Exam 5: How to Form a Business

A distinguishing feature of a cooperative is that it

People who form cooperatives

Matthew is leading a group of stockholders who want to take the Cash Cow Corporation private. If Matthew's group succeeds, Cash Cow's stock will no longer be available to investors on the open market.

If an established franchisor agrees to provide you the opportunity to become a franchisee in its franchise system, the franchisor may also be willing to serve as a source of financing for your operation.

The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

A merger involving a software producer and a clothing manufacturer is an example of a ________ merger.

The form of business ownership that usually requires the most detailed record keeping is the

Janie is a general partner in a local bakery. All of her personal assets are legally protected from the debts of the business.

One of the drawbacks of a limited liability company is that most states do not yet recognize this form of ownership.

A(n) ________ is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.

An entrepreneur who wishes to start a business with little delay or hassle, and who wants to be his or her own boss, should organize the business as a

One disadvantage of ________ is the initial cost of formation.

Double taxation means that a corporation pays twice the amount of taxes as a sole proprietorship or partnership.

When investors successfully take a firm private, the company's stock is

Dr. Limmer, Dr. Lowder, and Dr. Lynch want to incorporate their practice. There is no advantage due to the costs involved.

In a general partnership, all partners are entitled to an equal share of the firm's profits.

A(n) ________ occurs when one company buys the property and obligations of another company.

Double taxation means

Joji is a 37-year-old married business owner. He runs a dry cleaning service with three locations in Toledo, Ohio. His personal obligations are the home that he owns with his wife, who works for a large financial consulting firm; the healthcare of his family; and his commitment toward saving for his three children's college educations. Joji knows that two of his locations require a large infusion of cash to pay for new and expensive dry cleaning equipment. Although his wife's job provides the family with health insurance, it also places the family in a higher income tax bracket. Joji would certainly like to minimize his taxes. Which of the following forms of business ownership would you suggest for him?

A(n) ________ is a state-chartered legal entity with authority to act and to have liability separate from its owners.