Question 1

Which of the following statements is true of a limited liability partnership (LLP)?

Accepted Answer

A)  It does not need to distinguish between limited and general partners. 
B)  The amount of liability protection offered by LLPs varies among states. 
C)  All partners of an LLP cannot take an active role in management. 
D)  It is completely different from a limited partnership. 
A)  It does not need to distinguish between limited and general partners. 
B)  The amount of liability protection offered by LLPs varies among states. 
C)  All partners of an LLP cannot take an active role in management. 
D)  It is completely different from a limited partnership.

Question 2

Which of the following statements is true of a limited liability company (LLC)?

Accepted Answer

A)  It offers less flexibility than a corporation in terms of tax treatment. 
B)  It is by far the most common type of business organization in the United States. 
C)  It is a relatively new form of business ownership in the United States. 
D)  It is required to hold regular board meetings. 
A)  It offers less flexibility than a corporation in terms of tax treatment. 
B)  It is by far the most common type of business organization in the United States. 
C)  It is a relatively new form of business ownership in the United States. 
D)  It is required to hold regular board meetings.

Question 3

Ronnie is the owner of a pet store and manages the store by himself. Any profit that Ronnie's store earns is:

Accepted Answer

A)  used to purchase preferred stocks of the store. 
B)  treated as Ronnie's personal income. 
C)  not subjected to any form of taxation. 
D)  taxed only if Ronnie has taken a loan. 
A)  used to purchase preferred stocks of the store. 
B)  treated as Ronnie's personal income. 
C)  not subjected to any form of taxation. 
D)  taxed only if Ronnie has taken a loan.

Question 4

Conall is appointed by a nine-member board of directors of a real estate company to manage the company on a daily basis. The board ensures that Conall acts in a manner that is consistent with the interests of the stockholders. Given this information, Conall is most likely a _____.

Accepted Answer

A)  non-executive director 
B)  chief executive officer 
C)  chief business officer 
D)  human resource manager 
A)  non-executive director 
B)  chief executive officer 
C)  chief business officer 
D)  human resource manager

Question 5

A(n) _____ cannot distribute dividends to its members.

Accepted Answer

A)  S corporation 
B)  C corporation 
C)  not-for-profit corporation 
D)  statutory close corporation 
A)  S corporation 
B)  C corporation 
C)  not-for-profit corporation 
D)  statutory close corporation

Question 6

In the case of C corporations, shareholders don't pay income taxes on _____.

Accepted Answer

A)  non-operating incomes 
B)  dividend covers 
C)  gross margins 
D)  retained earnings 
A)  non-operating incomes 
B)  dividend covers 
C)  gross margins 
D)  retained earnings

Question 7

In the context of limited partnerships, which of the following is an aspect that differentiates limited partners from general partners?

Accepted Answer

A)  Duration of the partnership in a company 
B)  Sharing of the profits of a company 
C)  Financial contribution to a company 
D)  Participation in the management of a company 
A)  Duration of the partnership in a company 
B)  Sharing of the profits of a company 
C)  Financial contribution to a company 
D)  Participation in the management of a company

Question 8

In the context of franchising, briefly discuss the Franchise Disclosure Document (FDD).

Accepted Answer

Answers will vary. The Federal Trade Com

Question 9

The Internal Revenue Service classifies each limited liability company (LLC) based on the tax treatment the company selects.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a difference between a C corporation and an S corporation?

Accepted Answer

A)  The members of a C corporation have unlimited liability, whereas the members of an S corporation enjoy limited liability. 
B)  The members of a C corporation have limited liability, whereas the members of an S corporation have unlimited liability. 
C)  A C corporation is double taxed, whereas an S corporation is taxed as a partnership. 
D)  A C corporation is taxed as a partnership, whereas an S corporation is double taxed. 
A)  The members of a C corporation have unlimited liability, whereas the members of an S corporation enjoy limited liability. 
B)  The members of a C corporation have limited liability, whereas the members of an S corporation have unlimited liability. 
C)  A C corporation is double taxed, whereas an S corporation is taxed as a partnership. 
D)  A C corporation is taxed as a partnership, whereas an S corporation is double taxed.

Question 11

A typical partnership agreement includes details about:

Accepted Answer

A)  how partners will solve the issue of unlimited liability. 
B)  how partners will settle disagreements. 
C)  selling company shares to the public. 
D)  raising financial capital through corporate bonds. 
A)  how partners will solve the issue of unlimited liability. 
B)  how partners will settle disagreements. 
C)  selling company shares to the public. 
D)  raising financial capital through corporate bonds.

