Question 1

If the owner of a sole proprietorship retires or dies, the owner's heirs may take over a profitable business and either sell it or continue to operate it.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an advantage of a sole proprietorship?

Accepted Answer

A)  It is easy to form and dissolve. 
B)  It has unlimited liability. 
C)  Profits are taxed as personal income. 
D)  There owner has the flexibility of being his or her own boss. 
E)  The owner keeps all profits. 
A)  It is easy to form and dissolve. 
B)  It has unlimited liability. 
C)  Profits are taxed as personal income. 
D)  There owner has the flexibility of being his or her own boss. 
E)  The owner keeps all profits.

Question 3

Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

Accepted Answer

A) True 
 B)False

Question 4

Describe the advantages and disadvantages of a corporation.

Accepted Answer

Corporations have several advantages, in

Question 5

Quarrels among business associates have become common. The associates quarrel over what products the firm should sell, division of authority, selection of personnel, whether to bring family members into the business, whether to expand, and who is contributing most to the firm's success. Such feuding, which damages business relationships, occurs most frequently in what form of business?

Accepted Answer

A)  Partnerships 
B)  Cooperatives 
C)  Corporations 
D)  Sole proprietorships 
E)  S-corporations 
A)  Partnerships 
B)  Cooperatives 
C)  Corporations 
D)  Sole proprietorships 
E)  S-corporations

Question 6

Compared to a corporation, a partnership is more difficult and expensive to establish.

Accepted Answer

A) True 
 B)False

Question 7

Most partnerships have ____ partners.

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  five 
E)  more than five 
A)  two 
B)  three 
C)  four 
D)  five 
E)  more than five

Question 8

What does double taxation mean?

Accepted Answer

A)  Companies must pay taxes on their income, and then employees must pay taxes on their salaries and wages. 
B)  Companies have to pay both sales taxes and income taxes. 
C)  Companies must pay taxes on their earnings, and then stockholders pay taxes on their dividends. 
D)  Suppliers tax their customers, and in turn these businesses tax the ultimate consumer. 
E)  Companies must pay taxes on corporate income and then additional taxes on distributions to profit stockholders. 
A)  Companies must pay taxes on their income, and then employees must pay taxes on their salaries and wages. 
B)  Companies have to pay both sales taxes and income taxes. 
C)  Companies must pay taxes on their earnings, and then stockholders pay taxes on their dividends. 
D)  Suppliers tax their customers, and in turn these businesses tax the ultimate consumer. 
E)  Companies must pay taxes on corporate income and then additional taxes on distributions to profit stockholders.

Question 9

Wade serves on Foot Locker's board of directors. How did Wade get this position?

Accepted Answer

A)  He volunteered for the assignment. 
B)  He was appointed by the chief executive officer. 
C)  He was assigned by the Federal Trade Commission. 
D)  Through default as the largest stockholder, Wade got the position. 
E)  He was elected by the company's stockholders. 
A)  He volunteered for the assignment. 
B)  He was appointed by the chief executive officer. 
C)  He was assigned by the Federal Trade Commission. 
D)  Through default as the largest stockholder, Wade got the position. 
E)  He was elected by the company's stockholders.

Question 10

In a limited partnership, a limited partner's name must be included in the partnership's name.

Accepted Answer

A) True 
 B)False

Question 11

As a limited partner in a construction business, Joe

Accepted Answer

A)  has input only on major company decisions. 
B)  contributes only his time and not his money. 
C)  does not receive any portion of the profits. 
D)  only risks his initial investment. 
E)  cannot lose his investment in the partnership. 
A)  has input only on major company decisions. 
B)  contributes only his time and not his money. 
C)  does not receive any portion of the profits. 
D)  only risks his initial investment. 
E)  cannot lose his investment in the partnership.

Question 12

The person who assumes full co-ownership of a partnership, including unlimited liability, is a

Accepted Answer

A)  sole proprietor. 
B)  stockholder. 
C)  shareholder. 
D)  limited partner. 
E)  general partner. 
A)  sole proprietor. 
B)  stockholder. 
C)  shareholder. 
D)  limited partner. 
E)  general partner.

