Question 1

Almost one-half of corporate stock in the United States is owned by people whose annual income exceeds $100,000.

Accepted Answer

A) True 
 B)False  True

Question 2

Double taxation refers to the negative feature of

Accepted Answer

A)  all businesses in the United States 
B)  sole proprietorships 
C)  corporations 
D)  the federal and state tax systems 
E)  partnerships 
A)  all businesses in the United States 
B)  sole proprietorships 
C)  corporations 
D)  the federal and state tax systems 
E)  partnerships C

Question 3

Compared to stockholders, bondholders

Accepted Answer

A)  face greater risk 
B)  face the same risk 
C)  face lower risk 
D)  always receive a higher return on their investment 
E)  always receive a lower return on their investment 
A)  face greater risk 
B)  face the same risk 
C)  face lower risk 
D)  always receive a higher return on their investment 
E)  always receive a lower return on their investment C

Question 4

A takeover implies that

Accepted Answer

A)  the common shareholders buy out the bondholders 
B)  the government takes over the corporation 
C)  someone or a group is able to purchase all of the outstanding common stock in a corporation 
D)  the board of directors takes control of the corporation 
E)  a proprietorship sells out to a partnership 
A)  the common shareholders buy out the bondholders 
B)  the government takes over the corporation 
C)  someone or a group is able to purchase all of the outstanding common stock in a corporation 
D)  the board of directors takes control of the corporation 
E)  a proprietorship sells out to a partnership

Question 5

Which of the following is not found in the corporate form of business?

Accepted Answer

A)  stocks 
B)  bonds 
C)  state charter 
D)  dividends 
E)  unlimited liability 
A)  stocks 
B)  bonds 
C)  state charter 
D)  dividends 
E)  unlimited liability

Question 6

Indirect stock ownership means that a person

Accepted Answer

A)  buys stocks through a stockbroker 
B)  puts money into financial intermediaries that buy stocks 
C)  has a friend buy stocks so that the IRS won't know about it 
D)  puts money into a partnership rather than a corporation 
E)  buys bonds instead of stocks when the interest rate is high 
A)  buys stocks through a stockbroker 
B)  puts money into financial intermediaries that buy stocks 
C)  has a friend buy stocks so that the IRS won't know about it 
D)  puts money into a partnership rather than a corporation 
E)  buys bonds instead of stocks when the interest rate is high

Question 7

A sole proprietorship produces only one good.

Accepted Answer

A) True 
 B)False

Question 8

You and your roommate plan to start a business after college selling pagers. You have personal assets of $20,000, and she has personal assets of $15,000. You plan to invest $12,000 in the business while she plans to invest $8,000. If the business goes bankrupt with assets of $20,000 and liabilities of $50,000, describe how much each of you stand to lose if you organize (a) as a partnership, and (b) as a corporation.

Accepted Answer

a. In a partnership, each partner is 100

Question 9

If a proprietorship converts to a corporation form of business organization, it gives up control of day-to-day operations to the

Accepted Answer

A)  bondholders 
B)  shareholders 
C)  owners 
D)  management 
E)  board of directors 
A)  bondholders 
B)  shareholders 
C)  owners 
D)  management 
E)  board of directors

Question 10

Which of the following is unique to the corporate form of business organization?

Accepted Answer

A)  hiring and firing workers 
B)  borrowing funds for expansion 
C)  production of goods and services 
D)  limited liability for the firm's debts 
E)  ability to plow profits back into the firm 
A)  hiring and firing workers 
B)  borrowing funds for expansion 
C)  production of goods and services 
D)  limited liability for the firm's debts 
E)  ability to plow profits back into the firm

Question 11

When compared to a sole proprietorship, a disadvantage of the partnership form of business organization is that there

Accepted Answer

A)  is reduced access to capital resources 
B)  is limited liability 
C)  is shared liability with each partner for all the firm's debts 
D)  can only be two partners 
E)  are fewer opportunities to expand output 
A)  is reduced access to capital resources 
B)  is limited liability 
C)  is shared liability with each partner for all the firm's debts 
D)  can only be two partners 
E)  are fewer opportunities to expand output

Question 12

According to the text, those who hold stock in U.S. corporations

Accepted Answer

A)  are only from the top 10 percent of the wealthiest individuals in the country 
B)  cover a wide spectrum of American society 
C)  are mainly over 65 years of age 
D)  have very little education 
E)  includes only 2 percent of the U.S. population 
A)  are only from the top 10 percent of the wealthiest individuals in the country 
B)  cover a wide spectrum of American society 
C)  are mainly over 65 years of age 
D)  have very little education 
E)  includes only 2 percent of the U.S. population

Question 13

Convertible stockholders are paid dividends before common and preferred stockholders.