Question 12

Yadira works for an organization whose earnings are exempt from federal and state income taxes. The organization is barred from funding any political campaign. Given this information, Yadira most likely works for a(n):

Accepted Answer

A)  S corporation. 
B)  C corporation. 
C)  not-for-profit corporation. 
D)  statutory close corporation. 
A)  S corporation. 
B)  C corporation. 
C)  not-for-profit corporation. 
D)  statutory close corporation.

Question 13

Corporations are by far the most common type of business organization in the United States.

Accepted Answer

A) True 
 B)False

Question 14

Similar to a corporation, all owners of a limited liability company (LLC):

Accepted Answer

A)  have restricted debts. 
B)  are called stockholders. 
C)  are exempted from federal and state income taxes. 
D)  have the right to establish the company's mission. 
A)  have restricted debts. 
B)  are called stockholders. 
C)  are exempted from federal and state income taxes. 
D)  have the right to establish the company's mission.

Question 15

In the context of corporate restructuring, a common objective of a horizontal merger is to:

Accepted Answer

A)  improve efficiency by eliminating duplication of facilities and personnel. 
B)  provide tighter integration of production and increased control over the supply of crucial inputs. 
C)  reduce risk by making a firm less vulnerable to adverse conditions in any single market. 
D)  transfer partial ownership of operations to investors. 
A)  improve efficiency by eliminating duplication of facilities and personnel. 
B)  provide tighter integration of production and increased control over the supply of crucial inputs. 
C)  reduce risk by making a firm less vulnerable to adverse conditions in any single market. 
D)  transfer partial ownership of operations to investors.

Question 16

Green Haven is an organization whose earnings are exempt from federal and state income taxes. Individuals who contribute money to the organization can avail the benefit of tax deduction. However, the organization is barred from distributing dividends to its members. Given this information, Green Haven is most likely a(n):

Accepted Answer

A)  S corporation. 
B)  C corporation. 
C)  not-for-profit corporation. 
D)  statutory close corporation. 
A)  S corporation. 
B)  C corporation. 
C)  not-for-profit corporation. 
D)  statutory close corporation.

Question 17

Unlike a sole proprietorship, a corporation:

Accepted Answer

A)  avoids the undesirable possibility of double taxation of earnings. 
B)  does not require the articles of incorporation to set up the company. 
C)  is considered to be a legal entity that is separate and distinct from its owners. 
D)  is a voluntary agreement under which two or more people act as co-owners. 
A)  avoids the undesirable possibility of double taxation of earnings. 
B)  does not require the articles of incorporation to set up the company. 
C)  is considered to be a legal entity that is separate and distinct from its owners. 
D)  is a voluntary agreement under which two or more people act as co-owners.

Question 18

Harvey, a shareholder in Braxwell Technologies, reinvests 10% of the dividends received from the company back into it, partly to evade taxes and partly to support the company. This scenario reflects the concept of _____.

Accepted Answer

A)  cash disbursements 
B)  tunneling 
C)  retained earnings 
D)  asset stripping 
A)  cash disbursements 
B)  tunneling 
C)  retained earnings 
D)  asset stripping

Question 19

Which of the following is a disadvantage of franchising?

Accepted Answer

A)  The franchisee seldom receives any support or training from the franchisor about running the business. 
B)  The franchisee is unable to attain instant brand-name recognition among customers. 
C)  The franchise agreement usually requires the franchisee to follow the franchisor's procedures to the letter. 
D)  The franchisee faces funding challenges as bankers are often reluctant to fund franchisees. 
A)  The franchisee seldom receives any support or training from the franchisor about running the business. 
B)  The franchisee is unable to attain instant brand-name recognition among customers. 
C)  The franchise agreement usually requires the franchisee to follow the franchisor's procedures to the letter. 
D)  The franchisee faces funding challenges as bankers are often reluctant to fund franchisees.

Question 20

Which of the following statements is true of the formation of a partnership?

Accepted Answer

A)  Working out the details of a partnership agreement is always a simple process. 
B)  Forming a partnership requires issuance of fresh stock to the public. 
C)  Partnerships are created by filing a document called the articles of organization. 
D)  Partnerships can be established based on a simple verbal agreement. 
A)  Working out the details of a partnership agreement is always a simple process. 
B)  Forming a partnership requires issuance of fresh stock to the public. 
C)  Partnerships are created by filing a document called the articles of organization. 
D)  Partnerships can be established based on a simple verbal agreement.

