Deck 5: Forms of Business Ownership and Organization

Question 1

Define the concept of small business and identify the industries in which small businesses are established.

Answer 1

Small business in Canada is defined by Statistics Canada as a company that is independently owned and operated having fewer than 100 employees and revenues not more than $2 million.Small businesses account for more than two-thirds of employment in five Canadian industry categories: non-institutional health care,construction,accommodation and food,forestry, and other services.Approximately 25 percent of small businesses operate in Canadian goods-producing industriesthe remaining 75 percent operate in service industries.

Question 2

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
Owners of _____ have limited voting rights,but are entitled to the earliest dividends.

Answer 2

m

Question 3

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
During a(n)_____,two or more firms combine to form one company.

Answer 3

d

Question 4

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ occurs when one firm purchases the property and assumes the obligations of another firm.

Question 5

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
Small start-up ventures looking for low-cost shared facilities can utilize _____,offered by local community agencies.

Question 6

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ combines firms operating at different levels in the production and marketing process.

Question 7

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ is independently owned and operated,and is responsible for almost 30 percent of the nation's gross domestic product.

Question 8

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ is a type of business owned by only a few shareholders and the shares are generally unavailable to outsiders .

Question 9

Describe the benefits and drawbacks of starting a home-based business.

Question 10

Explain how small businesses create new industries.

Question 11

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ joins a firm in the same industry that wish to diversify,increase its customer base,cut costs,or offer expanded product lines.

Question 12

Discuss the economic and social contributions of small business.

Question 13

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
The form of business ownership that establishes the firm as a separate legal entity is the _____.

Question 14

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
_____ is a contractual agreement that specifies the methods by which a dealer can produce and market a supplier's good or service.

Question 15

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
The form of business ownership that is least subject to legal red tape is _____.

Question 16

Describe three primary reasons a small business might fail.

Question 17

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A merger of firms in unrelated industries is called a(n)_____.

Question 18

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
Having a(n)_____ improves the chances of success for a new business by providing an orderly statement of a company's goals.

Question 19

Why are small businesses especially important to women?

Question 20

MATCHING
Complete the following using the terms listed.
a.sole proprietorship
b.small business
c.corporation
d.merger
e.acquisition
f.horizontal merger
g.conglomerate merger
h.cooperative
i.vertical merger
j.business incubators
k.business plan
l.closed corporation
m.preferred stock
n.franchising
A(n)_____ business consists of owners who join forces to collectively operate all or part of the functions in their industry.

Question 21

Of the following industries,which is most likely to be owned by a small business owner?

A) nursing homes
B) paper mills
C) home building
D) electric utilities

Question 22

Which of the following is an advantage of a home-based business?

A) less flexibility
B) greater visibility to customers
C) lower costs
D) isolation

Question 23

Distinguish between a vertical merger,a horizontal merger,and a conglomerate merger.Provide an example of each.Which is likely to receive the closest government scrutiny?

Question 24

Explain the benefits and drawbacks of buying a franchise.

Question 25

Although the average farm size has increased in recent years the majority of farmers operate as ________ businesses.

A) small
B) large
C) government owned
D) partnerships

Question 26

________ of goods-producing businesses are small firms..

A) Less than 25 percent
B) About 25 percent
C) About 50 percent
D) Over 95 percent

Question 27

What is a business incubator?

Question 28

Compared to large businesses,which of the following statements regarding small businesses is INCORRECT?

A) Small businesses are less likely to hire young employees.
B) Small businesses are less likely to develop new products.
C) Small businesses are more likely to be franchises.
D) Small businesses are more likely to be eligible for government loans or for government purchasing programs.

Question 29

List the elements contained in a business plan.

Question 30

More than 97 percent of all Canadian businesses employ:

A) 100 or fewer employees
B) 1,000 to 3,000 employees
C) 3,000 to 5,000 employees
D) more than 5,000 employees

Question 31

Compare and contrast the three forms of business ownership.

Question 32

Provide an example of how innovation drives small business.

Question 33

What services does the Business Development Bank of Canada (BDC)offer to business owners?

Question 34

Discuss two alternatives to private ownership and give an example of each.

Question 35

Explain the role of corporate management.

Question 36

Small-business owners want to determine whether their companies meet the standards for small-business designation because

A) they do not have to pay taxes on their profits
B) government agencies offer benefits designed to help and protect the interests of small businesses
C) incorporation is easier for them
D) banks are more likely to grant them loans

Question 37

Traditionally,small businesses tended to be concentrated in the ________ industry.

