Exam 3: Selecting a Form of Business Ownership

Mary and Diane drafted a partnership agreement for their apparel business. Which element below should have been included?

Sole proprietors find it easier to obtain outside financing than do owners of other types of business enterprises.

Ben Cohen and Jerry Greenfield started Ben & Jerry's as a corporation.

Which of the following is a of the corporate form of organization?

One drawback to incorporation-one that often discourages small businesses from incorporating-is the fact that corporations are costly to set up.

A(n) _____ occurs when two companies join together and form a new company.

An alternative approach to traditional business growth is to merge with or acquire another company.

The combination of Adidas and Reebok was an example of a(n) _____.

Which of the following is not true for a sole proprietor?

Scenario-Based Jerry Foster is a sole proprietorship who owns a canoe renting business.Jerry's employee, Terry Gibbs, greets customers at the company's office, loads the customers and their rented canoes onto a van, provides them with safety instructions and drives them upstream.Once unloaded the canoers are on their own to float back to the company's office to check in.Although there have been minor accidents, no one has drowned in the nine years the business has been in operation.Jerry plans to add kayaks and rubber rafts next year.The scenery is beautiful and each day people see wild animals come down to the water. -If someone does drown this year, who will be held liable?

In a partnership one partner can be sued for unpaid debts incurred by another partner.

What is a sole proprietorship?

As a sole proprietor, your personal assets are not at risk for the sake of the business.

Which of the following is true about not-for-profit corporations:

A partnership is a business that is jointly owned by two or more people.

A sole proprietorship is a legal form of business ownership.

126If they form a corporation and Pat Smith gets into an accident with the company's van and the van is not insured, George Johnson could be held personally liable for any damages resulting from the accident.

Financing needs are not directly related to selecting a form of business ownership.

They could expand their operations by acquiring another tugboat company. This type of deal is called a merger.

In a limited partnership, although one partner runs the business, any number of the others may have partial involvement in the business.