Which of the following statements is true of a limited liability partnership (LLP)?

Which of the following statements is true of a limited liability company (LLC)?

Ronnie is the owner of a pet store and manages the store by himself. Any profit that Ronnie's store earns is:

Conall is appointed by a nine-member board of directors of a real estate company to manage the company on a daily basis. The board ensures that Conall acts in a manner that is consistent with the interests of the stockholders. Given this information, Conall is most likely a _____.

A(n) _____ cannot distribute dividends to its members.

In the case of C corporations, shareholders don't pay income taxes on _____.

In the context of limited partnerships, which of the following is an aspect that differentiates limited partners from general partners?

In the context of franchising, briefly discuss the Franchise Disclosure Document (FDD).

The Internal Revenue Service classifies each limited liability company (LLC) based on the tax treatment the company selects.

Which of the following is a difference between a C corporation and an S corporation?

A typical partnership agreement includes details about:

Yadira works for an organization whose earnings are exempt from federal and state income taxes. The organization is barred from funding any political campaign. Given this information, Yadira most likely works for a(n):

Corporations are by far the most common type of business organization in the United States.

Similar to a corporation, all owners of a limited liability company (LLC):

In the context of corporate restructuring, a common objective of a horizontal merger is to:

Unlike a sole proprietorship, a corporation:

Harvey, a shareholder in Braxwell Technologies, reinvests 10% of the dividends received from the company back into it, partly to evade taxes and partly to support the company. This scenario reflects the concept of _____.

Which of the following is a disadvantage of franchising?

Which of the following statements is true of the formation of a partnership?

Business Now: Change Is the Only Constant

Economics: The Framework of Business

The World Marketplace: Business Without Borders

Business Ethics Social Responsibility: Doing Well by Doing Good

Business Communication: Creating Delivering Messages That Matter

Small Business Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Finance: Acquiring Using Funds to Maximize Value

Securities Markets: Trading Financial Resources

Marketing: Building Profitable Customer Connections

Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Management, Motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top Quality Workforce

Managing Information Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

Appendix :personal-Finance-Appendix

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Exam 6: Business Formation: Choosing the Form That Fits

Which of the following statements is true of a limited liability partnership (LLP)?

Which of the following statements is true of a limited liability company (LLC)?

Ronnie is the owner of a pet store and manages the store by himself. Any profit that Ronnie's store earns is:

Conall is appointed by a nine-member board of directors of a real estate company to manage the company on a daily basis. The board ensures that Conall acts in a manner that is consistent with the interests of the stockholders. Given this information, Conall is most likely a _____.

A(n) _____ cannot distribute dividends to its members.

In the case of C corporations, shareholders don't pay income taxes on _____.

In the context of limited partnerships, which of the following is an aspect that differentiates limited partners from general partners?

In the context of franchising, briefly discuss the Franchise Disclosure Document (FDD).

The Internal Revenue Service classifies each limited liability company (LLC) based on the tax treatment the company selects.

Which of the following is a difference between a C corporation and an S corporation?

A typical partnership agreement includes details about:

Yadira works for an organization whose earnings are exempt from federal and state income taxes. The organization is barred from funding any political campaign. Given this information, Yadira most likely works for a(n):

Corporations are by far the most common type of business organization in the United States.

Similar to a corporation, all owners of a limited liability company (LLC):

In the context of corporate restructuring, a common objective of a horizontal merger is to:

Unlike a sole proprietorship, a corporation:

Harvey, a shareholder in Braxwell Technologies, reinvests 10% of the dividends received from the company back into it, partly to evade taxes and partly to support the company. This scenario reflects the concept of _____.

Which of the following is a disadvantage of franchising?

Which of the following statements is true of the formation of a partnership?

Business Now: Change Is the Only Constant

Economics: The Framework of Business

The World Marketplace: Business Without Borders

Business Ethics Social Responsibility: Doing Well by Doing Good

Business Communication: Creating Delivering Messages That Matter

Small Business Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Finance: Acquiring Using Funds to Maximize Value

Securities Markets: Trading Financial Resources

Marketing: Building Profitable Customer Connections

Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Management, Motivation, and Leadership: Bringing Business to Life

Human Resource Management: Building a Top Quality Workforce

Managing Information Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

Appendix :personal-Finance-Appendix

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