Question 1

C corporations, S corporations, and LLCs can be ________ to establish.

Accepted Answer

A)  costly 
B)  easy 
C)  quick 
D)  cheap 
A)  costly 
B)  easy 
C)  quick 
D)  cheap

Question 2

A limited partner is treated as an investor in a business venture and does not take an active role in managing it.

Accepted Answer

A) True 
 B)False

Question 3

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality, which has little impact on the business and its owner(s).

Accepted Answer

A) True 
 B)False

Question 4

The sole proprietorship is the easiest form of ownership to create, but once formed, it is subject to the greatest number of regulations.

Accepted Answer

A) True 
 B)False

Question 5

Important factors to investigate regarding the business to be purchased include ________.

Accepted Answer

A)  assessing the physical assets of the business 
B)  reviewing accounts receivable and business records 
C)  reviewing contractual arrangements and assessing intangible assets 
D)  All of the above 
A)  assessing the physical assets of the business 
B)  reviewing accounts receivable and business records 
C)  reviewing contractual arrangements and assessing intangible assets 
D)  All of the above

Question 6

When acquiring a business, the buyer should ________.

Accepted Answer

A)  conduct a self-analysis of skills, abilities, and interests 
B)  prepare a list of potential candidates 
C)  investigate potential candidates and carefully evaluate them 
D)  All of the above 
A)  conduct a self-analysis of skills, abilities, and interests 
B)  prepare a list of potential candidates 
C)  investigate potential candidates and carefully evaluate them 
D)  All of the above

Question 7

A creditor's claim against an asset is referred to as lien.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following documents must an entrepreneur file to create a limited liability company?

Accepted Answer

A)  Articles of Organization 
B)  Articles of Incorporation 
C)  Operating Agreement 
D)  A and C only 
A)  Articles of Organization 
B)  Articles of Incorporation 
C)  Operating Agreement 
D)  A and C only

Question 9

Which of the following statements concerning financing the purchase of an existing business is true?

Accepted Answer

A)  It is usually more difficult than securing financing for a start-up business. 
B)  Usually, the business seller is not a good source of financing. 
C)  The buyer should be able to make the payments on the loans out of the company's cash flow. 
D)  All of the above 
A)  It is usually more difficult than securing financing for a start-up business. 
B)  Usually, the business seller is not a good source of financing. 
C)  The buyer should be able to make the payments on the loans out of the company's cash flow. 
D)  All of the above

Question 10

The sole proprietorship is the form of ownership with the least ability to accumulate capital.

Accepted Answer

A) True 
 B)False

Question 11

A toy manufacturer is sued based on the claim of injuries caused by a product it makes. This is an example of a ________.

Accepted Answer

A)  product liability lawsuit 
B)  promissory estoppel lawsuit 
C)  restrictive covenant lawsuit 
D)  contingent liability lawsuit 
A)  product liability lawsuit 
B)  promissory estoppel lawsuit 
C)  restrictive covenant lawsuit 
D)  contingent liability lawsuit

Question 12

The business acquisition process should begin with the search for potential companies to acquire.

Accepted Answer

A) True 
 B)False

Question 13

A limited liability company ________.

Accepted Answer

A)  is similar to an S corporation in that it is a cross between a partnership and a corporation 
B)  prevents owners who want to maintain their limited liability status from actively managing the company 
C)  can have a maximum of 50 owners 
D)  All of the above 
A)  is similar to an S corporation in that it is a cross between a partnership and a corporation 
B)  prevents owners who want to maintain their limited liability status from actively managing the company 
C)  can have a maximum of 50 owners 
D)  All of the above

Question 14

Sources of potential legal liabilities for the buyer of an existing business include all but which of the following?

Accepted Answer

A)  Problems with the physical premises, such as hazardous materials. 
B)  Product liability claims. 
C)  Labor problems and disputes. 
D)  Errors and omissions. 
A)  Problems with the physical premises, such as hazardous materials. 
B)  Product liability claims. 
C)  Labor problems and disputes. 
D)  Errors and omissions.

Question 15

Defining the duties, responsibilities, contributions, and roles of the partners in a partnership agreement is not necessary since the law covers these provisions automatically.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a potential disadvantage of purchasing an existing business?

Accepted Answer

A)  The employees inherited with the business may not be suitable. 
B)  The previous owner may have created ill will among the company's customers. 
C)  Equipment and facilities may be obsolete or inefficient. 
D)  All of the above 
A)  The employees inherited with the business may not be suitable. 
B)  The previous owner may have created ill will among the company's customers. 
C)  Equipment and facilities may be obsolete or inefficient. 
D)  All of the above

Question 17

Which of the following is required to form a partnership?

