Deck 5: Forms of Business Ownership and Organization

Question 1

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.alien corporation
m.preferred stock
n.franchising
The form of business ownership that is least subject to legal red tape is _____.

Answer 1

a

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.alien 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.

Answer 2

h

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.alien corporation
m.preferred stock
n.franchising
A(n) _____ is a type of business ownership formed in one country but that operates in another country.

Answer 3

l

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.alien corporation
m.preferred stock
n.franchising
A(n) _____ is independently owned and operated and is responsible for more than half of the nation's gross domestic product.

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.alien corporation
m.preferred stock
n.franchising
A(n) _____ occurs when one firm purchases the property and assumes the obligations of another firm.

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.alien 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 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.alien corporation
m.preferred stock
n.franchising
A(n) _____ joins firms in the same industry that wish to diversify, increase their customer base, cut costs, or offer expanded product lines.

Question 8

Describe how small businesses help create new jobs.

Question 9

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.alien corporation
m.preferred stock
n.franchising
Small start-up ventures looking for low-cost shared facilities can utilize _____, offered by local community agencies.

Question 10

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.alien corporation
m.preferred stock
n.franchising
During a(n) _____, two or more firms combine to form one company.

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.alien corporation
m.preferred stock
n.franchising
Owners of _____ have limited voting rights, but are entitled to the earliest dividends.

Question 12

Explain how small businesses create new industries.

Question 13

Describe how to identify a small business from a large one.

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.alien 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 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.alien corporation
m.preferred stock
n.franchising
A(n) _____ combines firms operating at different levels in the production and marketing process.

Question 16

List the elements contained in a business plan.

Question 17

Why are small businesses especially important to women and minorities?

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.alien corporation
m.preferred stock
n.franchising
A merger of firms in unrelated industries is called a(n) _____.

Question 19

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.alien corporation
m.preferred stock
n.franchising
The form of business ownership that establishes the firm as a separate legal entity is the _____.

Question 20

Describe three primary reasons why a small business might fail.

Question 21

Compare and contrast the three forms of business ownership.

Question 22

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

A) manufacturing
B) retailing
C) wholesaling
D) importing/exporting

Question 23

Almost 90 percent of U.S. farms are owned by _____.

A) the government
B) large corporations
C) individual farmers
D) small corporations

Question 24

Define the categories of corporations.

Question 25

Compare mergers and acquisitions.

Question 26

Describe the complexity of franchise agreements.

Question 27

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 small businesses compete with larger firms.
C) incorporation is easier for them.
D) banks are more likely to grant them loans.

Question 28

Describe the steps required when incorporating a business. Regarding incorporation, what might make a state "business-friendly"?

Question 29

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

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 be eligible for government loans or for government purchasing programs.
D) Small businesses are more likely to be franchises.

Question 30

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

A) Greater visibility to customers
B) Lower costs
C) Less flexibility
D) Isolation

Question 31

The majority of all U.S. firms employ:

A) more than 5,000 employees.
B) 1,000 to 3,000 employees.
C) 3,000 to 5,000 employees.
D) 500 or fewer employees.
)

Question 32

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

A) Nursing home
B) Paper mill
C) Home building company
D) Electric utilities company

Question 33

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

Question 34

Describe the types of loans the Small Business Administration (SBA) offers to small businesses.

Question 35

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 customers.

Question 36

What is a business incubator?

Question 37

Provide an example of how innovation drives small business.

Question 38

Which government agency establishes standards for small businesses?

A) Food and Drug Administration
B) Securities and Exchange Commission
C) Small Business Administration
D) Small Business Investment Company

Question 39

_____ of small businesses are considered home-based businesses.

A) About 50 percent
B) About 75 percent
C) Less than 25 percent
D) About 25 percent

Question 40

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 41

A fast food chain offers a contractual business arrangement in various countries around the world. This fast food chain will be an example of a(n) international _____.

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

Question 42

_____ use their own capital supplemented with government loans to invest in small businesses.

A) Franchisors
B) Small Business Investment Companies (SBICs)
C) Joint ventures
D) Freemium business models

Question 43

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

A) get a loan from your local bank.
B) incorporate your business.
C) understand the industry in which a company operates.
D) apply for a Small Business Administration loan.

Question 44

The _____ industry represents the greatest percentage of minority-owned businesses.

A) finance
B) service
C) retail
D) transportation

Question 45

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

A) a statement of the company's goals
B) an executive summary
C) separate financial and marketing sections
D) a time frame for selling stock to investors

Question 46

In exchange for an ownership share, small businesses receive financing from a group of investors known as _____,

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

Question 47

Ricardo buys the franchise of a fast food chain. In this scenario, he is the _____ and _____ for this fast food chain.

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

Question 48

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

A) More franchises are opening outside the United States.
B) Franchises are becoming less expensive to fund.
C) Franchisees are determining their own pricing and marketing.
D) Franchisees are able to negotiate better pricing than franchisors.

Question 49

The Small Business Administration (SBA) provides all of the following EXCEPT _____.

