Question 1

About 85 percent of all business firms in the United States are sole proprietorships.

Accepted Answer

A) True 
 B)False

Question 2

Goodwill Industries is an example of a(n)

Accepted Answer

A)  LLC. 
B)  syndicate. 
C)  cooperative. 
D)  not-for-profit corporation. 
E)  S-corporation. 
A)  LLC. 
B)  syndicate. 
C)  cooperative. 
D)  not-for-profit corporation. 
E)  S-corporation.

Question 3

Joint ventures are created for a specific purpose and dissolved when that purpose is achieved.

Accepted Answer

A) True 
 B)False

Question 4

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.

Accepted Answer

A) True 
 B)False

Question 5

With regard to limited-liability companies, which of the following statements is false?

Accepted Answer

A)  Many experts believe that an LLC is nothing more than an S-corporation. 
B)  An LLC can have no more than 100 stockholders. 
C)  An LLC avoids double taxation. 
D)  An LLC provides limited-liability protection to the personal assets of the owners. 
E)  When compared to regular corporations, there are fewer government regulations that apply to LLCs. 
A)  Many experts believe that an LLC is nothing more than an S-corporation. 
B)  An LLC can have no more than 100 stockholders. 
C)  An LLC avoids double taxation. 
D)  An LLC provides limited-liability protection to the personal assets of the owners. 
E)  When compared to regular corporations, there are fewer government regulations that apply to LLCs.

Question 6

A voluntary association of two or more people acting as co-owners of a business is known as a

Accepted Answer

A)  partnership. 
B)  corporation. 
C)  sole proprietorship. 
D)  conglomerate. 
E)  syndicate. 
A)  partnership. 
B)  corporation. 
C)  sole proprietorship. 
D)  conglomerate. 
E)  syndicate.

Question 7

Assume that you are a corporate manager and that a corporate raider is trying to take over your company. What steps could you follow to avoid the takeover?

Accepted Answer

As a corporate manager, there are severa

Question 8

Which of the following has a restriction on the number of owners, members, or stockholders?

Accepted Answer

A)  S-corporation 
B)  Not-for-profit corporation 
C)  Open corporation 
D)  Limited-liability company 
E)  Cooperative 
A)  S-corporation 
B)  Not-for-profit corporation 
C)  Open corporation 
D)  Limited-liability company 
E)  Cooperative

Question 9

All of the following are disadvantages that Sean should consider before entering a partnership agreement with his cousin except

Accepted Answer

A)  lack of continuity. 
B)  effects of disagreements with his cousin. 
C)  the inability to get out the money he invests. 
D)  unlimited liability. 
E)  double taxation. 
A)  lack of continuity. 
B)  effects of disagreements with his cousin. 
C)  the inability to get out the money he invests. 
D)  unlimited liability. 
E)  double taxation.

Question 10

Why do farmers join cooperatives?

Accepted Answer

Farmers join cooperatives for a variety

Question 11

A master limited partnership is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 12

Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

Accepted Answer

A)  corporation. 
B)  partnership. 
C)  sole proprietorship. 
D)  limited partnership. 
E)  limited-liability corporation. 
A)  corporation. 
B)  partnership. 
C)  sole proprietorship. 
D)  limited partnership. 
E)  limited-liability corporation.

Question 13

Why is the concept of unlimited liability a concern for the sole proprietor?

Accepted Answer

The concept of unlimited liability is a

Question 14

A ____ is a form that enables stockholders to allow someone else to vote for them.

Accepted Answer

A)  waiver 
B)  rights transfer 
C)  proxy 
D)  voter registration 
E)  dividend 
A)  waiver 
B)  rights transfer 
C)  proxy 
D)  voter registration 
E)  dividend

Question 15

Recently there have been several mergers involving Big Four accounting firms. One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young. This is an example of a

Accepted Answer

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

Question 16

Financial experts agree that takeovers enhance corporate profitability and productivity.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would least likely be stated in the articles of partnership?

Accepted Answer

A)  Who will make the final decisions 
B)  How much each partner will invest 
C)  What the duties of each partner are 
D)  What products the company will sell 
E)  What will happen if a partner dies or wants to dissolve the partnership 
A)  Who will make the final decisions 
B)  How much each partner will invest 
C)  What the duties of each partner are 
D)  What products the company will sell 
E)  What will happen if a partner dies or wants to dissolve the partnership

Question 18

A corporation chartered in Kansas and doing business in Kansas is known as a domestic corporation.

Accepted Answer

A) True 
 B)False

Question 19

Profits of a large corporation are taxed twice, once as corporate income and again as personal income of stockholders.

Accepted Answer

A) True 
 B)False

Question 20

The retail card and gift shop chain that Heidi started has since been incorporated. Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

Accepted Answer

A)  Heidi has no responsibility if the business fails and will still be able to get her initial investment back. 
B)  Heidi may have to give up her car and house if the corporation fails in order to cover the debts of the corporation. 
C)  The other stockholders will be able to seize Heidi's personal money but not her primary residence in the event that the business fails. 
D)  Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment. 
E)  Heidi will only be liable for losses that develop from decisions she made about the daily business operations. 
A)  Heidi has no responsibility if the business fails and will still be able to get her initial investment back. 
B)  Heidi may have to give up her car and house if the corporation fails in order to cover the debts of the corporation. 
C)  The other stockholders will be able to seize Heidi's personal money but not her primary residence in the event that the business fails. 
D)  Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment. 
E)  Heidi will only be liable for losses that develop from decisions she made about the daily business operations.

Exam 4: Choosing a Form of Business Ownership

About 85 percent of all business firms in the United States are sole proprietorships.

Goodwill Industries is an example of a(n)

Joint ventures are created for a specific purpose and dissolved when that purpose is achieved.

Because of limited liability, individuals are more willing to invest in corporations than in other forms of business.

With regard to limited-liability companies, which of the following statements is false?

A voluntary association of two or more people acting as co-owners of a business is known as a

Assume that you are a corporate manager and that a corporate raider is trying to take over your company. What steps could you follow to avoid the takeover?

Which of the following has a restriction on the number of owners, members, or stockholders?

All of the following are disadvantages that Sean should consider before entering a partnership agreement with his cousin except

Why do farmers join cooperatives?

A master limited partnership is taxed like a corporation.

Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

Why is the concept of unlimited liability a concern for the sole proprietor?

A ____ is a form that enables stockholders to allow someone else to vote for them.

Recently there have been several mergers involving Big Four accounting firms. One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young. This is an example of a

Financial experts agree that takeovers enhance corporate profitability and productivity.

Which of the following would least likely be stated in the articles of partnership?

A corporation chartered in Kansas and doing business in Kansas is known as a domestic corporation.

Profits of a large corporation are taxed twice, once as corporate income and again as personal income of stockholders.

The retail card and gift shop chain that Heidi started has since been incorporated. Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

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

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