Question 13

Brian wants to start a business that provides canoe and kayak trips. He decides that it would be better to ask his brother Brad to become his partner because

Accepted Answer

A)  one person could not possibly run this type of business. 
B)  Brian will receive all of the profits from the partnership. 
C)  together they will be able to get more capital and credit to start the business. 
D)  the business will pay less taxes than it would as a sole proprietorship. 
E)  there are generally fewer control issues in a partnership than in a sole proprietorship. 
A)  one person could not possibly run this type of business. 
B)  Brian will receive all of the profits from the partnership. 
C)  together they will be able to get more capital and credit to start the business. 
D)  the business will pay less taxes than it would as a sole proprietorship. 
E)  there are generally fewer control issues in a partnership than in a sole proprietorship.

Question 14

Corporations account for about 95 percent of all sales revenues.

Accepted Answer

A) True 
 B)False

Question 15

When incorporating, a business

Accepted Answer

A)  may incorporate in any state it chooses. 
B)  must incorporate in the state in which its headquarters are located. 
C)  must incorporate in the state in which it does the most business. 
D)  must receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located. 
E)  must do none of the above. 
A)  may incorporate in any state it chooses. 
B)  must incorporate in the state in which its headquarters are located. 
C)  must incorporate in the state in which it does the most business. 
D)  must receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located. 
E)  must do none of the above.

Question 16

The major reason why businesses change from sole proprietorships to other forms of ownership is to

Accepted Answer

A)  gain unlimited liability. 
B)  avoid unlimited liability. 
C)  avoid lack of continuity. 
D)  obtain help and eliminate the problem of too much to do in one day. 
E)  offer advancement opportunities for employees. 
A)  gain unlimited liability. 
B)  avoid unlimited liability. 
C)  avoid lack of continuity. 
D)  obtain help and eliminate the problem of too much to do in one day. 
E)  offer advancement opportunities for employees.

Question 17

Experts predict that mergers in the first part of the twenty-first century will be the result of cash-rich companies looking to acquire businesses that will enhance their position in the marketplace.

Accepted Answer

A) True 
 B)False

Question 18

Suppose Bill Gates, founder of Microsoft, is interested in a small software company. He may offer to purchase the stock of this company at a price that is just high enough to tempt the current stockholders. This action would be called a

Accepted Answer

A)  monopoly. 
B)  tender offer. 
C)  proxy fight. 
D)  hostile takeover. 
E)  white knight offer. 
A)  monopoly. 
B)  tender offer. 
C)  proxy fight. 
D)  hostile takeover. 
E)  white knight offer.

Question 19

Explain the differences among a domestic, a foreign, and an alien corporation.

Accepted Answer

A domestic corporation is one that is in

Question 20

Why is a sole proprietorship the most flexible type of business?

Accepted Answer

A sole proprietorship is considered the

Exam 4: Choosing a Form of Business Ownership

If the owner of a sole proprietorship retires or dies, the owner's heirs may take over a profitable business and either sell it or continue to operate it.

Which of the following is not an advantage of a sole proprietorship?

Because there are two or more people in a general partnership, bankers, suppliers, and other creditors are not concerned about unlimited liability.

Describe the advantages and disadvantages of a corporation.

Compared to a corporation, a partnership is more difficult and expensive to establish.

Most partnerships have ____ partners.

What does double taxation mean?

Wade serves on Foot Locker's board of directors. How did Wade get this position?

In a limited partnership, a limited partner's name must be included in the partnership's name.

As a limited partner in a construction business, Joe

The person who assumes full co-ownership of a partnership, including unlimited liability, is a

Brian wants to start a business that provides canoe and kayak trips. He decides that it would be better to ask his brother Brad to become his partner because

Corporations account for about 95 percent of all sales revenues.

When incorporating, a business

The major reason why businesses change from sole proprietorships to other forms of ownership is to

Experts predict that mergers in the first part of the twenty-first century will be the result of cash-rich companies looking to acquire businesses that will enhance their position in the marketplace.

Suppose Bill Gates, founder of Microsoft, is interested in a small software company. He may offer to purchase the stock of this company at a price that is just high enough to tempt the current stockholders. This action would be called a

Explain the differences among a domestic, a foreign, and an alien corporation.

Why is a sole proprietorship the most flexible type of business?

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

Filters