Question 1

Preferred stockholders receive dividends before dividends are paid to ordinary shareholders.

Accepted Answer

A) True 
 B)False  True

Question 2

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors.They also want to avoid double taxation.Which type of business ownership would you recommend?

Accepted Answer

A)  Regular corporation 
B)  S-corporation 
C)  Cooperative 
D)  Limited-liability company 
E)  Limited partnership 
A)  Regular corporation 
B)  S-corporation 
C)  Cooperative 
D)  Limited-liability company 
E)  Limited partnership D

Question 3

The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.

Accepted Answer

A) True 
 B)False  False

Question 4

Samantha's Dilemma
Samantha graduated from college and needed to decide where she wanted to work.She had several options.Her aunt Julie owned and operated a small business that she started about twenty years ago.Julie, an individual owner of her business, informed Samantha that she could work for her.On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired.On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education.Her other option would be to work for a company that a friend and her husband had started and jointly owned.It was a rapidly growing company with plenty of opportunity for advancement.However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends.Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the UK.
After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her.She wanted to prove how motivated and hard-working she was.Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.
-Refer to Samantha's Dilemma.What type of company does Samantha's friend operate?

Accepted Answer

A)  Incorporation 
B)  Partnership 
C)  Franchise 
D)  Corporation 
E)  Sole trader 
A)  Incorporation 
B)  Partnership 
C)  Franchise 
D)  Corporation 
E)  Sole trader

Question 5

Amy owns 100 shares of General Electric preferred stock.She wants to attend the annual stockholder meeting to cast her vote on company issues.Based on your knowledge from school, you caution Amy that

Accepted Answer

A)  people with fewer than 1,000 shares of stock cannot vote. 
B)  stockholders are not allowed to attend the annual meetings. 
C)  most preferred stock does not have voting rights. 
D)  only institutional investors are allowed to attend the meetings. 
E)  she can vote only by proxy and not in person. 
A)  people with fewer than 1,000 shares of stock cannot vote. 
B)  stockholders are not allowed to attend the annual meetings. 
C)  most preferred stock does not have voting rights. 
D)  only institutional investors are allowed to attend the meetings. 
E)  she can vote only by proxy and not in person.

Question 6

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.

Accepted Answer

A) True 
 B)False

Question 7

The partner who can lose only what he or she has invested in a business is the

Accepted Answer

A)  general partner. 
B)  sole trader. 
C)  manager. 
D)  employee. 
E)  limited partner. 
A)  general partner. 
B)  sole trader. 
C)  manager. 
D)  employee. 
E)  limited partner.

Question 8

A syndicate is a temporary association of individuals or firms organised to perform a specific task that requires a large amount of capital.

Accepted Answer

A) True 
 B)False

Question 9

Susan has a commercial laundry service that has been growing rapidly.She wants to continue to grow the business, but she needs access to more money and does not want to risk her personal assets.Susan contacts her lawyer to see if all the legal requirements are met to start the process of

Accepted Answer

A)  partnering. 
B)  selling her business. 
C)  incorporating. 
D)  consulting. 
E)  corporate opening. 
A)  partnering. 
B)  selling her business. 
C)  incorporating. 
D)  consulting. 
E)  corporate opening.

Question 10

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

Accepted Answer

A)  sole trader. 
B)  S-corporation. 
C)  closed corporation. 
D)  open corporation. 
E)  not-for-profit corporation. 
A)  sole trader. 
B)  S-corporation. 
C)  closed corporation. 
D)  open corporation. 
E)  not-for-profit corporation.

Question 11

The form of business organisation that comprises about 19 percent of western businesses is the

Accepted Answer

A)  joint venture. 
B)  syndicate. 
C)  sole trader. 
D)  partnership. 
E)  corporation. 
A)  joint venture. 
B)  syndicate. 
C)  sole trader. 
D)  partnership. 
E)  corporation.

Question 12

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc.He has worked for the finance department ever since he started.He noticed that the corporation was only taxed as though it were a partnership.This was something that he found very odd when he first started working for the company, but he later realised it was a fairly common practice.He recognised that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy.He wanted to work for a company whose main goal was to provide service to the community, not to make a profit.However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc.A week later, Kevin discovered there was going to be a merger between B&G, Inc.and one of its major competitors.Kevin's boss informed him that he would be getting a promotion and a raise.While he was excited about making more money, he still was not happy.He knew then that he would not be working for the company for long.
-Refer to B&G, Inc.What type of organisation is B&G, Inc.?

Accepted Answer

A)  Sole trader 
B)  Limited-liability company 
C)  S-corporation 
D)  Not-for-profit corporation 
E)  Cooperative 
A)  Sole trader 
B)  Limited-liability company 
C)  S-corporation 
D)  Not-for-profit corporation 
E)  Cooperative

Question 13

With regard to limited-liability companies, which of the following statements is false?

Accepted Answer

A)  Many experts believe that an LLC is nothing more than an S-corporation. 
B)  An LLC can have no more than 100 stockholders. 
C)  An LLC avoids double taxation. 
D)  An LLC provides limited-liability protection to the personal assets of the owners. 
E)  When compared to regular corporations, there are fewer government regulations that apply to LLCs. 
A)  Many experts believe that an LLC is nothing more than an S-corporation. 
B)  An LLC can have no more than 100 stockholders. 
C)  An LLC avoids double taxation. 
D)  An LLC provides limited-liability protection to the personal assets of the owners. 
E)  When compared to regular corporations, there are fewer government regulations that apply to LLCs.

Question 14

Which of the following is not a disadvantage of sole traders?

