Question 1

A conglomerate merger will:

Accepted Answer

A)  Diversify business operations and investments. 
B)  Allow the firm to have a less dominant position in its market. 
C)  Enable the firm to enjoy a higher degree of specialization. 
D)  Give the firm a more secure access to needed materials and components and better control over quality. 
A)  Diversify business operations and investments. 
B)  Allow the firm to have a less dominant position in its market. 
C)  Enable the firm to enjoy a higher degree of specialization. 
D)  Give the firm a more secure access to needed materials and components and better control over quality.

Question 2

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

Accepted Answer

A) True 
 B)False

Question 3

A ___________ is an arrangement whereby someone with proven idea for a business sells the rights to use the business model,to sell a product or service to others in a given territory.

Accepted Answer

A)  conditional grant 
B)  franchise agreement 
C)  trade contract 
D)  extended ownership agreement 
A)  conditional grant 
B)  franchise agreement 
C)  trade contract 
D)  extended ownership agreement

Question 4

A merger between two businesses in different stages of related businesses is known as a vertical merger.

Accepted Answer

A) True 
 B)False

Question 5

Nutty Dough is a small chain of donut shops currently owned and operated by a group of seven partners.The owners think that their chain has the potential for rapid growth,but several of the partners are concerned about the growing financial risks that will accompany this growth.One way the partners could deal with this problem would be to incorporate their business.

Accepted Answer

A) True 
 B)False

Question 6

When using social media to search for potential franchisees,companies:

Accepted Answer

A)  only gauge the popularity of the social media user. 
B)  only look at what people are saying about the company. 
C)  have developed games emulating day-to-day operations to entice potential franchisees. 
D)  only look at what the user is saying about the company online and the popularity of that user. 
A)  only gauge the popularity of the social media user. 
B)  only look at what people are saying about the company. 
C)  have developed games emulating day-to-day operations to entice potential franchisees. 
D)  only look at what the user is saying about the company online and the popularity of that user.

Question 7

A cooperative consists of people with similar needs who pool their resources for mutual gain.

Accepted Answer

A) True 
 B)False

Question 8

A partner (owner)who invests money in a business,does not take an active role in managing the operation,and is only subject to losing the funds he/she invested.

Accepted Answer

A)  Implied partner. 
B)  Limited partner. 
C)  Partial partner. 
D)  Corporate partner. 
A)  Implied partner. 
B)  Limited partner. 
C)  Partial partner. 
D)  Corporate partner.

Question 9

The purpose of a farm cooperative is to:

Accepted Answer

A)  Give members more economic power as a group than they would have as individuals. 
B)  Give each farm an equal share in the running of the cooperative. 
C)  Equalize the members' standard of living. 
D)  Allow socialism a foothold in the U.S. 
A)  Give members more economic power as a group than they would have as individuals. 
B)  Give each farm an equal share in the running of the cooperative. 
C)  Equalize the members' standard of living. 
D)  Allow socialism a foothold in the U.S.

Question 10

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Accepted Answer

A)  Corporations 
B)  Partnerships 
C)  Sole proprietorships 
D)  Limited liability companies 
A)  Corporations 
B)  Partnerships 
C)  Sole proprietorships 
D)  Limited liability companies

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Hidden Valley Communications,Inc. ,located in a remote area of Utah,made a special device that was used in 4th generation cell phones.After three years of local operations,the company that employed 4,000 people was planning to close its Utah operation and move the assembly offshore.Under the direction of a financial services company that financed the deal,the employees agreed to become owners of the company and continue to operate the business.The business concept that describes this arrangement is:

Accepted Answer

A)  IPO (initial public offering). 
B)  LBO (leveraged buyout). 
C)  EPO (equity public offering). 
D)  HM (horizontal merger). 
A)  IPO (initial public offering). 
B)  LBO (leveraged buyout). 
C)  EPO (equity public offering). 
D)  HM (horizontal merger).

