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Exam 6: Forms of Business Ownership

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Question 81

Multiple Choice

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A difference between partnerships and sole proprietorships is that partnerships:

A) are managed by an elected board of directors.
B) have the advantage of limited liability.
C) have a greater chance of long term survival.
D) are easier to form.

E) A) and D)
F) A) and C)

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Question 82

Multiple Choice

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Which of the following statements about co-operatives is most accurate?

A) has become a major force in Canadian agriculture and housing.
B) there are about 500 co-operatives in Canada.
C) are found in few sectors of the economy.
D) provide products and services to about 1 million Canadians.

E) A) and B)
F) A) and C)

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Question 83

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The profits of a sole proprietorship are taxed as the personal income of the owner.

An entrepreneur who wishes to start a business with little delay or hassle,and who wants to be his or her own boss,should organize the business as a:

A franchise agreement is an arrangement where a franchisor sells the rights to a business name and to sell a product or service within a given territory to a franchisee.

Ram has just paid several thousand dollars to obtain a Fontmaster Printers franchise in Northern Ontario.Now that he has paid his fee,he can look forward to having the freedom to use his own creative talents to make his print shop different and more attractive than other Fontmaster shops in Ontario.

Alphonzo has agreed to become a partner in his brother's new clothing store and has provided 30 percent of the start-up capital for Remora's Clothiers.Since he provided 30 percent of the money to start the firm,he is entitled to 30 percent of any profits the firm earns during its first year of operations.

A__________ is a business organization that is owned,and usually managed,by one person.

A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

A disadvantage of corporations is that their charters are only valid for 99 years,so corporations are less permanent than other types of businesses.

One of the strengths of the sole proprietorship is its ability to sustain rapid growth by raising large amounts of financial resources.

The owners of a corporation are known as general corporate partners.

A(n) __________is someone who has a good idea for a business and who sells the right to use the business name and sell a product or service within a given territory.

A co-operative is simply another name for a corporation.

The "coattail effect" refers to the burden of corporate rules and regulations on franchisees.

A co-operative consists of people with similar needs who pool their resources for mutual gain.

Mara plans to open a shop specializing in foods and cultural items from the Middle East.She wants to be the firm's only general partner,but she is trying to get several friends to participate as limited partners.Apparently Mara wants to:

Franchisors will sometimes send reverse royalties to franchisees who:

A__________ is an organization that is owned and controlled by the people who use it -producers,consumers and workers with similar needs who pool their resources for mutual gain.

One advantage of a partnership is that there is a simple process for partners to terminate their business.