A) service
B) goods-producing
C) manufacturing
D) forestry

Question 38

Describe the steps required when incorporating a business.

Question 39

Which government program guarantees repayment of bank loans given to small business?

A) Business Development Bank of Canada
B) Toronto Stock Exchange
C) Canada Small Business Financing Program
D) Small Business Investment Company Program

Question 40

People often choose to operate home-based firms for all but which one of the following reasons:

A) They can choose to work when it suits them
B) Lower overhead costs
C) Better work-life balance
D) Zero start-up costs

Question 41

Owners of small businesses can increase their chances of success if they:

A) become an expert in legal,financial,marketing,and other related business areas
B) incorporate their business
C) hire only family members or friends
D) understand their own limitations

Question 42

Many businesses fail during the early years because of ________.

A) unmotivated owners
B) poor planning
C) niche markets
D) inadequate financing

Question 43

In exchange for an ownership share,Benita's small business receives financing from a group of individuals known as _____________,

A) microloan investors
B) franchisors
C) Small Business Investment Companies
D) venture capitalists

Question 44

A small business fails in the management sense when ________.

A) financial training is lacking
B) marketing training is lacking
C) staffs are overworked
D) overall business training is lacking

Question 45

Martha is the owner of a very small technology start-up.She shares clerical staff,computers,and other business services with other small business owners.Martha is part of a(n):

A) venture capital company
B) business incubator
C) joint venture
D) microloan company

Question 46

A business plan for a small business typically contains all of the following EXCEPT ________.

A) a statement of the company's goals
B) a detailed time frame for achieving goals
C) projections of money flows
D) a time frame for selling stock to investors

Question 47

The Business Development Bank of Canada (BDC)provides all of the following EXCEPT ________.

A) loan guarantees
B) training
C) technical assistance
D) counselling

Question 48

Most small businesses get their start-up money from ________ .

A) commercial banks
B) credit card companies
C) family members
D) investors

Question 49

McDonalds offers a contractual business arrangement in various countries around the world.McDonalds is an example of a(n)international ____________.

A) merger
B) franchise
C) acquisition
D) not-for-profit corporation

Question 50

Which of the following is the leading cause of today's small business failures?

A) management inexperience
B) poor products and/or services
C) no marketing plan
D) excess government regulation

Question 51

___________ invest in small businesses in return for an ownership share

A) Franchisors
B) Venture Capitalists
C) Joint ventures
D) Business Development Bank of Canada

Question 52

Haseem owns a small business and needs assistance on a variety of issues.The Business Development Bank of Canada (BDC)can help him by providing all of the following EXCEPT: ________.

A) government procurement
B) Management training skills
C) technical assistance
D) financial assistance

Question 53

When the Canada Small Business Finance Program (CSBFP)assists a small business in applying for a major loan,it acts as the lender's ________.

A) bank
B) savings and loan association
C) credit union
D) guarantor

Question 54

Innovation is possible in small business because they ________.

A) have the funds to turn new ideas into large-scale,profitable ventures
B) employ highly intelligent,motivated people
C) provide fertile ground for new ideas
D) work harder

Question 55

________ newly launched businesses fail after three years of commencing operations.

A) Less than 10 percent
B) About 15 percent
C) About 50 percent
D) Almost all

Question 56

In Canada today,the number of small and medium-sized enterprises that have at least one female owner is _______.

A) Almost 20 percent
B) Almost 50 percent
C) 90 percent
D) 95 percent

Question 57

All of the following are contributions of small businesses EXCEPT:

A) They provide more job security than large corporations.
B) They fuel local economies.
C) They provide needed services to the larger corporate community.
D) They create a substantial number of new jobs.

Question 58

All of the following organizations are regularly and directly involved in sponsoring business incubators EXCEPT ________.

A) the federal government
B) colleges and universities
C) not-for-profit organizations
D) profit-seeking businesses

Question 59

If you are considering starting your own business,a key priority for you should be to:

A) learn the basics of business.
B) incorporate your business.
C) get a loan from your local bank
D) apply for a Small Business Administration loan.

Question 60

Small businesses that provide ________ have experienced the greatest increase in new jobs.

