Question 1

The sole proprietorship form of ownership tends to be attractive to people who want to invest in a company without taking an active role in management.

Accepted Answer

A) True 
 B)False

Question 2

Ted and Mark have been partners in a dry cleaning business for the past three years.They would like their brother Todd to join them.Unfortunately,partnership law states that only two partners can participate in a partnership.

Accepted Answer

A) True 
 B)False

Question 3

A disadvantage of corporations is that they generally require extensive paperwork.

Accepted Answer

A) True 
 B)False

Question 4

People who form co-operatives:

Accepted Answer

A) believe the government should play a larger role in the economy. 
B) want to find a way to supply basic necessities free of charge to everyone. 
C) dislike the notion of having owners,managers,and customers as separate individuals with separate goals. 
D) see competitive behaviour as the key to ensuring rapid economic growth.

Question 5

Yolanda owns a roofing business.She enjoys being her own boss,but her satisfaction comes at a price.Her days are filled with organizing the activities of her employees and soliciting new customers.She often misses activities with friends and family because of the obligations of running her own business.She also knows that she has unlimited personal liability for any of her firm's debts.It appears that Yolanda's business is organized as a:

Accepted Answer

A) sole proprietorship. 
B) corporation. 
C) limited partnership. 
D) joint venture.

Question 6

Co-operatives can be found in many sectors of the economy.

Accepted Answer

A) True 
 B)False

Question 7

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

Accepted Answer

A) True 
 B)False

Question 8

In a co-operative,members/customers:

Accepted Answer

A) each have unlimited liability for the debts of the firm. 
B) take turns serving on the board that manages the company. 
C) democratically control their businesses using the one member/one vote system. 
D) are known as limited partners.

Question 9

Elroy is the sole proprietor of a gift shop in a small shopping centre.Because he is a sole proprietor,any profit Elroy's business earns is:

Accepted Answer

A) taxed twice,once as business income,then again as Elroy's personal income. 
B) taxed only if and when it is distributed to investors. 
C) taxed only as Elroy's personal income. 
D) totally tax-free.

Question 10

A corporation is a federally or provincially chartered legal entity,with authority to act and have liability separate from its owners.

Accepted Answer

A) True 
 B)False

Question 11

Laurel has always worked for others,but has become tired of following orders.She wants to find an inexpensive way to start her own business so that she can have the freedom to run her business exactly as she sees fit.Laurel could achieve her goals by becoming a franchisee.

Accepted Answer

A) True 
 B)False

Question 12

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Accepted Answer

A) True 
 B)False

Question 13

A legal entity with authority to act separately from its owners is known as a ___________.

Accepted Answer

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

Question 14

A(n)__________is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.

Accepted Answer

A) conditional grant 
B) trade contract 
C) extended ownership agreement 
D) franchise agreement

Question 15

What is the difference between a general partner and a limited partner? Give an example of a situation in which a person would want to be a limited partner.

Accepted Answer

The answer of What is the difference between a general...

Question 16

When entering into a new partnership,the partners should:

Accepted Answer

A) plan to incorporate as soon as possible. 
B) agree to put the first year's profits back into the partnership. 
C) avoid putting their agreement in writing since this would limit the flexibility of the partnership. 
D) put the partnership agreement in writing.

Question 17

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Accepted Answer

A) True 
 B)False

Question 18

All of the partners in a general partnership have limited liability for the debts of their firm.

Accepted Answer

A) True 
 B)False

Question 19

Maria is already a successful franchisee with Nite Lite,a chain of "no frills" motels that provide clean rooms and good service at affordable rates.The motel she currently operates is located in the Maritime provinces,but she is considering an opportunity to open another Nite Lite motel in the United States.Although her costs of operating in a new country may be higher,she will offer the benefits of convenience and a predictable level of service.

Accepted Answer

A) True 
 B)False

Question 20

Juan wants to start his own business.He would be most likely to favour organizing his new company as a sole proprietorship if he:

Accepted Answer

A) expects rapid growth and wants to be able to raise a large sum of money. 
B) wants to minimize the financial risk he must accept as the owner of a business. 
C) wants to make it easy to attract qualified employees. 
D) has a strong desire to be his own boss.

Exam 6: Forms of Business Ownership

The sole proprietorship form of ownership tends to be attractive to people who want to invest in a company without taking an active role in management.

Ted and Mark have been partners in a dry cleaning business for the past three years.They would like their brother Todd to join them.Unfortunately,partnership law states that only two partners can participate in a partnership.

A disadvantage of corporations is that they generally require extensive paperwork.

People who form co-operatives:

Co-operatives can be found in many sectors of the economy.

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

In a co-operative,members/customers:

Elroy is the sole proprietor of a gift shop in a small shopping centre.Because he is a sole proprietor,any profit Elroy's business earns is:

A corporation is a federally or provincially chartered legal entity,with authority to act and have liability separate from its owners.

Laurel has always worked for others,but has become tired of following orders.She wants to find an inexpensive way to start her own business so that she can have the freedom to run her business exactly as she sees fit.Laurel could achieve her goals by becoming a franchisee.

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

A legal entity with authority to act separately from its owners is known as a ___________.

A(n) __________is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.

What is the difference between a general partner and a limited partner? Give an example of a situation in which a person would want to be a limited partner.

When entering into a new partnership,the partners should:

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

All of the partners in a general partnership have limited liability for the debts of their firm.

Juan wants to start his own business.He would be most likely to favour organizing his new company as a sole proprietorship if he: