Exam 5: How to Form a Business

The form of business ownership best suited to raising large amounts of money for expansion is the:

A(n)___________ is an arrangement whereby someone with proven idea for a business sells the rights to use the business model,to sell a product or service to others in a given territory.

The owners of a corporation are known as general corporate partners.

Stock options are the right to purchase shares of the corporation for a fixed price.

A horizontal merger refers to a merger between two companies in the same industry,and serving the same markets.

By filling out the correct paperwork annually,any corporation can qualify to be classified as an S corporation.

Sandy Beech,a talented fashion designer who wants to start her own women's swimwear and beach towel line,is trying to decide which form of business ownership is right for her.As a young mother who aspires to send her children to college some day,she does not want to jeopardize her savings account in any way.In order to overcome these risks,Sandy should start her business as a sole proprietorship.

Chipper's Golf Resort has the opportunity to buy 1000 acres of property adjacent to its 18-hole golf course.After talking with her banker,the owner is encouraged to begin the paperwork to change from a Limited Liability Company form of business ownership to a corporation.You applaud this strategy because she will eliminate the problem of double taxation.

A corporation can raise financial capital by selling shares of stock to interested investors.

When two firms who do not participate in the same industries,for example a software company and a fast food restaurant company decide to merge,the result is called a ____________ merger.

An entrepreneur who wishes to start a business with little delay or hassle,and who wants to be his or her own boss,should organize the business as a:

One disadvantage of a limited liability company is that it:

An attempt by employees,management,or a group of investors to purchase an organization primarily through borrowing is called a(n):

A cooperative is simply another name for a corporation.

When two companies in the same industry agree to become one firm,the result is called a:

Mel,Tim,and Bill agreed to partner in a small rehab business.Initially,they were enthusiastic contributors until their first project took more work than Mel initially estimated;Tim wanted morning meetings and long lunch hours;and,Bill decided to go on vacation even though the project was not complete and ready to sell.As the Spotlight on Small Business box,titled,"Pick Your Partners Wisely" indicates,

What is a C corporation? What are the major advantages and disadvantages of this form of business ownership?

Recent figures indicate that franchising has declined in importance over the last ten years.

When a sole proprietor dies:

Compared to a sole proprietorship,which of the following is considered an advantage of a general partnership?