Question 1

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional)corporation as a form of business ownership is that it:

Accepted Answer

A)  Has the ability to raise more money. 
B)  Is easier and less expensive to form. 
C)  Qualifies for simplified tax treatment. 
D)  Creates unlimited liability for its owners. 
A)  Has the ability to raise more money. 
B)  Is easier and less expensive to form. 
C)  Qualifies for simplified tax treatment. 
D)  Creates unlimited liability for its owners.

Question 2

Because of the growth of minority-owned businesses in the U.S. ,franchisors are becoming more focused on recruiting minority franchisees.

Accepted Answer

A) True 
 B)False

Question 3

One advantage of an S Corporation is that the profits are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

Accepted Answer

A) True 
 B)False

Question 4

In a typical franchise agreement,the franchisor pays the franchisee a fee to manage its company,and the two of them split the profits based on the percentages established in the agreement.

Accepted Answer

A) True 
 B)False

Question 5

One reason many companies do not organize themselves as an S corporation is that this form of business:

Accepted Answer

A)  Is subject to a higher tax rate than a general partnership. 
B)  Does not provide owners with limited liability. 
C)  Has a special eligibility restriction,which many businesses are unable to meet. 
D)  Is much more difficult to set up than C corporations. 
A)  Is subject to a higher tax rate than a general partnership. 
B)  Does not provide owners with limited liability. 
C)  Has a special eligibility restriction,which many businesses are unable to meet. 
D)  Is much more difficult to set up than C corporations.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Being your own boss means:

Accepted Answer

A)  Reducing your working hours. 
B)  Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business. 
C)  Accepting accountability for the mistakes of the business. 
D)  Having limited financial resources to throw into the business. 
A)  Reducing your working hours. 
B)  Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business. 
C)  Accepting accountability for the mistakes of the business. 
D)  Having limited financial resources to throw into the business.

Question 8

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

Accepted Answer

A) True 
 B)False

Question 9

One difference between partnerships and sole proprietorships is that partnerships:

Accepted Answer

A)  Take less work to form. 
B)  Are managed by an elected board of directors. 
C)  Have the advantage of limited liability. 
D)  Have a greater chance of long term survival due to the accountability of each partner to the other. 
A)  Take less work to form. 
B)  Are managed by an elected board of directors. 
C)  Have the advantage of limited liability. 
D)  Have a greater chance of long term survival due to the accountability of each partner to the other.

Question 10

With respect to taxes,the sole proprietorship:

Accepted Answer

A)  Pays taxes on the profits of the business at the same rate that corporations pay taxes. 
B)  Pays taxes on the profits of the business,at the owner's personal tax rate. 
C)  Pays taxes only if there are no expenses associated with the business. 
D)  Is permitted to determine its own tax rate and schedule of payments. 
A)  Pays taxes on the profits of the business at the same rate that corporations pay taxes. 
B)  Pays taxes on the profits of the business,at the owner's personal tax rate. 
C)  Pays taxes only if there are no expenses associated with the business. 
D)  Is permitted to determine its own tax rate and schedule of payments.

Question 11

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Accepted Answer

A) True 
 B)False

Question 12

Emily wants to open a chain of hair styling salons and hopes to attract investors to help finance growth.She considered forming a C corporation,but wants to have more flexibility about how the new business will be taxed.She also wants to offer investors/owners limited liability.Emily can satisfy her objectives by setting up a(n):

Accepted Answer

A)  Limited liability company. 
B)  S corporation. 
C)  Alien corporation. 
D)  General partnership. 
A)  Limited liability company. 
B)  S corporation. 
C)  Alien corporation. 
D)  General partnership.

Question 13

Ramon lives in Mexico City and is a Mexican citizen.He has several friends in the United States who own shares in an S corporation.Ramon would like to invest in this company.Ramon:

Accepted Answer

A)  Can invest in this company,but must pay both U.S.and Mexican taxes. 
B)  Cannot become a shareholder since he is not a citizen or permanent resident of the U.S. 
C)  Can become a shareholder but cannot become a manager,and his income must be paid in pesos. 
D)  Needs approval from the Mexican government before he can invest. 
A)  Can invest in this company,but must pay both U.S.and Mexican taxes. 
B)  Cannot become a shareholder since he is not a citizen or permanent resident of the U.S. 
C)  Can become a shareholder but cannot become a manager,and his income must be paid in pesos. 
D)  Needs approval from the Mexican government before he can invest.