A) goods
B) services
C) products
D) retailing merchandise

Question 61

Devon and Keith opened a restaurant as a partnership.Two years later,Keith left the restaurant,and Devon discovered that Keith had charged numerous expenses to their account.These expenses resulted in thousands of dollars worth of debt for the restaurant.What option does Devon have in this situation?

A) He doesn't have to worry because,according to law,everyone is responsible for his/her own debts.
B) Business creditors will pursue Keith alone since his signature authorized payments.
C) Business creditors will expect Devon to pay at least half the debt since he owns 50 percent of the business.
D) Business creditors will expect full payment from Devon.

Question 62

Chen is a franchisee of a local retail shop.One of his chief concerns regarding owning a franchise is that:

A) The franchising agreement is too restrictive.
B) The franchisor provides him with a wide range of support.
C) The franchise has the benefit of name recognition.
D) The franchisor can negotiate better deals on ingredients,supplies,and real estate,because of its financial strength.

Question 63

Sole proprietorships have all of the following advantages EXCEPT ________.

A) ease of formation
B) unlimited life
C) ease of liquidation
D) profits subject only to a single tax

Question 64

If business owners in a partnership wish to limit liability,they have the option to ________.

A) pledge funds
B) divide into sole proprietorships
C) set up a limited partnership
D) withhold funds

Question 65

The franchisor provides all of the following services EXCEPT ________.

A) building plan
B) accounting systems
C) on-site management
D) name recognition

Question 66

Although ______ are the most common type of business ownership,the greatest revenues come from ______.

A) sole proprietorships,partnerships
B) partnerships,corporations
C) corporations,partnerships
D) sole proprietorships,corporations

Question 67

The two principal parties in a franchising agreement are the ________.

A) manager and worker
B) franchiser and partners
C) franchiser and franchisee
D) venture capitalist and SBA

Question 68

Corporations have all of the following advantages EXCEPT ________.

A) favourable tax treatment
B) limited liability
C) expanded financial capacity
D) unlimited life

Question 69

A restaurant franchisee purchases which of the following from the franchisor?

A) only food
B) both tangible and intangible assets
C) only equipment
D) only name recognition

Question 70

The advertising plan for a franchise is usually put together by the ________.

A) franchisee
B) advertising agency
C) franchisor
D) co-owners

Question 71

Richard,Sarah,and Trevor form a partnership because it offers the following advantage:

A) greater financial resources.
B) unlimited financial liability
C) limiting liability of partners to the value of their interests in the company
D) double taxation

Question 72

The stock of Old Germany Brewery is totally owned by the Prechter family.When the family elected to move from a sole proprietorship to a corporation,the greatest concern was ________.

A) there might be family squabbles
B) how to limit liability
C) choosing work assignments
D) double taxation

Question 73

Franchising offers all of the following advantages EXCEPT ________.

A) prior performance record
B) a recognizable company name
C) guaranteed level of profitability
D) training

Question 74

Which of the following statements regarding franchising is FALSE?

A) Franchises are more risky than other forms of business ownership.
B) Franchisees have the benefit of name recognition.
C) Franchisors provide a wide range of support to franchisees.
D) Benefits for the franchisor include opportunities for expansion that might not otherwise be available.

Question 75

Which of the following is a trend in the area of franchising?

A) One out of every 14 working Canadians is employed by a franchise
B) Franchises are becoming less expensive to fund.
C) Franchisees determining their own pricing and marketing.
D) Franchisees are able to negotiate better pricing than franchisors.

Question 76

Which one of the following duties is exclusively the responsibility of the Board of Directors in a corporation? ______

A) Managing overall operations
B) Supervise employees
C) Introduce major changes
D) Setting overall policy

Question 77

Greg buys a McDonald's franchise.Greg is the ________ and ________ for McDonald's.

A) franchisor;works
B) franchisor;does not work
C) franchisee;works
D) franchisee;does not work

Question 78

If you are a highly independent individual used to having your own way,the best business format for you is to being as a ________.

A) partnership
B) corporation
C) sole proprietorship
D) limited liability corporation

Question 79

One of the most "business-friendly" provinces in Canada is:

A) Alberta
B) Ontario
C) Quebec
D) British Columbia

Question 80

Which of the following statements concerning preferred shares is FALSE? ______.

A) Owners of preferred shares never have voting rights
B) Preferred shareholders receive dividends before the holders of common shares
C) In dissolution preferred shareholders have first claim of assets,after debt holders
D) Any corporation can offer preferred shares