Question 1

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Accepted Answer

A) True 
 B)False

Question 2

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Accepted Answer

A) Corporations 
B) Partnerships 
C) Sole proprietorships 
D) Limited liability companies 
A) Corporations 
B) Partnerships 
C) Sole proprietorships 
D) Limited liability companies

Question 3

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional)corporation as a form of business ownership is that it:

Accepted Answer

A) Has the ability to raise more money. 
B) Is easier and less expensive to form. 
C) Qualifies for simplified tax treatment. 
D) Creates unlimited liability for its owners. 
A) Has the ability to raise more money. 
B) Is easier and less expensive to form. 
C) Qualifies for simplified tax treatment. 
D) Creates unlimited liability for its owners.

Question 4

Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types.One of their goals is to maintain the loving relationship they currently enjoy so they are following the Model Business Corporation Act recommendations as they write the partnership agreement.Which of the following is an accurate recommendation of the Act?

Accepted Answer

A) The business should be actively operating for an extended period before the partners decide who is responsible for what business functions. 
B) Family businesses never take on outside partners,so no discussion of this need take place. 
C) There should be discussion and well-understood ways that the partners will handle disagreements. 
D) Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business,retire,or die. 
A) The business should be actively operating for an extended period before the partners decide who is responsible for what business functions. 
B) Family businesses never take on outside partners,so no discussion of this need take place. 
C) There should be discussion and well-understood ways that the partners will handle disagreements. 
D) Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business,retire,or die.

Question 5

When two firms join together to form one company,it is called a merger.

Accepted Answer

A) True 
 B)False

Question 6

Being your own boss means:

Accepted Answer

A) Reducing your working hours. 
B) Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business. 
C) Accepting accountability for the mistakes of the business. 
D) Having limited financial resources to throw into the business. 
A) Reducing your working hours. 
B) Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business. 
C) Accepting accountability for the mistakes of the business. 
D) Having limited financial resources to throw into the business.

Question 7

A limited liability company is similar to an S corporation,but without the special eligibility requirements.

Accepted Answer

A) True 
 B)False

Question 8

In a cooperative,members/customers:

Accepted Answer

A) Democratically control their businesses by electing a board of directors. 
B) Are known as limited partners. 
C) Each have unlimited liability for the debts of the firm. 
D) Take turns serving on the board that manages the company. 
A) Democratically control their businesses by electing a board of directors. 
B) Are known as limited partners. 
C) Each have unlimited liability for the debts of the firm. 
D) Take turns serving on the board that manages the company.

Question 9

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set-up a:

Accepted Answer

A) Master Limited Partnership. 
B) Sole proprietorship. 
C) Limited amount of time each can actively spend in the business. 
D) Limited Liability Partnership. 
A) Master Limited Partnership. 
B) Sole proprietorship. 
C) Limited amount of time each can actively spend in the business. 
D) Limited Liability Partnership.

Question 10

Taking a firm private involves converting a firm from a corporation to a general partnership.

Accepted Answer

A) True 
 B)False

Question 11

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

Accepted Answer

A) True 
 B)False

Question 12

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Accepted Answer

A) True 
 B)False

Question 13

A general partner takes an active role in the management of the business.

Accepted Answer

A) True 
 B)False

Question 14

One advantage of an S Corporation is that the profits of the business are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

Accepted Answer

A) True 
 B)False

Question 15

According to the Uniform Partnership Act,the three key elements of any general partnership are:

Accepted Answer

A) A board of directors,a written partnership agreement,and a well-defined product or service. 
B) Two owners,an adequate financial base,and a written statement describing the manner in which profits and losses will be divided. 
C) Common ownership,shared profits and losses,and right to participate in management. 
D) Common stock,a board of directors,and a statement of limited liability. 
A) A board of directors,a written partnership agreement,and a well-defined product or service. 
B) Two owners,an adequate financial base,and a written statement describing the manner in which profits and losses will be divided. 
C) Common ownership,shared profits and losses,and right to participate in management. 
D) Common stock,a board of directors,and a statement of limited liability.

Question 16

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is normally considered a disadvantage of the corporate form of business?

Accepted Answer

A) Unlimited liability of owners. 
B) Difficult transfer of ownership. 
C) Limited life. 
D) Double taxation of earnings. 
A) Unlimited liability of owners. 
B) Difficult transfer of ownership. 
C) Limited life. 
D) Double taxation of earnings.

Question 18

Modern Screen Entertainment,Inc. ,recently bought Star Power Pictures,Inc. ,for an undisclosed amount of money.It now owns all of Star Power Picture's properties and obligations.This is an example of a(n):

Accepted Answer

A) Merger. 
B) Combination. 
C) Expropriation. 
D) Acquisition. 
A) Merger. 
B) Combination. 
C) Expropriation. 
D) Acquisition.

Question 19

Franchisors may send reverse royalties to franchisees who:

Accepted Answer

A) Have not yet created their own web site. 
B) Feel their sales have been hurt by the franchisor's Internet sales. 
C) Are using e-commerce to expand their sales territory. 
D) Desire to streamline their communication with employees,customers,and vendors. 
A) Have not yet created their own web site. 
B) Feel their sales have been hurt by the franchisor's Internet sales. 
C) Are using e-commerce to expand their sales territory. 
D) Desire to streamline their communication with employees,customers,and vendors.

Question 20

To qualify as an S corporation,a company must:

Accepted Answer

A) Have no more than 50 shareholders. 
B) Have shareholders who are individuals or estates,and,qualify as permanent residents of the U.S. 
C) Have a different class of stock for each owner. 
D) Have not more than 5 percent of income derived from passive sources. 
A) Have no more than 50 shareholders. 
B) Have shareholders who are individuals or estates,and,qualify as permanent residents of the U.S. 
C) Have a different class of stock for each owner. 
D) Have not more than 5 percent of income derived from passive sources.

Exam 5: How to Form a Business

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional)corporation as a form of business ownership is that it:

When two firms join together to form one company,it is called a merger.

Being your own boss means:

A limited liability company is similar to an S corporation,but without the special eligibility requirements.

In a cooperative,members/customers:

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set-up a:

Taking a firm private involves converting a firm from a corporation to a general partnership.

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

A general partner takes an active role in the management of the business.

One advantage of an S Corporation is that the profits of the business are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

According to the Uniform Partnership Act,the three key elements of any general partnership are:

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Which of the following is normally considered a disadvantage of the corporate form of business?

Modern Screen Entertainment,Inc. ,recently bought Star Power Pictures,Inc. ,for an undisclosed amount of money.It now owns all of Star Power Picture's properties and obligations.This is an example of a(n):

Franchisors may send reverse royalties to franchisees who:

To qualify as an S corporation,a company must:

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

Entrepreneurship and Starting a Small Business

Management and Leadership

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money,financial Institutions,and the Federal Reserve

Bonus A: Using Technology to Manage Information

Bonus B: Managing Risk

Bonus C: Managing Your Personal Finances

Appendix: Working Within the Legal Environment

Filters