Question 1

Because of unlimited liability, it is easy for sole traders to borrow large sums of money.

Accepted Answer

A) True 
 B)False

Question 2

An association of individuals or firms formed for the purpose of performing a business function for all members is known as a

Accepted Answer

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

Question 3

A corporation is an artificial person created by law.

Accepted Answer

A) True 
 B)False

Question 4

Kerry wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Kerry?

Accepted Answer

A)  Bailey, an artist with a real flair for new-aged jewelry design 
B)  Ashley, Kerry's best friend who is fun to hang out with and good at solving problems 
C)  Natalie, who has business experience with accounting, management, and marketing 
D)  Janette, who used to work at the jewelry counter at a department store 
E)  Darla, an engineer with industrial management experience but no money 
A)  Bailey, an artist with a real flair for new-aged jewelry design 
B)  Ashley, Kerry's best friend who is fun to hang out with and good at solving problems 
C)  Natalie, who has business experience with accounting, management, and marketing 
D)  Janette, who used to work at the jewelry counter at a department store 
E)  Darla, an engineer with industrial management experience but no money

Question 5

Wade Comer and Tom Busby decide to start a partnership and offer accounting services.Which of the following is the best way to start this partnership?

Accepted Answer

A)  They should orally discuss how they want the partnership to work and who is responsible for certain areas. 
B)  They should determine the exact way the business should be run and have a witness listen to their oral discussion. 
C)  They should let a third party, such as a consultant or an attorney, draft whatever agreement the consultant or attorney thinks is appropriate. 
D)  They should carefully draft an articles of partnership together, outlining each partner's responsibilities and other important information. 
E)  With the help of an attorney, they should draft a partnership agreement that states each partner's duties and investments. 
A)  They should orally discuss how they want the partnership to work and who is responsible for certain areas. 
B)  They should determine the exact way the business should be run and have a witness listen to their oral discussion. 
C)  They should let a third party, such as a consultant or an attorney, draft whatever agreement the consultant or attorney thinks is appropriate. 
D)  They should carefully draft an articles of partnership together, outlining each partner's responsibilities and other important information. 
E)  With the help of an attorney, they should draft a partnership agreement that states each partner's duties and investments.

Question 6

Mike Nettles approached Nathan Lang about becoming a partner in a firm that destroys environmental waste.While Mike would like to become a partner in the firm, he is concerned about his liability because he has recently inherited a lot of money.In this situation, Mike should become a

Accepted Answer

A)  general partner with a majority ownership interest in the business. 
B)  general partner with a minority ownership interest in the business. 
C)  limited partner. 
D)  joint venturist. 
E)  sole trader. 
A)  general partner with a majority ownership interest in the business. 
B)  general partner with a minority ownership interest in the business. 
C)  limited partner. 
D)  joint venturist. 
E)  sole trader.

Question 7

The amount paid for stock is the most a shareholder can lose in the corporate form of ownership.

Accepted Answer

A) True 
 B)False

Question 8

Keisha Cook and Donnie Blackman decide to go into business together.They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities.Keisha and Donnie created a(n)

Accepted Answer

A)  articles of partnership. 
B)  master limited partnership agreement. 
C)  licensing agreement. 
D)  corporate charter. 
E)  division of partnership agreement. 
A)  articles of partnership. 
B)  master limited partnership agreement. 
C)  licensing agreement. 
D)  corporate charter. 
E)  division of partnership agreement.

Question 9

Thomas wants to make money, so he starts his own business as a sole proprietor.He likes this form of business because

Accepted Answer

A)  he will get to keep all of the profits the business makes. 
B)  profit is guaranteed since he will be the only owner. 
C)  it will provide a steady income for him. 
D)  he has to split the profits with only one other person. 
E)  he has to pay small dividends to the other owners. 
A)  he will get to keep all of the profits the business makes. 
B)  profit is guaranteed since he will be the only owner. 
C)  it will provide a steady income for him. 
D)  he has to split the profits with only one other person. 
E)  he has to pay small dividends to the other owners.

Question 10

Which of the following states offers the lowest organisational costs for corporations?

Accepted Answer

A)  Delaware 
B)  Georgia 
C)  Michigan 
D)  New York 
E)  Alaska 
A)  Delaware 
B)  Georgia 
C)  Michigan 
D)  New York 
E)  Alaska

Question 11

Walmart is incorporated in Arkansas, the state of its origins and headquarters.Within Arkansas, Walmart is classified as a(n) ____ corporation.

Accepted Answer

A)  privately-held 
B)  Foreign 
C)  Alien 
D)  domestic 
E)  hometown 
A)  privately-held 
B)  Foreign 
C)  Alien 
D)  domestic 
E)  hometown

Question 12

The major reason why businesses change from sole traderships to other forms of ownership is to

Accepted Answer

A)  gain unlimited liability. 
B)  avoid unlimited liability. 
C)  avoid lack of continuity. 
D)  obtain help and eliminate the problem of too much to do in one day. 
E)  offer advancement opportunities for employees. 
A)  gain unlimited liability. 
B)  avoid unlimited liability. 
C)  avoid lack of continuity. 
D)  obtain help and eliminate the problem of too much to do in one day. 
E)  offer advancement opportunities for employees.

Question 13

What do experts believe is likely to become one of the most popular types of business organisations?

Accepted Answer

A)  Limited-liability companies 
B)  S-corporations 
C)  Partnerships 
D)  Sole traders 
E)  Corporations 
A)  Limited-liability companies 
B)  S-corporations 
C)  Partnerships 
D)  Sole traders 
E)  Corporations

Question 14

A vertical merger is a merger between firms that operate at different but related levels in the production and marketing of a product.

Accepted Answer

A) True 
 B)False

Question 15

Corporate officers are

Accepted Answer

A)  listed in the corporate charter. 
B)  elected by stockholders. 
C)  appointed by the board of directors. 
D)  appointed by management. 
E)  elected by incorporators. 
A)  listed in the corporate charter. 
B)  elected by stockholders. 
C)  appointed by the board of directors. 
D)  appointed by management. 
E)  elected by incorporators.

Question 16

Most partnerships have ____ partners.

Accepted Answer

A)  Two 
B)  Three 
C)  Four 
D)  Five 
E)  more than five 
A)  Two 
B)  Three 
C)  Four 
D)  Five 
E)  more than five

Question 17

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy.This sort of association is referred to as a(n)

Accepted Answer

A)  syndicate. 
B)  cooperative. 
C)  conglomerate. 
D)  alliance. 
E)  vertical merger. 
A)  syndicate. 
B)  cooperative. 
C)  conglomerate. 
D)  alliance. 
E)  vertical merger.

Question 18

Walters Company, LLC, is a wholesale distributor of industrial packaging.A primary advantage that Walters enjoys as an LLC that corporations do not have is

Accepted Answer

A)  ease of formation. 
B)  limited liability. 
C)  avoiding double taxation. 
D)  one class of outstanding stock. 
E)  income taxes. 
A)  ease of formation. 
B)  limited liability. 
C)  avoiding double taxation. 
D)  one class of outstanding stock. 
E)  income taxes.

Question 19

Which of the following is not an advantage of a sole trader?

Accepted Answer

A)  It is easy to form and dissolve. 
B)  It has unlimited liability. 
C)  Profits are taxed as personal income. 
D)  There owner has the flexibility of being his or her own boss. 
E)  The owner keeps all profits. 
A)  It is easy to form and dissolve. 
B)  It has unlimited liability. 
C)  Profits are taxed as personal income. 
D)  There owner has the flexibility of being his or her own boss. 
E)  The owner keeps all profits.

Question 20

Which of the following is not a disadvantage of the corporate form of ownership?

Accepted Answer

A)  Difficulty of formation 
B)  Limited liability 
C)  Expense of incorporation and selling stock 
D)  Lack of secrecy 
E)  Double taxation 
A)  Difficulty of formation 
B)  Limited liability 
C)  Expense of incorporation and selling stock 
D)  Lack of secrecy 
E)  Double taxation

Because of unlimited liability, it is easy for sole traders to borrow large sums of money.

An association of individuals or firms formed for the purpose of performing a business function for all members is known as a

A corporation is an artificial person created by law.

Kerry wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Kerry?

Wade Comer and Tom Busby decide to start a partnership and offer accounting services.Which of the following is the best way to start this partnership?

Mike Nettles approached Nathan Lang about becoming a partner in a firm that destroys environmental waste.While Mike would like to become a partner in the firm, he is concerned about his liability because he has recently inherited a lot of money.In this situation, Mike should become a

The amount paid for stock is the most a shareholder can lose in the corporate form of ownership.

Keisha Cook and Donnie Blackman decide to go into business together.They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities.Keisha and Donnie created a(n)

Thomas wants to make money, so he starts his own business as a sole proprietor.He likes this form of business because

Which of the following states offers the lowest organisational costs for corporations?

Walmart is incorporated in Arkansas, the state of its origins and headquarters.Within Arkansas, Walmart is classified as a(n) ____ corporation.

The major reason why businesses change from sole traderships to other forms of ownership is to

What do experts believe is likely to become one of the most popular types of business organisations?

A vertical merger is a merger between firms that operate at different but related levels in the production and marketing of a product.

Corporate officers are

Most partnerships have ____ partners.

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy.This sort of association is referred to as a(n)

Walters Company, LLC, is a wholesale distributor of industrial packaging.A primary advantage that Walters enjoys as an LLC that corporations do not have is

Which of the following is not an advantage of a sole trader?

Which of the following is not a disadvantage of the corporate form of ownership?

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

Because of unlimited liability, it is easy for sole traders to borrow large sums of money.

An association of individuals or firms formed for the purpose of performing a business function for all members is known as a

A corporation is an artificial person created by law.

Kerry wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Kerry?

Wade Comer and Tom Busby decide to start a partnership and offer accounting services.Which of the following is the best way to start this partnership?

Mike Nettles approached Nathan Lang about becoming a partner in a firm that destroys environmental waste.While Mike would like to become a partner in the firm, he is concerned about his liability because he has recently inherited a lot of money.In this situation, Mike should become a

The amount paid for stock is the most a shareholder can lose in the corporate form of ownership.

Keisha Cook and Donnie Blackman decide to go into business together.They start by writing an agreement listing and explaining the terms of the business they will both own, along with each of their responsibilities.Keisha and Donnie created a(n)

Thomas wants to make money, so he starts his own business as a sole proprietor.He likes this form of business because

Which of the following states offers the lowest organisational costs for corporations?

Walmart is incorporated in Arkansas, the state of its origins and headquarters.Within Arkansas, Walmart is classified as a(n) ____ corporation.

The major reason why businesses change from sole traderships to other forms of ownership is to

What do experts believe is likely to become one of the most popular types of business organisations?

A vertical merger is a merger between firms that operate at different but related levels in the production and marketing of a product.

Corporate officers are

Most partnerships have ____ partners.

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy.This sort of association is referred to as a(n)

Walters Company, LLC, is a wholesale distributor of industrial packaging.A primary advantage that Walters enjoys as an LLC that corporations do not have is

Which of the following is not an advantage of a sole trader?

Which of the following is not a disadvantage of the corporate form of ownership?

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