Question 1

Sole proprietorship, partnership, and corporation are the three legal forms of business ownership.

Accepted Answer

A) True 
 B)False

Question 2

The most important benefit of incorporation is the limited liability to which the owners are exposed.

Accepted Answer

A) True 
 B)False

Question 3

SCENARIO-BASED
Scuffy the Tugboat is a family-run business that makes tugboats.  It is owned by three brothers, Jack, Frank, and Bob.  Their first tugboat is still towing ships in Boston Harbor, and over the years, success has allowed them to grow the company by plowing money back into it.  Now, however, they want to expand but they are not sure how they should do this.   They are also unsure about which legal form of organization is best for them. 
-Scuffy the Tugboat could not operate as a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 4

SCENARIO-BASED
Rock City is a community in the Midwest with a population of 23,000 people. Three dental clinics serve the city and the surrounding area. Perfect Smile is owned and operated by the newest dentist in town, Dr. Martin Harris, who employs one dental assistant and a secretary/receptionist. Drs. Joan Bennett and Joseph Young jointly operate Teeth for Life and provide a few more services than Dr. Harris. Rock City Dental Clinic has been in business for 58 years, employs 38 people, and offers a range of services that include dentures, orthodontics, and minor oral surgery.
-What action could any of Rock City's dentists take to limit their exposure to liability as well as make it easier to find capital for expansion

Accepted Answer

A)  form a silent partnership 
B)  incorporate 
C)  obtain a Small Business Administration loan 
D)  create a limited partnership 
A)  form a silent partnership 
B)  incorporate 
C)  obtain a Small Business Administration loan 
D)  create a limited partnership

Question 5

In a(n) _____ partnership, a single partner runs the business and any number of other partners have little involvement in it.

Accepted Answer

A)  general 
B)  limited 
C)  unlimited 
D)  corporation 
A)  general 
B)  limited 
C)  unlimited 
D)  corporation

Question 6

Some of the advantages of a sole proprietorship business are that it is easy and inexpensive to form, there are few government regulations, and the owner has complete control over his/her business.

Accepted Answer

A) True 
 B)False

Question 7

Which industry has the highest percentage of cooperatives

Accepted Answer

A)  outdoor gear 
B)  housing 
C)  agriculture 
D)  insurance 
A)  outdoor gear 
B)  housing 
C)  agriculture 
D)  insurance

Question 8

In Ben and Jerry's hostile takeover they feared that their _____ would end.

Accepted Answer

A)  excellent business reputation 
B)  above-average industry profits 
C)  company's social mission 
D)  high employee morale 
A)  excellent business reputation 
B)  above-average industry profits 
C)  company's social mission 
D)  high employee morale

Question 9

If you have the talent to run a business, want to make all important business decisions, and are willing to finance the business with all your own resources, you should consider operating as a partnership.

Accepted Answer

A) True 
 B)False

Question 10

It is not necessary to decide if the business should survive the owner(s) in the startup stage.

Accepted Answer

A) True 
 B)False

Question 11

Any corporation can raise more money than a partnership because it has better credit.

Accepted Answer

A) True 
 B)False

Question 12

SCENARIO-BASED 
Pat Smith and George Johnson own five flower shops in Manhattan.  They want to open a wholesale flower business to supply their shops as well as others in their geographical area.  They currently operate as a partnership but are considering changing their legal form of organization.  One reason for doing this is to increase the likelihood that they will be able to raise the funds needed to expand.
-An S-corporation would give them a more favorable tax treatment than a regular corporation.

Accepted Answer

A) True 
 B)False

Question 13

Some people with substantial assets may hesitate to enter a partnership. They don't want to lose some or all of these assets because of the mistakes of other partners. To offset this possible loss they can form an unlimited partnership.

Accepted Answer

A) True 
 B)False

Question 14

SCENARIO-BASED 
Pat Smith and George Johnson own five flower shops in Manhattan.  They want to open a wholesale flower business to supply their shops as well as others in their geographical area.  They currently operate as a partnership but are considering changing their legal form of organization.  One reason for doing this is to increase the likelihood that they will be able to raise the funds needed to expand.
-The corporate form of organization would give them more access to funds but they would still be personally liable for any loans.

Accepted Answer

A) True 
 B)False

Question 15

With a sole proprietorship, you -- the owner -- are, in effect, the business.

Accepted Answer

A) True 
 B)False

Question 16

The most important benefit of incorporation is the _____ feature of corporations.

Accepted Answer

A)  limited continuity 
B)  limited liability 
C)  financial resources 
D)  unlimited liability 
A)  limited continuity 
B)  limited liability 
C)  financial resources 
D)  unlimited liability

Question 17

In a limited partnership the limited partners' losses are limited to their investment in the business and not their personal assets.

Accepted Answer

A) True 
 B)False

Question 18

Which legal form of organization did Ben Cohen and Jerry Greenfield choose when they started their business

Accepted Answer

A)  Sole proprietorship 
B)  Corporation 
C)  Partnership 
D)  S-corporation 
A)  Sole proprietorship 
B)  Corporation 
C)  Partnership 
D)  S-corporation

Question 19

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out _____.

Accepted Answer

A)  dividends 
B)  shares 
C)  allotments 
D)  capital surpluses 
A)  dividends 
B)  shares 
C)  allotments 
D)  capital surpluses

Question 20

As a sole proprietor, you can reduce your risks with insurance; however, you still carry a substantial liability.

Accepted Answer

A) True 
 B)False

Sole proprietorship, partnership, and corporation are the three legal forms of business ownership.

The most important benefit of incorporation is the limited liability to which the owners are exposed.

In a(n) _____ partnership, a single partner runs the business and any number of other partners have little involvement in it.

Some of the advantages of a sole proprietorship business are that it is easy and inexpensive to form, there are few government regulations, and the owner has complete control over his/her business.

Which industry has the highest percentage of cooperatives

In Ben and Jerry's hostile takeover they feared that their _____ would end.

If you have the talent to run a business, want to make all important business decisions, and are willing to finance the business with all your own resources, you should consider operating as a partnership.

It is not necessary to decide if the business should survive the owner(s) in the startup stage.

Any corporation can raise more money than a partnership because it has better credit.

Some people with substantial assets may hesitate to enter a partnership. They don't want to lose some or all of these assets because of the mistakes of other partners. To offset this possible loss they can form an unlimited partnership.

With a sole proprietorship, you -- the owner -- are, in effect, the business.

The most important benefit of incorporation is the _____ feature of corporations.

In a limited partnership the limited partners' losses are limited to their investment in the business and not their personal assets.

Which legal form of organization did Ben Cohen and Jerry Greenfield choose when they started their business

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out _____.

As a sole proprietor, you can reduce your risks with insurance; however, you still carry a substantial liability.

The Foundations of Business

Business Ethics and Social Responsibility

Business in a Global Environment

The Challenges of Starting a Business

Managing for Business Success

Recruiting, Motivating, and Keeping Quality Employees

Teamwork and Communications

Marketing: Providing Value to Customers

Product Design and Development

Operations Management in Manufacturing and Service Industries

The Role of Accounting in Business

Managing Financial Resources

Personal Finances

Managing Information and Technology

The Legal and Regulatory Environment of Business

Filters

Exam 4: Selecting a Form of Business Ownership

Sole proprietorship, partnership, and corporation are the three legal forms of business ownership.

The most important benefit of incorporation is the limited liability to which the owners are exposed.

In a(n) _____ partnership, a single partner runs the business and any number of other partners have little involvement in it.

Some of the advantages of a sole proprietorship business are that it is easy and inexpensive to form, there are few government regulations, and the owner has complete control over his/her business.

Which industry has the highest percentage of cooperatives

In Ben and Jerry's hostile takeover they feared that their _____ would end.

If you have the talent to run a business, want to make all important business decisions, and are willing to finance the business with all your own resources, you should consider operating as a partnership.

It is not necessary to decide if the business should survive the owner(s) in the startup stage.

Any corporation can raise more money than a partnership because it has better credit.

Some people with substantial assets may hesitate to enter a partnership. They don't want to lose some or all of these assets because of the mistakes of other partners. To offset this possible loss they can form an unlimited partnership.

With a sole proprietorship, you -- the owner -- are, in effect, the business.

The most important benefit of incorporation is the _____ feature of corporations.

In a limited partnership the limited partners' losses are limited to their investment in the business and not their personal assets.

Which legal form of organization did Ben Cohen and Jerry Greenfield choose when they started their business

When it distributes a portion of its income to shareholders in the form of cash payments, a corporation pays out _____.

As a sole proprietor, you can reduce your risks with insurance; however, you still carry a substantial liability.

The Foundations of Business

Business Ethics and Social Responsibility

Business in a Global Environment

The Challenges of Starting a Business

Managing for Business Success

Recruiting, Motivating, and Keeping Quality Employees

Teamwork and Communications

Marketing: Providing Value to Customers

Product Design and Development

Operations Management in Manufacturing and Service Industries

The Role of Accounting in Business

Managing Financial Resources

Personal Finances

Managing Information and Technology

The Legal and Regulatory Environment of Business

Filters