Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

One reason limited liability companies have become so popular is that they

Accepted Answer

A)  can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation. 
B)  allow owners to sell their interests in the company without requiring approval from other owners. 
C)  have unlimited life. 
D)  permit owners to avoid paying self-employment taxes on the company's profits. 
A)  can be taxed either as a corporation or as a partnership, so owners can choose the tax treatment that is most advantageous for their situation. 
B)  allow owners to sell their interests in the company without requiring approval from other owners. 
C)  have unlimited life. 
D)  permit owners to avoid paying self-employment taxes on the company's profits.

Question 3

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

Accepted Answer

A) True 
 B)False

Question 4

One reason that companies participate in mergers and acquisitions is

Accepted Answer

A)  to do the same thing as the competition because it makes for a highly leveraged company. 
B)  to convert a sole proprietorship into a partnership. 
C)  to expand within their own field or enter new markets. 
D)  to take the first step toward a join venture. 
A)  to do the same thing as the competition because it makes for a highly leveraged company. 
B)  to convert a sole proprietorship into a partnership. 
C)  to expand within their own field or enter new markets. 
D)  to take the first step toward a join venture.

Question 5

Finnegan is a limited partner in Gettout & Associates, a local financial consulting company. Heywood U. Gettout is one of the general partners in the company and is needing to temporarily leave the company to attend to some personal matters. Heywood has asked Finnegan to perform his managerial duties while he is gone. As a limited partner, Finnegan

Accepted Answer

A)  can fill in as a manager whenever necessary, as long as it is for only a limited time. 
B)  can make managerial decisions as long as they do not involve the payment of money. 
C)  cannot participate in the management of the partnership. 
D)  can manage the firm as long as he gets approval from the company's other general partners. 
A)  can fill in as a manager whenever necessary, as long as it is for only a limited time. 
B)  can make managerial decisions as long as they do not involve the payment of money. 
C)  cannot participate in the management of the partnership. 
D)  can manage the firm as long as he gets approval from the company's other general partners.

Question 6

The limited liability company requires a minimum of 10 members.

Accepted Answer

A) True 
 B)False

Question 7

Intercontinental Provisions, a specialty grocery store, is considering a conglomerate merger with a company that makes storage solutions. A likely reason is

Accepted Answer

A)  to expand its market share. 
B)  to develop spin-off companies. 
C)  diversification. 
D)  to meet the requirements to convert to a limited liability company. 
A)  to expand its market share. 
B)  to develop spin-off companies. 
C)  diversification. 
D)  to meet the requirements to convert to a limited liability company.

Question 8

Global franchising offers

Accepted Answer

A)  few opportunities for American investors. 
B)  opportunities for large franchise systems, but not small ones. 
C)  opportunities for both large and small franchises. 
D)  American firms the opportunity to market goods overseas without any need to adjust for cultural differences. 
A)  few opportunities for American investors. 
B)  opportunities for large franchise systems, but not small ones. 
C)  opportunities for both large and small franchises. 
D)  American firms the opportunity to market goods overseas without any need to adjust for cultural differences.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

States may levy special taxes on corporations that are not imposed on other businesses.

Accepted Answer

A) True 
 B)False

Question 11

Harper has always disliked the concept that the customers, managers, and workers of a business are separate individuals with competing goals. She joined with many other people in her community who share this view to become a member, and part owner, of a childcare center. Harper and the other members operate the center for their own benefit, and each is expected to work at the center at least 12 hours each month. The type of organization Harper belongs to is known as a joint venture.

Accepted Answer

A) True 
 B)False

Question 12

In recent years, foreign firms were reluctant to merge with or acquire American corporations.

Accepted Answer

A) True 
 B)False

Question 13

Compared to a sole proprietorship, which of the following is considered an advantage of a general partnership?

Accepted Answer

A)  Ability to pool financial resources 
B)  Unlimited liability for all owners 
C)  Division of profits among owners 
D)  Ease and flexibility in transferring shares of ownership to others 
A)  Ability to pool financial resources 
B)  Unlimited liability for all owners 
C)  Division of profits among owners 
D)  Ease and flexibility in transferring shares of ownership to others

Question 14

If a franchisee decides he wants out of the business, he is free to close up shop or sell the business, just as if he were a sole proprietor or partnership outside of a franchise arrangement.

Accepted Answer

A) True 
 B)False

Question 15

Due to several years of poor performance, Stanley's Metal Manufacturers, Inc., is closing. Through the use of debt financing, Stanley's workers plan to purchase the company's stock from current shareholders in order to buy the company, improve performance, and save jobs.

Accepted Answer

A) True 
 B)False

Question 16

In today's economy, only large business enterprises should operate as corporations.

Accepted Answer

A) True 
 B)False

Question 17

Some ________ ask members/customers to work at the organization for a number of hours a month as part of their duties.

Accepted Answer

A)  franchises 
B)  limited partnerships 
C)  mutual funds 
D)  cooperatives 
A)  franchises 
B)  limited partnerships 
C)  mutual funds 
D)  cooperatives

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

A major objective of limited liability partnerships (LLPs) is to limit each partner's personal liability to the consequences of their own acts and those of people under their supervision.

Accepted Answer

A) True 
 B)False

Question 20

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set up a

Accepted Answer

A)  master limited partnership. 
B)  sole proprietorship. 
C)  limited amount of time each can actively spend in the business. 
D)  limited liability partnership. 
A)  master limited partnership. 
B)  sole proprietorship. 
C)  limited amount of time each can actively spend in the business. 
D)  limited liability partnership.

Exam 5: How to Form a Business

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

One reason limited liability companies have become so popular is that they

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

One reason that companies participate in mergers and acquisitions is

The limited liability company requires a minimum of 10 members.

Intercontinental Provisions, a specialty grocery store, is considering a conglomerate merger with a company that makes storage solutions. A likely reason is

Global franchising offers

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

States may levy special taxes on corporations that are not imposed on other businesses.

In recent years, foreign firms were reluctant to merge with or acquire American corporations.

Compared to a sole proprietorship, which of the following is considered an advantage of a general partnership?

If a franchisee decides he wants out of the business, he is free to close up shop or sell the business, just as if he were a sole proprietor or partnership outside of a franchise arrangement.

Due to several years of poor performance, Stanley's Metal Manufacturers, Inc., is closing. Through the use of debt financing, Stanley's workers plan to purchase the company's stock from current shareholders in order to buy the company, improve performance, and save jobs.

In today's economy, only large business enterprises should operate as corporations.

Some ________ ask members/customers to work at the organization for a number of hours a month as part of their duties.

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.

A major objective of limited liability partnerships (LLPs) is to limit each partner's personal liability to the consequences of their own acts and those of people under their supervision.

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set up a

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

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

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

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