Question 14

Although sole proprietors do not pay any special taxes,as the owner of the business you are also an employee of the business which requires you to:

Accepted Answer

A)  Pay income tax only one time each year. 
B)  Pay self-employment taxes. 
C)  Pay for the right to get an employee identification number. 
D)  File an income tax return for the business. 
A)  Pay income tax only one time each year. 
B)  Pay self-employment taxes. 
C)  Pay for the right to get an employee identification number. 
D)  File an income tax return for the business.

Question 15

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

Accepted Answer

A) True 
 B)False

Question 16

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

Accepted Answer

A) True 
 B)False

Question 17

A corporation can raise financial capital by selling shares of stock to interested investors.

Accepted Answer

A) True 
 B)False

Question 18

At one time there were many farm cooperatives,but more recently,they have been replaced by other forms of business ownership.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about buying a franchise is most accurate?

Accepted Answer

A)  One of the advantages of buying a franchise is that franchisors are so closely regulated that there is virtually no chance for scams to succeed. 
B)  Before purchasing a franchise,the buyer should carefully evaluate the franchise,the franchisor,his or her own situation,and the nature of the market. 
C)  Franchise agreements are simple to evaluate,since federal law requires that all such agreements must be written in plain English with all fees and terms clearly explained. 
D)  Buying a franchise is the simplest and least expensive way to set up a business,since the franchisor has already worked out all of the details for setting up and running the business. 
A)  One of the advantages of buying a franchise is that franchisors are so closely regulated that there is virtually no chance for scams to succeed. 
B)  Before purchasing a franchise,the buyer should carefully evaluate the franchise,the franchisor,his or her own situation,and the nature of the market. 
C)  Franchise agreements are simple to evaluate,since federal law requires that all such agreements must be written in plain English with all fees and terms clearly explained. 
D)  Buying a franchise is the simplest and least expensive way to set up a business,since the franchisor has already worked out all of the details for setting up and running the business.

Question 20

After a successful five years,Peaceful Pastures,LLC (a retirement ranch for race horses)thinks it may be able to attract donations from animal activist groups and even the federal government if it becomes a non-profit corporation.As its business advisor,you explain that as a non-profit corporation,the owner(s)may earn a salary but the business should not seek after-tax profits.

Accepted Answer

A) True 
 B)False

A conglomerate merger will:

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

A ___________ is an arrangement whereby someone with proven idea for a business sells the rights to use the business model,to sell a product or service to others in a given territory.

A merger between two businesses in different stages of related businesses is known as a vertical merger.

When using social media to search for potential franchisees,companies:

A cooperative consists of people with similar needs who pool their resources for mutual gain.

A partner (owner)who invests money in a business,does not take an active role in managing the operation,and is only subject to losing the funds he/she invested.

The purpose of a farm cooperative is to:

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

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

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

Although sole proprietors do not pay any special taxes,as the owner of the business you are also an employee of the business which requires you to:

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

A corporation can raise financial capital by selling shares of stock to interested investors.

At one time there were many farm cooperatives,but more recently,they have been replaced by other forms of business ownership.

Which of the following statements about buying a franchise is most accurate?

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

A conglomerate merger will:

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

A ___________ is an arrangement whereby someone with proven idea for a business sells the rights to use the business model,to sell a product or service to others in a given territory.

A merger between two businesses in different stages of related businesses is known as a vertical merger.

When using social media to search for potential franchisees,companies:

A cooperative consists of people with similar needs who pool their resources for mutual gain.

A partner (owner)who invests money in a business,does not take an active role in managing the operation,and is only subject to losing the funds he/she invested.

The purpose of a farm cooperative is to:

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

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

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

Although sole proprietors do not pay any special taxes,as the owner of the business you are also an employee of the business which requires you to:

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

A corporation can raise financial capital by selling shares of stock to interested investors.

At one time there were many farm cooperatives,but more recently,they have been replaced by other forms of business ownership.

Which of the following statements about buying a franchise is most accurate?

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