Question 14

About 15 years ago,a well-known franchised food chain was brought to its knees when several customers got sick from tainted beef.Although the food chain recovered due to its quick and consistent action,several franchisees sued the parent company for loss of sales.The franchisees experienced the coattail effects of the bad publicity this event received.

Accepted Answer

A) True 
 B)False

Question 15

A foreign corporation is chartered in a country outside the U.S.

Accepted Answer

A) True 
 B)False

Question 16

Adam is a major stockholder in Precision Transmission Services (PTS),a nationwide network of transmission repair shops founded by his father.Currently,PTS stock is sold on the open market,but Adam has talked to several relatives about his desire to get all of the PTS stock back in his family's hands.Adam is interested in ______________________________.

Accepted Answer

A)  taking the firm private 
B)  a hostile takeover of the firm 
C)  converting the firm to a general partnership 
D)  forming a master limited partnership 
A)  taking the firm private 
B)  a hostile takeover of the firm 
C)  converting the firm to a general partnership 
D)  forming a master limited partnership

Question 17

Stockholders in a corporation exert a significant degree of control over the company's daily operations.

Accepted Answer

A) True 
 B)False

Question 18

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Accepted Answer

A)  Are less risky,because each partner is responsible for only a specified fraction of the firm's debts. 
B)  Are easier to terminate. 
C)  Cost less to organize. 
D)  Give the firm a stronger financial foundation. 
A)  Are less risky,because each partner is responsible for only a specified fraction of the firm's debts. 
B)  Are easier to terminate. 
C)  Cost less to organize. 
D)  Give the firm a stronger financial foundation.

Question 19

According to the Uniform Partnership Act,the three key elements of any general partnership are (1)common ownership, (2)shared profits and losses,and (3)the right to participate in managing the operations of the business.

Accepted Answer

A) True 
 B)False

Question 20

Corporations represent 20 percent of all the businesses in the U.S.and earn 81 percent of the total U.S.business receipts.

Accepted Answer

A) True 
 B)False

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional)corporation as a form of business ownership is that it:

Because of the growth of minority-owned businesses in the U.S. ,franchisors are becoming more focused on recruiting minority franchisees.

One advantage of an S Corporation is that the profits are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

In a typical franchise agreement,the franchisor pays the franchisee a fee to manage its company,and the two of them split the profits based on the percentages established in the agreement.

One reason many companies do not organize themselves as an S corporation is that this form of business:

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

Being your own boss means:

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

One difference between partnerships and sole proprietorships is that partnerships:

With respect to taxes,the sole proprietorship:

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Ramon lives in Mexico City and is a Mexican citizen.He has several friends in the United States who own shares in an S corporation.Ramon would like to invest in this company.Ramon:

A foreign corporation is chartered in a country outside the U.S.

Stockholders in a corporation exert a significant degree of control over the company's daily operations.

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

According to the Uniform Partnership Act,the three key elements of any general partnership are (1)common ownership, (2)shared profits and losses,and (3)the right to participate in managing the operations of the business.

Corporations represent 20 percent of all the businesses in the U.S.and earn 81 percent of the total U.S.business receipts.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

Entrepreneurship and Starting a Small Business

Management and Leadership

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Appendix A: Using Technology to Manage Information

Appendix B: Managing Risk

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Exam 5: How to Form a Business

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional)corporation as a form of business ownership is that it:

Because of the growth of minority-owned businesses in the U.S. ,franchisors are becoming more focused on recruiting minority franchisees.

One advantage of an S Corporation is that the profits are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

In a typical franchise agreement,the franchisor pays the franchisee a fee to manage its company,and the two of them split the profits based on the percentages established in the agreement.

One reason many companies do not organize themselves as an S corporation is that this form of business:

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

Being your own boss means:

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

One difference between partnerships and sole proprietorships is that partnerships:

With respect to taxes,the sole proprietorship:

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Ramon lives in Mexico City and is a Mexican citizen.He has several friends in the United States who own shares in an S corporation.Ramon would like to invest in this company.Ramon:

A foreign corporation is chartered in a country outside the U.S.

Stockholders in a corporation exert a significant degree of control over the company's daily operations.

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

According to the Uniform Partnership Act,the three key elements of any general partnership are (1)common ownership, (2)shared profits and losses,and (3)the right to participate in managing the operations of the business.

Corporations represent 20 percent of all the businesses in the U.S.and earn 81 percent of the total U.S.business receipts.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

Entrepreneurship and Starting a Small Business

Management and Leadership

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Appendix A: Using Technology to Manage Information

Appendix B: Managing Risk

Filters