Question 1

According to the text, which of the following statements is false?

Accepted Answer

A)  The sole trader is often the sole manager. 
B)  Many sole traders cannot afford to hire the help they need. 
C)  Potential employees often feel there is no room for advancement in a sole trader. 
D)  When compared to larger businesses, the lure of employee benefits is one reason why people go to work for sole traders. 
E)  The sole trader often finds it hard to keep competent employees. 
A)  The sole trader is often the sole manager. 
B)  Many sole traders cannot afford to hire the help they need. 
C)  Potential employees often feel there is no room for advancement in a sole trader. 
D)  When compared to larger businesses, the lure of employee benefits is one reason why people go to work for sole traders. 
E)  The sole trader often finds it hard to keep competent employees.

Question 2

The form of business organisation that accounts for just over 80 percent of western sales revenues is the

Accepted Answer

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

Question 3

Unlimited liability means

Accepted Answer

A)  there is no limit on the amount an owner can borrow. 
B)  creditors will absorb any loss from nonpayment of debt. 
C)  the business can borrow money for any type of purchase. 
D)  the owner is responsible for all business debts. 
E)  stockholders can borrow money from the business. 
A)  there is no limit on the amount an owner can borrow. 
B)  creditors will absorb any loss from nonpayment of debt. 
C)  the business can borrow money for any type of purchase. 
D)  the owner is responsible for all business debts. 
E)  stockholders can borrow money from the business.

Question 4

A master limited partnership is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 5

When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.

Accepted Answer

A) True 
 B)False

Question 6

A contract between a business and a state recognising the business as an artificial person is known as the

Accepted Answer

A)  articles of partnership. 
B)  articles of incorporation. 
C)  S-corporation. 
D)  stock certificate. 
E)  proxy. 
A)  articles of partnership. 
B)  articles of incorporation. 
C)  S-corporation. 
D)  stock certificate. 
E)  proxy.

Question 7

Articles of partnership are a legal document issued by the secretary of state.

Accepted Answer

A) True 
 B)False

Question 8

The retail card and gift shop chain that Heidi started has since been incorporated.Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

Accepted Answer

A)  Heidi has no responsibility if the business fails and will still be able to get her initial investment back. 
B)  Heidi may have to give up her car and house if the corporation fails in order to cover the debts of the corporation. 
C)  The other stockholders will be able to seize Heidi's personal money but not her primary residence in the event that the business fails. 
D)  Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment. 
E)  Heidi will only be liable for losses that develop from decisions she made about the daily business operations. 
A)  Heidi has no responsibility if the business fails and will still be able to get her initial investment back. 
B)  Heidi may have to give up her car and house if the corporation fails in order to cover the debts of the corporation. 
C)  The other stockholders will be able to seize Heidi's personal money but not her primary residence in the event that the business fails. 
D)  Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment. 
E)  Heidi will only be liable for losses that develop from decisions she made about the daily business operations.

Question 9

Karen Howard loves to cook and receives unqualified praise whenever she prepares a meal for someone.Encouraged by these compliments and eager to put her culinary talents to good use, Karen decides to open a small neighbourhood restaurant.Since she plans to maintain complete control of the business, she will most likely organise it as a

Accepted Answer

A)  limited partnership. 
B)  corporation. 
C)  general partnership. 
D)  cooperative. 
E)  sole trader. 
A)  limited partnership. 
B)  corporation. 
C)  general partnership. 
D)  cooperative. 
E)  sole trader.

Question 10

As a limited partner in a construction business, Joe

Accepted Answer

A)  has input only on major company decisions. 
B)  contributes only his time and not his money. 
C)  does not receive any portion of the profits. 
D)  only risks his initial investment. 
E)  cannot lose his investment in the partnership. 
A)  has input only on major company decisions. 
B)  contributes only his time and not his money. 
C)  does not receive any portion of the profits. 
D)  only risks his initial investment. 
E)  cannot lose his investment in the partnership.

Question 11

Legally, a partnership must

Accepted Answer

A)  have at least one limited partner. 
B)  have at least one general partner. 
C)  make all owners general partners. 
D)  not have any general partners. 
E)  designate a limited partner to be responsible for all debts of the partnership. 
A)  have at least one limited partner. 
B)  have at least one general partner. 
C)  make all owners general partners. 
D)  not have any general partners. 
E)  designate a limited partner to be responsible for all debts of the partnership.

Question 12

With regard to taxation of partnerships, which of the following statements is true?

Accepted Answer

A)  Profits are taxed twice. 
B)  Each partner is taxed in the same way as a sole trader. 
C)  Taxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of the profits. 
D)  A partnership is exempt from taxes. 
E)  The partnership is taxed as a separate entity. 
A)  Profits are taxed twice. 
B)  Each partner is taxed in the same way as a sole trader. 
C)  Taxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of the profits. 
D)  A partnership is exempt from taxes. 
E)  The partnership is taxed as a separate entity.

Question 13

A merger between firms in completely unrelated industries is known as a

Accepted Answer

A)  conglomerate merger. 
B)  cooperative. 
C)  joint venture. 
D)  vertical merger. 
E)  horizontal merger. 
A)  conglomerate merger. 
B)  cooperative. 
C)  joint venture. 
D)  vertical merger. 
E)  horizontal merger.

Question 14

Mark owns stock in Walgreens.He has the right to vote on company issues and examine corporate records, and he receives dividends from Walgreens' profits.What type of stock does Mark own?

Accepted Answer

A)  Common 
B)  "A" class 
C)  Proxy 
D)  Dividend 
E)  Preferred 
A)  Common 
B)  "A" class 
C)  Proxy 
D)  Dividend 
E)  Preferred

Question 15

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.Based on the information provided, what type of business does Samantha's aunt 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 16

Which of the following is a disadvantage of the corporate form of organisation?

Accepted Answer

A)  Both the corporation and its stockholders are taxed on profits retained and distributed. 
B)  Ownership of stock is easy to transfer. 
C)  More capital can be raised by the corporate form. 
D)  Corporations can hire better managers. 
E)  The organisation survives its owners. 
A)  Both the corporation and its stockholders are taxed on profits retained and distributed. 
B)  Ownership of stock is easy to transfer. 
C)  More capital can be raised by the corporate form. 
D)  Corporations can hire better managers. 
E)  The organisation survives its owners.

Question 17

Laura wants to start a business, but she is unsure of the legal form best for her.Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation.Which would you recommend?

Accepted Answer

A)  Joint venture 
B)  Partnership 
C)  Sole trading 
D)  Cooperative 
E)  Corporation 
A)  Joint venture 
B)  Partnership 
C)  Sole trading 
D)  Cooperative 
E)  Corporation

Question 18

A limited-liability company is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 19

The corporation, partnership, and sole trading are the three most common forms of business ownership.

Accepted Answer

A) True 
 B)False

Question 20

With respect to combined business skills and knowledge, which of the following partnerships is best?

Accepted Answer

A)  Joe, Louis, and Raul own a bakery.They are able bakers by trade.Each wants to spend all of his time baking items. 
B)  Carolyn, Melvin, and Cindy own a boutique.Carolyn has marketing expertise.Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit.Cindy is a CPA.Each has agreed to use his or her experience and expertise for the success of the business. 
C)  Mary and Robert, both young pharmacists, own a pharmacy.Neither has taken a business course, but they are willing to learn. 
D)  Carter and Renée own a video store.Renée is most experienced as a homemaker and mother.Carter has worked as an auto mechanic for ten years. 
E)  Vince and Linda own a vacuum cleaner store.Vince knows everything possible about store operations.Linda is wealthy and can provide investment capital. 
A)  Joe, Louis, and Raul own a bakery.They are able bakers by trade.Each wants to spend all of his time baking items. 
B)  Carolyn, Melvin, and Cindy own a boutique.Carolyn has marketing expertise.Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit.Cindy is a CPA.Each has agreed to use his or her experience and expertise for the success of the business. 
C)  Mary and Robert, both young pharmacists, own a pharmacy.Neither has taken a business course, but they are willing to learn. 
D)  Carter and Renée own a video store.Renée is most experienced as a homemaker and mother.Carter has worked as an auto mechanic for ten years. 
E)  Vince and Linda own a vacuum cleaner store.Vince knows everything possible about store operations.Linda is wealthy and can provide investment capital.

According to the text, which of the following statements is false?

The form of business organisation that accounts for just over 80 percent of western sales revenues is the

Unlimited liability means

A master limited partnership is taxed like a corporation.

When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.

A contract between a business and a state recognising the business as an artificial person is known as the

Articles of partnership are a legal document issued by the secretary of state.

The retail card and gift shop chain that Heidi started has since been incorporated.Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

As a limited partner in a construction business, Joe

Legally, a partnership must

With regard to taxation of partnerships, which of the following statements is true?

A merger between firms in completely unrelated industries is known as a

Mark owns stock in Walgreens.He has the right to vote on company issues and examine corporate records, and he receives dividends from Walgreens' profits.What type of stock does Mark own?

Which of the following is a disadvantage of the corporate form of organisation?

Laura wants to start a business, but she is unsure of the legal form best for her.Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation.Which would you recommend?

A limited-liability company is taxed like a corporation.

The corporation, partnership, and sole trading are the three most common forms of business ownership.

With respect to combined business skills and knowledge, which of the following partnerships is best?

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

Exam 4: Types of Business Ownership

According to the text, which of the following statements is false?

The form of business organisation that accounts for just over 80 percent of western sales revenues is the

Unlimited liability means

A master limited partnership is taxed like a corporation.

When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.

A contract between a business and a state recognising the business as an artificial person is known as the

Articles of partnership are a legal document issued by the secretary of state.

The retail card and gift shop chain that Heidi started has since been incorporated.Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

As a limited partner in a construction business, Joe

Legally, a partnership must

With regard to taxation of partnerships, which of the following statements is true?

A merger between firms in completely unrelated industries is known as a

Mark owns stock in Walgreens.He has the right to vote on company issues and examine corporate records, and he receives dividends from Walgreens' profits.What type of stock does Mark own?

Which of the following is a disadvantage of the corporate form of organisation?

Laura wants to start a business, but she is unsure of the legal form best for her.Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation.Which would you recommend?

A limited-liability company is taxed like a corporation.

The corporation, partnership, and sole trading are the three most common forms of business ownership.

With respect to combined business skills and knowledge, which of the following partnerships is best?

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