Accepted Answer

A)  Unlimited liability 
B)  Lack of money 
C)  Double taxation 
D)  Lack of continuity 
E)  Limited management skills 
A)  Unlimited liability 
B)  Lack of money 
C)  Double taxation 
D)  Lack of continuity 
E)  Limited management skills

Question 15

Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

Accepted Answer

A) True 
 B)False

Question 16

A corporation organised to provide a social, educational, religious, or other nonbusiness service is known as a(n)

Accepted Answer

A)  authority. 
B)  merger. 
C)  quasi-government corporation. 
D)  S-corporation. 
E)  not-for-profit corporation. 
A)  authority. 
B)  merger. 
C)  quasi-government corporation. 
D)  S-corporation. 
E)  not-for-profit corporation.

Question 17

To gain access to one another's markets, several U.S.and Japanese automobile manufacturers (for example, Chrysler and Mitsubishi) are engaging in temporary alliances to manufacture and market certain models of cars.These types of partnerships are known as

Accepted Answer

A)  limited-liability companies. 
B)  S-corporations. 
C)  cooperatives. 
D)  joint ventures. 
E)  foreign corporations. 
A)  limited-liability companies. 
B)  S-corporations. 
C)  cooperatives. 
D)  joint ventures. 
E)  foreign corporations.

Question 18

A tender offer is an offer to purchase stock from existing stockholders.

Accepted Answer

A) True 
 B)False

Question 19

In all states besides the one in which it is incorporated, a business is known as a(n)

Accepted Answer

A)  S-corporation. 
B)  resident corporation. 
C)  public corporation. 
D)  foreign corporation. 
E)  domestic corporation. 
A)  S-corporation. 
B)  resident corporation. 
C)  public corporation. 
D)  foreign corporation. 
E)  domestic corporation.

Question 20

A master limited partnership is also known as a closed corporation.

Accepted Answer

A) True 
 B)False

Preferred stockholders receive dividends before dividends are paid to ordinary shareholders.

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors.They also want to avoid double taxation.Which type of business ownership would you recommend?

The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.

Amy owns 100 shares of General Electric preferred stock.She wants to attend the annual stockholder meeting to cast her vote on company issues.Based on your knowledge from school, you caution Amy that

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.

The partner who can lose only what he or she has invested in a business is the

A syndicate is a temporary association of individuals or firms organised to perform a specific task that requires a large amount of capital.

Susan has a commercial laundry service that has been growing rapidly.She wants to continue to grow the business, but she needs access to more money and does not want to risk her personal assets.Susan contacts her lawyer to see if all the legal requirements are met to start the process of

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

The form of business organisation that comprises about 19 percent of western businesses is the

With regard to limited-liability companies, which of the following statements is false?

Which of the following is not a disadvantage of sole traders?

Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

A corporation organised to provide a social, educational, religious, or other nonbusiness service is known as a(n)

To gain access to one another's markets, several U.S.and Japanese automobile manufacturers (for example, Chrysler and Mitsubishi) are engaging in temporary alliances to manufacture and market certain models of cars.These types of partnerships are known as

A tender offer is an offer to purchase stock from existing stockholders.

In all states besides the one in which it is incorporated, a business is known as a(n)

A master limited partnership is also known as a closed corporation.

Introduction to Business

Responsible Business

Global Business

Small Business, Entrepreneurship, and Franchises

Leadership and Managing a Business

Flexibility Within the Organisation

Products and Services

Recruitment and Retaining the Best Employees

Employee Motivation and Team Building

The Marketing Concept

Aproduct Development and Pricing Strategies

Marketing Channels

Marketing Communications

Social Media and E-Business

Introduction to Management Accounting

Money and the Banking System

Financial Management

Personal Finances and Investments

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Exam 4: Types of Business Ownership

Preferred stockholders receive dividends before dividends are paid to ordinary shareholders.

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors.They also want to avoid double taxation.Which type of business ownership would you recommend?

The courts have held that an oral partnership agreement is not legally binding and, therefore, cannot be enforced.

Amy owns 100 shares of General Electric preferred stock.She wants to attend the annual stockholder meeting to cast her vote on company issues.Based on your knowledge from school, you caution Amy that

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.

The partner who can lose only what he or she has invested in a business is the

A syndicate is a temporary association of individuals or firms organised to perform a specific task that requires a large amount of capital.

Susan has a commercial laundry service that has been growing rapidly.She wants to continue to grow the business, but she needs access to more money and does not want to risk her personal assets.Susan contacts her lawyer to see if all the legal requirements are met to start the process of

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

The form of business organisation that comprises about 19 percent of western businesses is the

With regard to limited-liability companies, which of the following statements is false?

Which of the following is not a disadvantage of sole traders?

Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

A corporation organised to provide a social, educational, religious, or other nonbusiness service is known as a(n)

To gain access to one another's markets, several U.S.and Japanese automobile manufacturers (for example, Chrysler and Mitsubishi) are engaging in temporary alliances to manufacture and market certain models of cars.These types of partnerships are known as

A tender offer is an offer to purchase stock from existing stockholders.

In all states besides the one in which it is incorporated, a business is known as a(n)

A master limited partnership is also known as a closed corporation.

Introduction to Business

Responsible Business

Global Business

Small Business, Entrepreneurship, and Franchises

Leadership and Managing a Business

Flexibility Within the Organisation

Products and Services

Recruitment and Retaining the Best Employees

Employee Motivation and Team Building

The Marketing Concept

Aproduct Development and Pricing Strategies

Marketing Channels

Marketing Communications

Social Media and E-Business

Introduction to Management Accounting

Money and the Banking System

Financial Management

Personal Finances and Investments

Filters