A) loan guarantees
B) information and advice through toll-free telephone numbers
C) loans for natural disaster recovery
D) business incubators

Question 50

Neehara owns a small business and needs assistance on a variety of issues. The Small Business Administration (SBA) can help her by providing _____.

A) an accountant
B) a business incubator
C) government procurement
D) direct business loans

Question 51

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

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

Question 52

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 53

Mariana wants to start an event management firm with two of her friends. She decides to create a business plan that will help her in securing financing for her firm. Which of the following should she include in the business plan?

A) A list of her previous clients
B) A list of the potential lenders
C) An introduction that includes the objectives of her business
D) A time frame for selling stock to investors

Question 54

The management of Javier Investments wants to create more job opportunities in their city. They believe that the best way to create more jobs is to help people start their own business. They invest a portion of the company's profit, along with money received through government loans, to support people trying to start their own business. Javier Investments is an example of:

A) Unit investment trusts (UITs).
B) Small Business Investment Companies (SBICs).
C) Joint ventures.
D) Business incubators.

Question 55

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

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

Question 56

When the Small Business Administration (SBA) assists a small business in applying for a major loan, it acts as the lender's _____.

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

Question 57

Many businesses fail during the early years because of _____.

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

Question 58

The largest lenders to small businesses are _____.

A) commercial banks
B) retail chains
C) venture capitalists
D) investors

Question 59

The franchisor provides all of the following services EXCEPT _____.

A) business training
B) marketing programs
C) name recognition
D) on-site management

Question 60

Franchising offers all of the following advantages EXCEPT _____.

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

Question 61

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

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

Question 62

Alternatives to private ownership include _____.

A) public ownership and collective ownership
B) employee ownership and foreign corporations
C) foreign corporations and public ownership
D) employee ownership and collective ownership

Question 63

The maximum number of shareholders is limited to _____ for a firm to qualify as a subchapter S corporation.

A) 25
B) 50
C) 75
D) 100

Question 64

Jose is a stockholder in a software consulting firm. He gets a share of the earnings of the firm, on which he has to pay taxes. Moreover, the firm pays taxes on its earnings. As an individual, Jose is not legally liable to pay off the debts that might be incurred by the firm. In this scenario, the software consulting firm can be regarded as a _____.

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

Question 65

Which of the following statements is true regarding employee-owned corporations?

A) The number of employee-owned corporations is declining in the United States.
B) Employee-owned corporations may not publicly trade their stock.
C) Employees buy shares of stock in the company that employs them.
D) Stock prices in employee-owned corporations typically decrease.

Question 66

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

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

Question 67

Sole proprietorships have all of the following advantages EXCEPT _____.

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

Question 68

Which of the following statements regarding family-owned businesses is true?

A) Only a small percentage of family-owned businesses survive into the second or third generation.
B) Family-owned companies must submit a written agreement to the state in which it organizes.
C) All family-owned companies must be closed corporations.
D) Family-owned companies are an example of a not-for-profit corporation.

Question 69

People are likely to form a partnership because it offers:

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

Question 70

Farid is the owner of a small mushroom farm in Pennsylvania. He would like to join hands with other growers to create an organization that will promote and distribute mushrooms. The form of ownership that would be most suited for Farid and other growers will be a(n) _____.

A) joint venture
B) open corporation
C) government-owned collective
D) cooperative

Question 71

The stocks of Silver Novelties, a toy store, are completely owned by the Schmidts. 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 72

Which of the following statements regarding franchising is FALSE?

A) Franchises are riskier 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 73

When a government unit owns and operates an organization, the arrangement is known as _____.

A) private ownership
B) a cooperative
C) public ownership
D) employee ownership

Question 74

Which of the following is most likely an example of public ownership?

A) A movie theater
B) The city sewer system
C) A trucking company
D) A television company

Question 75

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

A) pledge funds
B) limit expenditure
C) set up a limited-liability partnership
D) dissolve the partnership

Question 76

Sunita is the owner of an electronic repair shop. She creates the marketing strategy for her shop, pays all the required taxes, and is also the only person who enjoys the profits generated by the shop. Sunita's business ownership in this scenario can be regarded as a _____.

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

Question 77

Salma and Debbie opened a restaurant in partnership. Two years later, Debbie left the restaurant, and Salma discovered that Debbie had incurred numerous expenses to their account. These expenses resulted in thousands of dollars' worth of debt for the restaurant. From the following, identify an accurate statement about this situation.

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

Question 78

Three members of Abdul's family work at BioTechno, a multi-national drug manufacturer. Each of them owns 5% shares of the company respectively. In fact, most of the employees of BioTechno, like Abdul and his family members, are stockholders of the company. BioTechno can be regarded as a _____.

A) sole proprietorship
B) employee-owned corporation
C) family-owned business
D) partnership

Question 79

Diya owns FoodMart, the franchisee of a local retail shop. Which of the following will be one of Diya's chief concerns regarding owning the franchise?

A) The franchisor does not provide her with the required supplies.
B) The franchising agreement is too restrictive.
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 80

Corporations have all of the following advantages EXCEPT _____.

A) favorable tax treatment
B) limited liability
C) expanded financial capacity
D) limited legal risk