Exam 5: How to Form a Business

Halle wants to start a business.She has two goals.First,given her limited personal wealth and eagerness to get started,she wants to get her business up and running with the least possible hassle and expense.Second,she wants to minimize her personal risk in the event that her company experiences difficulties.If Halle chooses a sole proprietorship,she would:

Like stockholders of a C corporation,owners of a limited liability company (LLC)are free to sell their ownership without the approval of other members.

The strategy of investors who are attempting a leveraged buyout is to:

An owner of a corporation is known as a(n):

the right to participate in managing the operations of the business.

If a firm is advertising that it is selling franchise opportunities,the prospective franchisee can be assured that the government has performed due diligence on this company,and has deemed it a safe investment.

It is not unusual for members of cooperatives to work for and help manage their cooperative.

Maria has a lot of self-confidence and business knowledge.She recently opened a bakery as a sole proprietor.She is expecting a high level of profits and is looking forward to:

The financial advantage to the parent company (the franchisor)in a franchise arrangement is the upfront franchise fee and the collection of royalties if franchisees are successful.

Earnings of C (conventional)corporations can be:

One reason franchises have become so popular is that this arrangement provides the franchisee with:

An acquisition is when one company buys the property and obligations of another company.

According to the Uniform Partnership Act, the three key elements of any general partnership are (1) shares of stock to represent ownership, (2) limited liability, and (3) ease of ownership transfer.

Continental Foods is considering a conglomerate merger with a company that makes storage solutions.A likely reason is:

Although it is a small company,Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana.Currently,the company is a chartered C-corporation,but the owners are interested in switching to an S corporation.After consulting a lawyer,they learned that Zorn Enterprises does not qualify to be designated as an S corporation.Which of the following characteristics of Zorn Enterprises would prevent it from becoming an S corporation?

Farm cooperatives were originally established to help farmers increase their economic power by acting as a group rather than as individuals.

Taking a firm private means turning a profit-seeking corporation into a nonprofit corporation in order to avoid a hostile takeover.

Two important considerations when choosing a form of business ownership is:

Greg plans to open up three Hottie Pata'tee franchises in the greater Denver area.He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants.Greg is likely to learn that:

According to the Spotlight on Small Business box,"Pick Your Partners Wisely",it is really not necessary to interview your prospective partner carefully,especially if they are an old friend.