Exam 5: How to Form a Business

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

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

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.

A horizontal merger refers to a merger between two companies that serve entirely different markets.

Which of the following is an attractive benefit of a corporation?

A person who buys the right to use a business name and sell a product within a given territory is called a:

Twenty-six years ago,several small vineyard owners in California joined voluntarily 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(n):

In a partnership,a(n)__________ partner (owner)actively manages the company and has unlimited liability for claims against the firm.

Many franchisors have rules that prohibit franchisees from sponsoring their own websites.

Franchising is popular in the United States,but legal barriers have limited its popularity in foreign countries.

Maria recently purchased 100 shares of stock in Idle Time Gaming,Inc.Maria is a(n)______________ of this company.

A conventional corporation is a state-chartered legal entity,with authority to act and have liability separate from its owners.

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

It is usually easy to start and end a sole proprietorship.

The stockholders in a corporation elect a board of directors to oversee the company's major policy issues.

In a limited liability partnership,each partner's risk of losing personal assets is:

One drawback of franchises is that they have a higher failure rate than other types of business ventures.

One reason that a firm may choose to merge or acquire another company would be diversity of products or services.

The owners of Idle Time Gaming Company would like to switch to an S corporation.Unfortunately,their lawyer advised them that they do not meet some of the requirements necessary to qualify as an S corporation.An alternative form of business that would give them similar advantages is a limited liability company.

Two of Diana's friends have approached her about starting a new business.Diana is willing to invest money in the business and share in its profits,but she has no desire to be involved in the day-to-day management of the company,nor is she willing to risk any amount beyond her initial investment.Diana's preferences suggest that she prefers a general partnership form of business ownership.