Accepted Answer

A) True 
 B)False

Question 14

A firm that exists as a separate legal being is

Accepted Answer

A)  a sole proprietorship 
B)  a corporation 
C)  a partnership 
D)  likely to be a small, family-run business 
E)  still dependent on its owners in many ways 
A)  a sole proprietorship 
B)  a corporation 
C)  a partnership 
D)  likely to be a small, family-run business 
E)  still dependent on its owners in many ways

Question 15

Only a small proportion of corporate stock owners have incomes under $100,000.

Accepted Answer

A) True 
 B)False

Question 16

Why can corporations issue bonds that mature long in the future, but partnerships and single-owner firms can only borrow for relatively short periods of time?

Accepted Answer

Corporations do not die on the

Question 17

Stock owners have claims on the assets and earnings of the firm in proportion to the percentage of total stock they own.

Accepted Answer

A) True 
 B)False

Question 18

Neighborhood florist shops, restaurants, and travel agencies are most likely organized as

Accepted Answer

A)  labor unions 
B)  corporations 
C)  partnerships 
D)  sole proprietorships 
E)  stock markets 
A)  labor unions 
B)  corporations 
C)  partnerships 
D)  sole proprietorships 
E)  stock markets

Question 19

The major difference between partnerships and proprietorships is

Accepted Answer

A)  the limit to liability 
B)  the opportunity to sell shares 
C)  the reduced cost of capital 
D)  shared responsibility and profit 
E)  tax advantages 
A)  the limit to liability 
B)  the opportunity to sell shares 
C)  the reduced cost of capital 
D)  shared responsibility and profit 
E)  tax advantages

Question 20

What characteristic is shared by both sole proprietorships and partnerships?

Accepted Answer

A)  They both tend to be large businesses. 
B)  They both face unlimited liability. 
C)  They both have just one owner. 
D)  They both face limited liability. 
E)  They both have just two owners. 
A)  They both tend to be large businesses. 
B)  They both face unlimited liability. 
C)  They both have just one owner. 
D)  They both face limited liability. 
E)  They both have just two owners.

Almost one-half of corporate stock in the United States is owned by people whose annual income exceeds $100,000.

Double taxation refers to the negative feature of

Compared to stockholders, bondholders

A takeover implies that

Which of the following is not found in the corporate form of business?

Indirect stock ownership means that a person

A sole proprietorship produces only one good.

If a proprietorship converts to a corporation form of business organization, it gives up control of day-to-day operations to the

Which of the following is unique to the corporate form of business organization?

When compared to a sole proprietorship, a disadvantage of the partnership form of business organization is that there

According to the text, those who hold stock in U.S. corporations

Convertible stockholders are paid dividends before common and preferred stockholders.

A firm that exists as a separate legal being is

Only a small proportion of corporate stock owners have incomes under $100,000.

Why can corporations issue bonds that mature long in the future, but partnerships and single-owner firms can only borrow for relatively short periods of time?

Stock owners have claims on the assets and earnings of the firm in proportion to the percentage of total stock they own.

Neighborhood florist shops, restaurants, and travel agencies are most likely organized as

The major difference between partnerships and proprietorships is

What characteristic is shared by both sole proprietorships and partnerships?

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 7: Entrepreneurship and Business Ownership

Almost one-half of corporate stock in the United States is owned by people whose annual income exceeds $100,000.

Double taxation refers to the negative feature of

Compared to stockholders, bondholders

A takeover implies that

Which of the following is not found in the corporate form of business?

Indirect stock ownership means that a person

A sole proprietorship produces only one good.

If a proprietorship converts to a corporation form of business organization, it gives up control of day-to-day operations to the

Which of the following is unique to the corporate form of business organization?

When compared to a sole proprietorship, a disadvantage of the partnership form of business organization is that there

According to the text, those who hold stock in U.S. corporations

Convertible stockholders are paid dividends before common and preferred stockholders.

A firm that exists as a separate legal being is

Only a small proportion of corporate stock owners have incomes under $100,000.

Why can corporations issue bonds that mature long in the future, but partnerships and single-owner firms can only borrow for relatively short periods of time?

Stock owners have claims on the assets and earnings of the firm in proportion to the percentage of total stock they own.

Neighborhood florist shops, restaurants, and travel agencies are most likely organized as

The major difference between partnerships and proprietorships is

What characteristic is shared by both sole proprietorships and partnerships?

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters