement.
C)  Factor transaction.
D)  Leveraged buyout.E) A) and C)
F) B) and C)

Question 19

Which of the following statements best summarizes the experience of American franchisors in foreign countries?

Accepted Answer

A)  Very few American franchisors of any size have had success in international markets.
B)  Large franchisors have had success in other nations,but newer and smaller franchisors have lacked the financial strength and reputation to succeed in global markets.
C)  The only nations in which American franchisors have achieved any success are Great Britain and Mexico.
D)  Both large and small franchises have found success in foreign countries by providing convenience and a predictable level of service and quality.E) B) and C)
F) None of the above

Question 20

People who form cooperatives:

Accepted Answer

A)  Believe the government should play a larger role in the economy.
B)  Dislike the notion of having owners,managers,and customers as separate individuals with separate goals.
C)  See competitive behavior as the key to ensuring rapid economic growth.
D)  Want to find a way to supply basic necessities free of charge to everyone.E) C) and D)
F) A) and B)

Exam 5: How to Form a Business

Hole In One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf,Inc. ,one of its major competitors.Hole In One Golf Company's plans are an example of a merger.

Correct Answer
verified

A horizontal merger refers to a merger between two companies that serve entirely different markets.

Correct Answer
verified

Jocelyn belongs to a food cooperative in her community.As a member,she can expect to have a vote in the election of the cooperative's board of directors.

Correct Answer
verified

People who form cooperatives:

Correct Answer
verified

A ______________ merger unites firms at different stages of related businesses.

Correct Answer
verified

One reason that companies participate in mergers and acquisitions is:

Correct Answer
verified

Which of the following statements best summarizes the experience of American franchisors in foreign countries?

Correct Answer
verified

Correct Answer
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A conglomerate merger will:

Correct Answer
verified

Liam owns a Far Horizons Travel Agency franchise.As a franchisee,Liam is guaranteed the right to retain all of his franchise's revenues and profits.

Correct Answer
verified

An attempt by employees,management,or a group of investors to purchase an organization primarily through borrowing is called an) :

Correct Answer
verified

Stockholders in a corporation accept unlimited liability for the corporation's debts.

Correct Answer
verified

Connie is a general partner in a retail cookie store.Her personal assets are legally protected from the debts of the business.

Correct Answer
verified

The form of business ownership that usually requires the most detailed record keeping is the:

Correct Answer
verified

One difference between partnerships and sole proprietorships is that partnerships:

Correct Answer
verified

Joe Jackson operates a sole proprietorship,but he is in poor health and may be unable to continue running the business.If Joe becomes incapacitated,his business:

Correct Answer
verified

Which of the following is normally considered a disadvantage of the corporate form of business?

Correct Answer
verified

Which of the following people would be most interested in participating in a business organized as a cooperative?

Correct Answer
verified

Correct Answer
verified

Being your own boss means:

Correct Answer
verified

Exam 5: How to Form a Business

Hole In One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf,Inc. ,one of its major competitors.Hole In One Golf Company's plans are an example of a merger.

Correct AnswerverifiedShow Answer

A horizontal merger refers to a merger between two companies that serve entirely different markets.

Correct AnswerverifiedShow Answer

Jocelyn belongs to a food cooperative in her community.As a member,she can expect to have a vote in the election of the cooperative's board of directors.

Correct AnswerverifiedShow Answer

People who form cooperatives:

Correct AnswerverifiedShow Answer

A ______________ merger unites firms at different stages of related businesses.

Correct AnswerverifiedShow Answer

One reason that companies participate in mergers and acquisitions is:

Correct AnswerverifiedShow Answer

Which of the following statements best summarizes the experience of American franchisors in foreign countries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A conglomerate merger will:

Correct AnswerverifiedShow Answer

Liam owns a Far Horizons Travel Agency franchise.As a franchisee,Liam is guaranteed the right to retain all of his franchise's revenues and profits.

Correct AnswerverifiedShow Answer

An attempt by employees,management,or a group of investors to purchase an organization primarily through borrowing is called an) :

Correct AnswerverifiedShow Answer

Stockholders in a corporation accept unlimited liability for the corporation's debts.

Correct AnswerverifiedShow Answer

Connie is a general partner in a retail cookie store.Her personal assets are legally protected from the debts of the business.

Correct AnswerverifiedShow Answer

The form of business ownership that usually requires the most detailed record keeping is the:

Correct AnswerverifiedShow Answer

One difference between partnerships and sole proprietorships is that partnerships:

Correct AnswerverifiedShow Answer

Joe Jackson operates a sole proprietorship,but he is in poor health and may be unable to continue running the business.If Joe becomes incapacitated,his business:

Correct AnswerverifiedShow Answer

Which of the following is normally considered a disadvantage of the corporate form of business?

Correct AnswerverifiedShow Answer

Which of the following people would be most interested in participating in a business organized as a cooperative?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Being your own boss means:

Correct AnswerverifiedShow Answer

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Correct Answer
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