Deck 5: Forms of Business Ownership and Organization

Question 1

Describe how small businesses help create new jobs.

Answer 1

Small businesses make tremendous contributions to the U.S.economy and to society as a whole.One impressive contribution is the number of new jobs created each year by small businesses.While it varies from year to year,on average two of every three new jobs are created by companies with fewer than 500 employees.A significant share of these jobs is created by the smallest companies,those with four or fewer employees.Several provisions of the recent Small Business Jobs Act may help give a further boost to these job numbers by raising the dollar amount of small business loans available to companies.¹⁴

Question 2

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

Answer 2

h

Question 3

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

Answer 3

c

Question 4

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

Question 5

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

Question 6

List the elements contained in a business plan.

Question 7

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

Question 8

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

Question 9

Explain the reasons for the failure of small businesses.

Question 10

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

Question 11

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

Question 12

Why are small businesses especially important to women and minorities?

Question 13

How does the Small Business Administration (SBA)provide financial assistance? What are the sources of microloans?

Question 14

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

Question 15

Complete the following using the terms listed.
a.small business
b.corporation
c.merger
d.acquisition
e.horizontal merger
f.conglomerate merger
g.Cooperative
h.vertical merger
i.business incubators
j.business plan
k.alien corporation
l.preferred stock
m.Franchising
A(n)_____ is independently owned and operated and is responsible for more than half of the nation's gross domestic product.

Question 16

Complete the following using the terms listed.
a.small business
b.corporation
c.merger
d.acquisition
e.horizontal merger
f.conglomerate merger
g.Cooperative
h.vertical merger
i.business incubators
j.business plan
k.alien corporation
l.preferred stock
m.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 17

What are the advantages of home-based businesses?

Question 18

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

Question 19

Complete the following using the terms listed.
a.small business
b.corporation
c.merger
d.acquisition
e.horizontal merger
f.conglomerate merger
g.Cooperative
h.vertical merger
i.business incubators
j.business plan
k.alien corporation
l.preferred stock
m.Franchising
A(n)_____ is a type of business ownership formed in one country but that operates in another country.

Question 20

Describe how Turning Technologies was formed and how it has benefited the society.

Question 21

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

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

Question 22

Which of the following is a reason for Krispy Kreme's near failure?

A)Consumers felt that its employees were incompetent.
B)The company lacked funding for its development.
C)The quality of its donuts was bad.
D)Consumers preferred its competitors' products.

Question 23

How do small businesses contribute to the U.S economy?

A)By creating job opportunities
B)By refraining from market competition
C)By paying a professional tax higher than other businesses
D)By adhering to traditional methods of operation

Question 24

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

Question 25

Compare mergers and acquisitions.

Question 26

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

Question 27

What specialized services does the Small Business Administration (SBA)offer?

Question 28

Discuss the benefits of a limited-liability corporation.

Question 29

The largest lenders to small businesses are _____.

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

Question 30

Compare and contrast the three forms of business ownership.

Question 31

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 32

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 33

Many businesses fail during the early years because of _____.

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

Question 34

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 35

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 36

Describe the complexity of franchise agreements.

Question 37

Define the categories of corporations.

Question 38

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 39

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

Question 40

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

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

Question 41

Which of the following is a benefit of franchising?

A)The failure of one franchise does not affect the brand.
B)It offers several opportunities for the expansion of a business.
C)It does not require any start-up cost.
D)The founder of the business has absolute control over every franchise.

Question 42

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 43

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 44

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 45

Which of the following is true of a business with sole proprietorship?

A)It involves several owners.
B)It is difficult to form and dissolve.
C)Its owner has maximum management flexibility.
D)Its owner is exempt from corporate franchise taxes.

Question 46

Martha requires funding for a shopping portal that she launched recently.She wants to secure a government procurement contract to ensure adequate funding.Which of the following organizations can help Martha avail the contract?

A)Limited-liability corporation
B)Center for Women's Business Research
C)Small Business Administration
D)International Franchise Association

Question 47

One of the disadvantages of partnerships is that:

A)the partners are not covered by life insurance.
B)all partners should have expertise in every area.
C)the partners are exposed to unlimited financial liability.
D)they are difficult to form and dissolve.

Question 48

_____ 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 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

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 51

A drawback of franchising is that:

A)it necessitates the development of new business models for every franchise.
B)it provides no opportunities for expansion.
C)it restricts the business to a single geographical location.
D)it deprives the franchisor of absolute control over his or her business.

Question 52

Which of the following is one of the criteria for borrowers to qualify for a Small Business Administration-backed loan?

A)The borrower should not be a financial service provider.
B)The borrower should not be a home-based business.
C)The borrower should be unable to secure conventional commercial financing.
D)The borrower should be a not-for-profit organization that focuses on energy conservation.

Question 53

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 54

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 55

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 56

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 57

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 58

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 59

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 60

The franchisor provides all of the following services EXCEPT _____.

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

Question 61

GreenStance is a company that designs and implements innovative water purification solutions using simple and inexpensive methods.All its decision-making focuses on a better environment.While the company manages to make profits,its vision is set beyond financial gains.Its adherence to its goals is verified by a third-party auditor.Which of the following types of corporations does this scenario illustrate?

A)B corporation
B)S corporation
C)Employee-owned corporation
D)Not-for-profit corporation

Question 62

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 63

Laura owns a company that provides laundry services.She ensures that only her family members are the stockholders of her company.She also allows them to control and manage all of the company's activities.In this scenario,Laura owns a _____.

A)public corporation
B)closed corporation
C)not-for-profit corporation
D)limited-liability corporation

Question 64

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 65

Which of the following is a function of the board of directors of a corporation?

A)Evaluating the performance of employees
B)Hiring the chief executive officer
C)Assigning specific tasks to employees
D)Maintaining personnel records

Question 66

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 67

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 68

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 69

Catalina owns 100 _____ stock of NxtGen Solutions,a software firm.It means that she has voting rights on company decisions at NxtGen Solutions,but only residual claims on the company's assets.

A)preferred
B)principal
C)management
D)common

Question 70

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 71

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 72

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 73

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 74

The board of directors of a corporation is elected by the _____.

A)corporation's employees
B)bondholders and other creditors
C)corporate officers
D)stockholders

Question 75

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 76

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 77

Corporations have all of the following advantages EXCEPT _____.

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

Question 78

Paul decides to start a trust-run hospital to help the poor get expensive treatments for free.Which of the following is most likely to be true of the hospital?

A)It has a high profit margin.
B)It issues stock certificates.
C)It pays dividends to owners.
D)It is exempt from corporate taxes.

Question 79

Nikita established a corporation in Nebraska,but she recently moved to Colorado where she now conducts her business.What type of corporation does Nikita own?

A)Alien corporation
B)Domestic corporation
C)Foreign corporation
D)National corporation

Question 80

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% of the business.
D)Business creditors will expect full payment from Salma.