Question 1

What does the board of directors manage? What do corporate officers manage?

Accepted Answer

The board of directors and corporate off

Question 2

Unlimited liability holds a sole proprietor personally responsible for all the debts of the business.

Accepted Answer

A) True 
 B)False

Question 3

Unlike a person, a corporation exists only on paper.

Accepted Answer

A) True 
 B)False

Question 4

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.
-Refer to B&G, Inc. Which of these features does not belong to this type of corporation?

Accepted Answer

A)  No double taxation 
B)  Management flexibility 
C)  Limited liability 
D)  Personal asset protection 
E)  Many Internal Revenue tax regulations 
A)  No double taxation 
B)  Management flexibility 
C)  Limited liability 
D)  Personal asset protection 
E)  Many Internal Revenue tax regulations

Question 5

Kim, Sandra, Jerry, and Wilma belong to a business that buys groceries in bulk, then distributes them to members. This type of business is called a

Accepted Answer

A)  cooperative. 
B)  quasi-government corporation. 
C)  producer cooperative. 
D)  buying corporation. 
E)  consumer corporation. 
A)  cooperative. 
B)  quasi-government corporation. 
C)  producer cooperative. 
D)  buying corporation. 
E)  consumer corporation.

Question 6

Which of the following is not a disadvantage of sole proprietorships?

Accepted Answer

A)  Unlimited liability 
B)  Lack of money 
C)  Double taxation 
D)  Lack of continuity 
E)  Limited management skills 
A)  Unlimited liability 
B)  Lack of money 
C)  Double taxation 
D)  Lack of continuity 
E)  Limited management skills

Question 7

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

Accepted Answer

A)  All stockholders vote on all the major issues and problems that a company faces on a monthly basis. 
B)  Stockholders are intricately involved in the daily operations of a corporation. 
C)  Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation. 
D)  Stockholders vote for the members of the board of directors, and this board makes all the daily business decisions for the corporation. 
E)  Stockholders usually call company management and tell executives better ways to run the organization. 
A)  All stockholders vote on all the major issues and problems that a company faces on a monthly basis. 
B)  Stockholders are intricately involved in the daily operations of a corporation. 
C)  Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation. 
D)  Stockholders vote for the members of the board of directors, and this board makes all the daily business decisions for the corporation. 
E)  Stockholders usually call company management and tell executives better ways to run the organization.

Question 8

The top governing body of a corporation is known as the

Accepted Answer

A)  incorporators. 
B)  stockholders. 
C)  management. 
D)  officers. 
E)  board of directors. 
A)  incorporators. 
B)  stockholders. 
C)  management. 
D)  officers. 
E)  board of directors.

Question 9

Ted's partnership agreement with two other men was a bit unsound. One of the problems the men were encountering was uneven productivity among the partners. The agreement required each partner to contribute to every aspect of the business to receive an equal portion of the profits. This agreement did not reflect the idea that

Accepted Answer

A)  all partners need not be equal; that is, there are different types of partners. Some may be fully active in running the business, whereas others may have a more limited role. 
B)  limited partners are required to be active in day-to-day business operations. 
C)  customers and creditors of a limited partnership need not be protected. 
D)  the Uniform Partnership Act requires every general partnership to have at least one limited partner. 
E)  each partner must agree to contracts entered into on behalf of all the others. 
A)  all partners need not be equal; that is, there are different types of partners. Some may be fully active in running the business, whereas others may have a more limited role. 
B)  limited partners are required to be active in day-to-day business operations. 
C)  customers and creditors of a limited partnership need not be protected. 
D)  the Uniform Partnership Act requires every general partnership to have at least one limited partner. 
E)  each partner must agree to contracts entered into on behalf of all the others.

Question 10

Kerry wants to start a business to sell handmade jewelry. She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business. Who of the following would make the best partner for Kerry?

Accepted Answer

A)  Bailey, an artist with a real flair for new-aged jewelry design 
B)  Ashley, Kerry's best friend who is fun to hang out with and good at solving problems 
C)  Natalie, who has business experience with accounting, management, and marketing 
D)  Janette, who used to work at the jewelry counter at a department store 
E)  Darla, an engineer with industrial management experience but no money 
A)  Bailey, an artist with a real flair for new-aged jewelry design 
B)  Ashley, Kerry's best friend who is fun to hang out with and good at solving problems 
C)  Natalie, who has business experience with accounting, management, and marketing 
D)  Janette, who used to work at the jewelry counter at a department store 
E)  Darla, an engineer with industrial management experience but no money

Question 11

Shareholders of an S-corporation are taxed as if they were owners in a partnership.

Accepted Answer

A) True 
 B)False

Question 12

Allied Services is a transportation company that operates in most of the United States. If Allied Services decided to incorporate, in which state would it incorporate?

Accepted Answer

A)  Nebraska, the state in which it started 
B)  Whatever state contributes the most to company revenues 
C)  The state where the company headquarters are located 
D)  Any state that the company chooses 
E)  A centrally located state within the United States 
A)  Nebraska, the state in which it started 
B)  Whatever state contributes the most to company revenues 
C)  The state where the company headquarters are located 
D)  Any state that the company chooses 
E)  A centrally located state within the United States

Question 13

Describe the advantages and disadvantages of the sole proprietorship form of ownership.

Accepted Answer

Sole proprietorship is a form of busines

Question 14

Thomas wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because

Accepted Answer

A)  he will get to keep all of the profits the business makes. 
B)  profit is guaranteed since he will be the only owner. 
C)  it will provide a steady income for him. 
D)  he has to split the profits with only one other person. 
E)  he has to pay small dividends to the other owners. 
A)  he will get to keep all of the profits the business makes. 
B)  profit is guaranteed since he will be the only owner. 
C)  it will provide a steady income for him. 
D)  he has to split the profits with only one other person. 
E)  he has to pay small dividends to the other owners.

Question 15

Nortons, Inc. is a hardware store that is owned by members of the Norton family as well as a few close friends of the family. This company is a(n)

Accepted Answer

A)  sole proprietorship. 
B)  partnership. 
C)  open corporation. 
D)  closed corporation. 
E)  public corporation. 
A)  sole proprietorship. 
B)  partnership. 
C)  open corporation. 
D)  closed corporation. 
E)  public corporation.

Question 16

When Compaq and Hewlett-Packard decided to become one company, this was an example of a(n)

Accepted Answer

A)  acquisition. 
B)  hostile takeover. 
C)  horizontal merger. 
D)  conglomerate merger. 
E)  joint venture. 
A)  acquisition. 
B)  hostile takeover. 
C)  horizontal merger. 
D)  conglomerate merger. 
E)  joint venture.

Question 17

A merger between two firms that make and sell similar products in similar markets is known as a

Accepted Answer

A)  horizontal merger. 
B)  cooperative. 
C)  joint venture. 
D)  vertical merger. 
E)  conglomerate merger. 
A)  horizontal merger. 
B)  cooperative. 
C)  joint venture. 
D)  vertical merger. 
E)  conglomerate merger.

Question 18

Habitat for Humanity and Girl Scouts are both examples of

Accepted Answer

A)  cooperatives... 
B)  quasi-government corporations.. 
C)  limited-liability corporations 
D)  cooperatives. 
E)  not-for-profit corporations., 
A)  cooperatives... 
B)  quasi-government corporations.. 
C)  limited-liability corporations 
D)  cooperatives. 
E)  not-for-profit corporations.,

Question 19

When the owner of a sole proprietorship dies, what becomes of the business?

Accepted Answer

A)  The employees take over the business. 
B)  It ceases to exist unless the heirs take it over or sell it. 
C)  It is automatically auctioned to the highest bidder. 
D)  It ceases to exist, and no one may legally take it over. 
E)  It may continue existing but only under a new name. 
A)  The employees take over the business. 
B)  It ceases to exist unless the heirs take it over or sell it. 
C)  It is automatically auctioned to the highest bidder. 
D)  It ceases to exist, and no one may legally take it over. 
E)  It may continue existing but only under a new name.

Question 20

Which of the following is an advantage of the corporate form of organization?

Accepted Answer

A)  Ownership of stock is easy to transfer. 
B)  Forming a corporation is a complex and costly process. 
C)  The corporation and its stockholders pay taxes on profits. 
D)  A corporation must submit detailed information to government agencies. 
E)  It is difficult to keep operations confidential because of required reports. 
A)  Ownership of stock is easy to transfer. 
B)  Forming a corporation is a complex and costly process. 
C)  The corporation and its stockholders pay taxes on profits. 
D)  A corporation must submit detailed information to government agencies. 
E)  It is difficult to keep operations confidential because of required reports.

Exam 4: Choosing a Form of Business Ownership

What does the board of directors manage? What do corporate officers manage?

Unlimited liability holds a sole proprietor personally responsible for all the debts of the business.

Unlike a person, a corporation exists only on paper.

Kim, Sandra, Jerry, and Wilma belong to a business that buys groceries in bulk, then distributes them to members. This type of business is called a

Which of the following is not a disadvantage of sole proprietorships?

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

The top governing body of a corporation is known as the

Kerry wants to start a business to sell handmade jewelry. She is very competent at making the jewelry and teaching others to make it, and she has saved a reasonable amount of money to start the business. Who of the following would make the best partner for Kerry?

Shareholders of an S-corporation are taxed as if they were owners in a partnership.

Allied Services is a transportation company that operates in most of the United States. If Allied Services decided to incorporate, in which state would it incorporate?

Describe the advantages and disadvantages of the sole proprietorship form of ownership.

Thomas wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because

Nortons, Inc. is a hardware store that is owned by members of the Norton family as well as a few close friends of the family. This company is a(n)

When Compaq and Hewlett-Packard decided to become one company, this was an example of a(n)

A merger between two firms that make and sell similar products in similar markets is known as a

Habitat for Humanity and Girl Scouts are both examples of

When the owner of a sole proprietorship dies, what becomes of the business?

Which of the following is an advantage of the corporate form of organization?

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