Exam 5: How to Form a Business

In a franchise arrangement, ownership remains in the hands of the franchisor.

A cooperative is simply another name for a corporation.

The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.

If the business is designated a sole proprietorship, profits are passed along to the owner. For tax purposes, these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Zach is a franchisee with Digger's Doggies, a chain of hotdog shops. He was doing well until several other Digger's Doggies franchisees got in trouble and were forced to close their shops. Soon afterward, Zach's business declined and was also forced to close. This is an example of

Mac and Charlie own a car repair shop that they operate as co-owners. Both take an active role in the management of the business, and each accepts unlimited liability. Mac and Charlie operate as a

Three types of corporate mergers are

In order to establish a C corporation, it is a requirement that investors run the company, whereas in an S corporation, this is not the case.

One disadvantage of a limited liability company is that it

A ________ is an organization that is owned and controlled by the people who use it-producers, consumers, and workers with similar needs pool their resources for mutual gain.

Double taxation is experienced by corporations that pay dividends. Which of the following scenarios is an accurate example of double taxation?

The ________ is the most common form of business ownership.

The coattail effect refers to inevitable repercussions on your business if a fellow franchisee should fail.

A ________ merger unites firms at different stages of related businesses.

Several small vineyard owners in the Napa Valley region of California banded together to market their grapes and wine in an attempt to get better prices. Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services. The arrangement established by these vineyard owners is an example of a

Public utilities, like electricity and water, are examples of quasi-public corporations.

Any debts or damages incurred by a firm organized as a sole proprietorship are

The three major types of mergers are acquisition, joint, and connective.

When a group of investors take a firm private, they purchase all the company's outstanding stock.

Although franchise arrangements are a good source of income for the franchisee, these businesses do not contribute significantly toward job creation.