Question 1

A leveraged buyout is an attempt by top management to gain control of a company by issuing a large amount of new stock.

Accepted Answer

A) True 
 B)False

Question 2

It is usually easy to start and end a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 3

When investors successfully take a firm private,the firm's stock is:

Accepted Answer

A)  Converted into bonds.
B)  Converted into cash.
C)  No longer sold to investors on the open market.
D)  Pledged as collateral to its bondholders.E) A) and B)
F) A) and C)

Question 4

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Accepted Answer

A)  Ease of formation
B)  Lower taxes
C)  Simplified paperwork
D)  Limited liability of ownersE) None of the above
F) B) and C)

Question 6

Which of the following is not a disclosure that should be part of a partnership agreement?

Accepted Answer

A)  The way profits will be divided among partners.
B)  The list of personal assets of each partner.
C)  The specific responsibilities of each partner.
D)  The salaries and drawing accounts of each partner.E) B) and C)
F) A) and D)

Question 7

Twenty-six years ago,several small vineyard owners in California joined voluntarily to market their grapes and wine in an attempt to get better prices.Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services.The arrangement established by these vineyard owners is an example of an) :

Accepted Answer

A)  Closed corporation.
B)  Joint venture.
C)  Limited agricultural partnership.
D)  Farm cooperative.E) A) and B)
F) A) and C)

Question 8

A group of medical doctors are interested in incorporating their business.There is no advantage due to the costs involved.

Accepted Answer

A) True 
 B)False

Question 9

Most states have legal restrictions that prevent individuals from incorporating.

Accepted Answer

A) True 
 B)False

Question 10

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Accepted Answer

A)  Are less risky,because each partner is responsible for only a specified fraction of the firm's debts.
B)  Are easier to terminate.
C)  Cost less to organize.
D)  Give the firm a stronger financial foundation.E) A) and B)
F) B) and D)

Question 11

A foreign corporation is chartered in a country outside the U.S.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an attractive benefit of a corporation?

Accepted Answer

A)  Corporations can enjoy double taxation.
B)  Unlike limited partnerships,all owners of corporations are passive investors.
C)  Corporations can protect its owners with unlimited liability.
D)  Corporations can attract employees by offering stock options.E) A) and B)
F) A) and C)

Question 13

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Accepted Answer

A) True 
 B)False

Question 14

A conventional corporation is a state-chartered legal entity,with authority to act and have liability separate from its owners.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Accepted Answer

A)  U.S.-based franchises are most likely to succeed in a foreign market if they use the same strategies and procedures used by franchises in the United States.
B)  There are limited opportunities for U.S.-based franchises to open in foreign countries because,aside from Canada,Mexico,and a small number of European countries,most foreign nations do not allow American-owned franchises to operate within their borders.
C)  The operating costs for franchises in foreign countries may be fairly high,but chances for success are quite good,because competition is likely to be less intense and the customer base in many foreign countries is expanding.
D)  It is difficult for U.S.-based franchises to succeed in most foreign countries because the low incomes of most households in these countries result in weak demand.E) B) and D)
F) C) and D)

Question 16

In a cooperative,members/customers:

Accepted Answer

A)  Democratically control their businesses by electing a board of directors.
B)  Are known as limited partners.
C)  Each have unlimited liability for the debts of the firm.
D)  Take turns serving on the board that manages the company.E) B) and C)
F) A) and B)

Question 17

Which of the following statements about S corporations is most accurate?

Accepted Answer

A)  The major attraction of S corporations is that they avoid the problem of double taxation.
B)  S Corporations are similar to C corporations,except that the majority of owners are foreign investors.
C)  Any corporation willing to pay the necessary fees and fill out the required paperwork can become an S Corporation.
D)  Only large corporations with operations in more than one state can qualify to be classified as S corporations.E) B) and D)
F) B) and C)

Question 18

In rural areas electrical power is often sold by ____________ that take advantage of the government's policy to sell them electricity at wholesale rates.

Accepted Answer

A)  franchises
B)  limited partnerships
C)  mutual funds
D)  cooperativesE) C) and D)
F) B) and D)

Question 19

The profits of a sole proprietorship are taxed as the personal income of the owner.

Accepted Answer

A) True 
 B)False

Question 20

Zach and Mac own an auto repair business which they operate as co-owners.Both take an active role in the management of the business,and each accepts unlimited liability.Zach and Mac operate as a __________.

Accepted Answer

A)  joint venture
B)  general partnership
C)  limited partnership
D)  cooperativeE) None of the above
F) A) and B)

Exam 5: How to Form a Business

A foreign corporation is chartered in a country outside the U.S.

Correct Answer
verified

It is usually easy to start and end a sole proprietorship.

Correct Answer
verified

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct Answer
verified

In rural areas electrical power is often sold by ____________ that take advantage of the government's policy to sell them electricity at wholesale rates.

Correct Answer
verified

Which of the following statements about S corporations is most accurate?

Correct Answer
verified

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Correct Answer
verified

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Correct Answer
verified

A leveraged buyout is an attempt by top management to gain control of a company by issuing a large amount of new stock.

Correct Answer
verified

Most states have legal restrictions that prevent individuals from incorporating.

Correct Answer
verified

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Correct Answer
verified

Zach and Mac own an auto repair business which they operate as co-owners.Both take an active role in the management of the business,and each accepts unlimited liability.Zach and Mac operate as a __________.

Correct Answer
verified

Which of the following is an attractive benefit of a corporation?

Correct Answer
verified

Which of the following is not a disclosure that should be part of a partnership agreement?

Correct Answer
verified

A group of medical doctors are interested in incorporating their business.There is no advantage due to the costs involved.

Correct Answer
verified

A conventional corporation is a state-chartered legal entity,with authority to act and have liability separate from its owners.

Correct Answer
verified

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Correct Answer
verified

Correct Answer
verified

In a cooperative,members/customers:

Correct Answer
verified

The profits of a sole proprietorship are taxed as the personal income of the owner.

Correct Answer
verified

When investors successfully take a firm private,the firm's stock is:

Correct Answer
verified

Exam 5: How to Form a Business

A foreign corporation is chartered in a country outside the U.S.

Correct AnswerverifiedShow Answer

It is usually easy to start and end a sole proprietorship.

Correct AnswerverifiedShow Answer

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct AnswerverifiedShow Answer

In rural areas electrical power is often sold by ____________ that take advantage of the government's policy to sell them electricity at wholesale rates.

Correct AnswerverifiedShow Answer

Which of the following statements about S corporations is most accurate?

Correct AnswerverifiedShow Answer

When two or more people legally agree to become co-owners of a business,the form of business is called a partnership.

Correct AnswerverifiedShow Answer

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Correct AnswerverifiedShow Answer

A leveraged buyout is an attempt by top management to gain control of a company by issuing a large amount of new stock.

Correct AnswerverifiedShow Answer

Most states have legal restrictions that prevent individuals from incorporating.

Correct AnswerverifiedShow Answer

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Correct AnswerverifiedShow Answer

Zach and Mac own an auto repair business which they operate as co-owners.Both take an active role in the management of the business,and each accepts unlimited liability.Zach and Mac operate as a __________.

Correct AnswerverifiedShow Answer

Which of the following is an attractive benefit of a corporation?

Correct AnswerverifiedShow Answer

Which of the following is not a disclosure that should be part of a partnership agreement?

Correct AnswerverifiedShow Answer

A group of medical doctors are interested in incorporating their business.There is no advantage due to the costs involved.

Correct AnswerverifiedShow Answer

A conventional corporation is a state-chartered legal entity,with authority to act and have liability separate from its owners.

Correct AnswerverifiedShow Answer

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a cooperative,members/customers:

Correct AnswerverifiedShow Answer

The profits of a sole proprietorship are taxed as the personal income of the owner.

Correct AnswerverifiedShow Answer

When investors successfully take a firm private,the firm's stock is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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