Accepted Answer

A)  A general partner 
B)  A limited partner 
C)  A secret partner 
D)  A silent partner 
A)  A general partner 
B)  A limited partner 
C)  A secret partner 
D)  A silent partner

Question 18

Which of the following statements is not true regarding the liquidation of an S corporation?

Accepted Answer

A)  The owners pay all taxes, debts, and creditors. 
B)  The owners obtain the written approval of shareholders to dissolve the company. 
C)  The owners file a statement of intent to dissolve with the secretary of state's office in each state where they conduct business. 
D)  The owners distribute all assets of the corporation to the shareholders. 
A)  The owners pay all taxes, debts, and creditors. 
B)  The owners obtain the written approval of shareholders to dissolve the company. 
C)  The owners file a statement of intent to dissolve with the secretary of state's office in each state where they conduct business. 
D)  The owners distribute all assets of the corporation to the shareholders.

Question 19

The most critical disadvantage of the sole proprietorship is ________.

Accepted Answer

A)  the owner's unlimited personal liability 
B)  limited access to capital 
C)  lack of continuity 
D)  limited skills and abilities of the owner 
A)  the owner's unlimited personal liability 
B)  limited access to capital 
C)  lack of continuity 
D)  limited skills and abilities of the owner

Question 20

The key to choosing the right form of ownership is ________.

Accepted Answer

A)  envisioning where your business will be in 10 years 
B)  understanding the characteristics of each form and knowing how they affect your business and personal circumstances 
C)  forming either an S corporation or a limited liability company since they are the only forms that offer owners liability protection 
D)  irrelevant since choosing a form of ownership is merely a technicality and has little impact on the business and its owner(s) 
A)  envisioning where your business will be in 10 years 
B)  understanding the characteristics of each form and knowing how they affect your business and personal circumstances 
C)  forming either an S corporation or a limited liability company since they are the only forms that offer owners liability protection 
D)  irrelevant since choosing a form of ownership is merely a technicality and has little impact on the business and its owner(s)

C corporations, S corporations, and LLCs can be ________ to establish.

A limited partner is treated as an investor in a business venture and does not take an active role in managing it.

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality, which has little impact on the business and its owner(s).

The sole proprietorship is the easiest form of ownership to create, but once formed, it is subject to the greatest number of regulations.

Important factors to investigate regarding the business to be purchased include ________.

When acquiring a business, the buyer should ________.

A creditor's claim against an asset is referred to as lien.

Which of the following documents must an entrepreneur file to create a limited liability company?

Which of the following statements concerning financing the purchase of an existing business is true?

The sole proprietorship is the form of ownership with the least ability to accumulate capital.

A toy manufacturer is sued based on the claim of injuries caused by a product it makes. This is an example of a ________.

The business acquisition process should begin with the search for potential companies to acquire.

A limited liability company ________.

Sources of potential legal liabilities for the buyer of an existing business include all but which of the following?

Defining the duties, responsibilities, contributions, and roles of the partners in a partnership agreement is not necessary since the law covers these provisions automatically.

Which of the following is a potential disadvantage of purchasing an existing business?

Which of the following is required to form a partnership?

Which of the following statements is not true regarding the liquidation of an S corporation?

The most critical disadvantage of the sole proprietorship is ________.

The key to choosing the right form of ownership is ________.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Exam 6: Forms of Business Ownership and Buying an Existing Business

C corporations, S corporations, and LLCs can be ________ to establish.

A limited partner is treated as an investor in a business venture and does not take an active role in managing it.

Entrepreneurs should not spend much time selecting a form of ownership for their businesses because making the choice is merely a technicality, which has little impact on the business and its owner(s).

The sole proprietorship is the easiest form of ownership to create, but once formed, it is subject to the greatest number of regulations.

Important factors to investigate regarding the business to be purchased include ________.

When acquiring a business, the buyer should ________.

A creditor's claim against an asset is referred to as lien.

Which of the following documents must an entrepreneur file to create a limited liability company?

Which of the following statements concerning financing the purchase of an existing business is true?

The sole proprietorship is the form of ownership with the least ability to accumulate capital.

A toy manufacturer is sued based on the claim of injuries caused by a product it makes. This is an example of a ________.

The business acquisition process should begin with the search for potential companies to acquire.

A limited liability company ________.

Sources of potential legal liabilities for the buyer of an existing business include all but which of the following?

Defining the duties, responsibilities, contributions, and roles of the partners in a partnership agreement is not necessary since the law covers these provisions automatically.

Which of the following is a potential disadvantage of purchasing an existing business?

Which of the following is required to form a partnership?

Which of the following statements is not true regarding the liquidation of an S corporation?

The most critical disadvantage of the sole proprietorship is ________.

The key to choosing the right form of ownership is ________.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Inside the Entrepreneurial Mind: From Ideas to Reality

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters