Deck 1: Business: Whats It All About

Question 1

A business in the form of a sole proprietorship ________.

A)is separate and distinct from its owner
B)is a separate legal entity
C)files its own tax return
D)is a company with a single owner

Answer 1

D

Question 2

Advantages of the corporate form of business organization include ________.

A)double taxation
B)limited liability for shareholders
C)separation of ownership and management
D)Two or more of these are correct.

Answer 2

B

Question 3

Disadvantages of the corporate form of business organization include ________.

A)double taxation
B)limited liability for shareholders
C)separation of ownership and management
D)two or more of these

Answer 3

D

Question 4

The two types of merchandising businesses include ________.

A)wholesale and retail
B)service and financial
C)manufacturing and retail
D)service and wholesale

Question 5

The inputs of a firm include ________.

A)revenues
B)liabilities
C)inventory and supplies
D)All of these are correct.

Question 6

The four types of business are ________.

A)service,wholesale,retail,and financial
B)for profit,nonprofit,wholesale,and retail
C)service,merchandising,manufacturing,and financial services
D)financial,manufacturing,service,and wholesale

Question 7

Which of the following is true about a corporation?

A)Corporations must have a minimum of two or more shareholders.
B)Each individual shareholder has individual legal responsibility for the corporation's actions.
C)Corporations are exempt from taxes; however,the shareholders are required to pay taxes on dividends received.
D)Managers of corporations can be held responsible for the actions of the corporation.

Question 8

Corporations are ________.

A)for-profit businesses only
B)manufacturers and not service organizations
C)owned by shareholders
D)exempt from legal liability

Question 9

The outputs of a firm are its ________.

A)capital contributions
B)services provided to customers
C)delivery of products to customers
D)Two or more of these are correct.

Question 10

A partnership ________.

A)is a business owned by two or more individuals
B)has owners who are legally liable for everything the company does
C)may be organized under a partnership agreement
D)is all of these

Question 11

Stock sold for the first time is called ________.

A)issued
B)traded
C)capital
D)dividends

Question 12

Which of the following is legally a separate entity from its owner(s)?

A)sole proprietorship
B)partnership
C)corporation
D)Two of these are correct.

Question 13

A partnership agreement ________.

A)exempts partners from unlimited liability
B)establishes the partnership as a separate legal entity
C)details how much work partners will do and how they will split up the profits
D)defines how many shares of stock the partnership may sell to investors

Question 14

Financial services companies ________.

A)deal in services related to money
B)sell insurance to their customers
C)lend money to consumers to pay for cars and houses
D)All of these are correct.

Question 15

The owners of a corporation are called ________.

A)shareholders
B)partners
C)stockholders
D)two or more of these

Question 16

A service company ________.

A)is a wholesale business
B)manufactures goods
C)is a retail business
D)None of these are correct.

Question 17

A manufacturing business ________.

A)will lend money to customers
B)buys goods for resale
C)provides services to its customers
D)makes the products it sells

Question 18

The ownership structure of a business includes the following forms ________.

A)individual,group,and corporate
B)sole proprietorship,partnership,and corporation
C)service,manufacturing,and financial
D)debtors,creditors,and owners

Question 19

A corporation ________.

A)is a legal entity separate from the owners
B)is a manufacturer and not a service organization
C)may cause unlimited liability for its shareholders
D)provides goods or services for the sole purpose of helping people

Question 20

Which of the following is true about a sole proprietorship?

A)A sole proprietorship is a company owned by two or more individuals.
B)The owner's liability is limited to the amounts invested in the business.
C)Income from a sole proprietorship is distributed to the owner in the form of a dividend.
D)The income from a sole proprietorship is taxed on the owner's personal income tax return.

Question 21

For which organization is there double taxation?

A)sole proprietorship
B)partnership
C)corporation
D)sole proprietorship,partnership and corporation

Question 22

Target is an example of a ________ firm.

A)service
B)merchandising
C)manufacturing
D)financial services

Question 23

A business form in which the partners are not personally liable for the malpractice of any of the other partners is called a ________.

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

Question 24

For which organization is ownership represented by shares of stock?

A)sole proprietorship
B)partnership
C)corporation
D)sole proprietorship and partnership

Question 25

Which of these businesses pays federal income taxes on its income?

A)corporation
B)partnership
C)sole proprietorship
D)Two of these are correct.

Question 26

For which organization are owners typically separate from managers and not involved in the day-to-day operations,sometimes resulting in managers making decisions that are not in the best interest of the owner(s)?

A)sole proprietorship
B)partnership
C)corporation
D)sole proprietorship and partnership

Question 27

Doolittle & Daley,attorneys at law,is an example of a ________.

A)sole proprietorship
B)partnership
C)corporation
D)not-for-profit

Question 28

The United Way is an example of a ________.

A)sole proprietorship
B)partnership
C)corporation
D)not-for-profit

Question 29

Stock may be purchased ________.

A)on a stock exchange
B)on the internet
C)from a stockbroker
D)from more than one of these

Question 30

Which type of business organization finds it easiest to raise large amounts of capital?

A)corporation
B)partnership
C)sole proprietorship
D)Two of these are correct.

Question 31

Dell Inc.'s distribution of earnings to owners is called dividends.Dell must be a ________.

A)sole proprietorship
B)partnership
C)corporation
D)sole proprietorship or partnership

Question 32

The governmental agency that monitors the stock market and the financial reporting of firms that trade in the market is the ________.

A)Financial Accounting Standards Board (FASB)
B)Internal Revenue Service (IRS)
C)Public Company Accounting Oversight Board (PCAOB)
D)Securities and Exchange Commission (SEC)

Question 33

Huntington Bank is an example of a ________ firm.

A)service
B)merchandising
C)manufacturing
D)financial services

Question 34

The stock market is ________.

A)located in New York City
B)the general term used to refer to all stock exchanges
C)where the IRS is located
D)where businesses become incorporated

Question 35

Which type of business organization exposes its owner(s)to unlimited liability?

A)corporation
B)partnership
C)sole proprietorship
D)Two of these are correct.

Question 36

The law firm of Doolittle and Baroque is an example of a ________ firm.

A)service
B)merchandising
C)manufacturing
D)financial services

Question 37

Toyota is an example of a ________ firm.

A)service
B)merchandising
C)manufacturing
D)financial services

Question 38

Ira Roth,CPA,is an example of a ________.

A)sole proprietorship
B)partnership
C)corporation
D)not-for-profit

Question 39

Target is an example of a ________.

A)sole proprietorship
B)partnership
C)corporation
D)not-for-profit

Question 40

For which organization are the personal assets of the owners at risk?

A)sole proprietorship
B)partnership
C)corporation
D)sole proprietorship and partnership

Question 41

Limited legal liability for owners is a characteristic of ________.

A)sole proprietorships
B)partnerships
C)corporations
D)not-for-profits

Question 42

The Securities and Exchange Commission (SEC)is the governmental agency that monitors the stock market and the financial reporting of publicly held companies.

Question 43

In which of the following are the owners' or owner's personal assets at risk if the business does not have enough money to pay its liabilities?

A)sole proprietorship
B)partnership
C)corporation
D)Two of these are correct.

Question 44

The Internal Revenue Service (IRS)is the governmental agency that monitors the stock market and the financial reporting of publicly held companies.

Question 45

Wal-Mart is an example of a service corporation.

Question 46

A corporation must be owned by two or more people.

Question 47

Use this financial statement to answer the following question: This business must be organized as a ________.

A)sole proprietorship
B)partnership
C)corporation
D)Two of these are possible.

Question 48

Which organization should keep its financial records separate from the personal financial affairs of the owner(s)?

A)sole proprietorship
B)partnership
C)corporation
D)All of these are correct.

Question 49

Profit is the difference between revenues and expenses.

Question 50

Double taxation occurs because businesses pay ________.

A)sales tax and income tax
B)property taxes and income taxes
C)taxes on net income,and owners pay taxes on the remaining net income distributed as dividends
D)social security taxes for employees,and employees also pay the same amount for themselves

Question 51

All businesses are formed to create something of value from scratch.

Question 52

When starting a business you should first ________.

A)write a business plan
B)borrow from creditors
C)purchase inventory
D)become incorporated

Question 53

The main purpose of a not-for-profit business is to add value to a product or service in order to make a profit.

Question 54

A business is formed to provide goods or services for the purpose of making a profit for its owner or owners.

Question 55

Profit is the difference between sales and revenues.

Question 56

The stock exchange is ________.

A)where companies may issue stock
B)regulated by the Securities and Exchange Commission (SEC)
C)where buyers and sellers exchange their shares of stock.
D)All of these are correct.

Question 57

Profit is the difference between assets and liabilities.

Question 58

Wal-Mart is an example of a merchandising corporation.

Question 59

In 2012,Baroque,Inc.,a U.S.corporation,earned profits of $200,000 before taxes.After paying federal income taxes of 30%,all of Baroque's after-tax income was paid to its only shareholder.The federal income tax rate on corporate dividends is 15%.How much tax will Baroque's shareholder pay on these dividends?

A)$21,000
B)$30,000
C)$60,000
D)$102,000

Question 60

A sole proprietorship is a company with a single owner.

Question 61

Identify the three forms of business organization.

Question 62

The cost of borrowing money is called ________.

A)a financing activity
B)principal
C)interest
D)an investing activity

Question 63

The balance sheet shows the revenues and expenses for the period.

Question 64

Sara contributes $5,000 of her own money to start her business,Team Shirts,Inc.From Team Shirts' perspective,it ________.

A)gets cash and gives up stock
B)gets stock and gives up cash
C)gets ownership and gives up contributed capital
D)is an operating activity

Question 65

Team Shirts,Inc.pays $5,000 cash for T-shirts from a supplier.This transaction ________.

A)is a financing activity
B)causes an increase in total assets
C)is an operating activity
D)is an investing activity

Question 66

What is the purpose of a business?

Question 67

Businesses receive contributed capital when customers pay for goods or services.

Question 68

Indicate which form of organization is associated with each of the following by putting an "X" in the appropriate column.More than one form may apply to each.

Question 69

When a company repays a loan,both the principal and interest paid are financing activities.

Question 70

A person who starts his own business is considered ________.

A)a manager
B)an entrepreneur
C)a shareholder
D)a capitalist

Question 71

A sole proprietorship has more than one owner.

Question 72

Transactions can only occur between businesses.

Question 73

Indicate the form of organization with which each of the following characteristics is associated by putting an "X" in the appropriate column.More than one form of organization may apply to each.

Question 74

Identify and describe the three types of business activities.

Question 75

Morris Lest began his business,Graters,Inc.with $10,000 of his savings.Graters borrowed $5,000 from Baroque Bank.Graters bought $3,000 worth of graters.The rent for the store is $1,000 per month.The first month's sales were $4,000 for inventory valued at $2,500.All of the transactions were in cash.Identify the get/give transactions above,and determine if there is an increase or decrease in assets,liabilities,or shareholders' equity.

Question 76

The Sarbanes-Oxley Act of 2002 required a new independent board called the Public Company Accounting Oversight Board to be formed to oversee the auditing profession and the audits of public companies.

Question 77

Audited financial statements have been examined by ________.

A)owners
B)Certified Public Accountants (CPAs)
C)Internal Revenue Service (IRS)agents
D)Securities and Exchange Commission (SEC)examiners

Question 78

Team Shirts,Inc.pays $600 for insurance.This transaction ________.

A)causes total assets to increase and total liabilities to increase
B)causes total liabilities to increase and retained earnings to decrease
C)is an investing activity
D)is an operating activity

Question 79

All liabilities represent the costs incurred to generate revenues.

Question 80

To be useful,information must be accurate and reliable.