Question 1

A merger between two businesses in different stages of related businesses is known as a vertical merger.

Accepted Answer

A) True 
 B)False

Question 2

A horizontal merger refers to a merger between two companies in the same industry, and serving the same markets.

Accepted Answer

A) True 
 B)False

Question 3

Few people today start their own business.

Accepted Answer

A) True 
 B)False

Question 4

When one of the owners of a corporation dies, the corporation legally ceases to exist.

Accepted Answer

A) True 
 B)False

Question 5

A major advantage of S corporations is that they:

Accepted Answer

A)   can have more stockholders than a C corporation.
B)   can operate in foreign nations as if they were domestic corporations.
C)   require less paperwork to set up than a C corporation does.
D)   avoid the problem of double taxation associated with conventional corporations.E) B) and D)
F) A) and B)

Question 6

What is a C corporation? What are the major advantages and disadvantages of this form of business ownership?

Accepted Answer

The C corporation is a state-chartered l...

Question 7

Franchising in global markets has demonstrated that high operating costs are counterbalanced by high profit opportunities.

Accepted Answer

A) True 
 B)False

Question 8

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

A general partner is an owner (partner) ...

Question 9

A ____________ is two firms combining to form one company.

Accepted Answer

A)   joint tenancy
B)   tenancy in common
C)   merger
D)   leveraged buyoutE) A) and C)
F) None of the above

Question 10

At one time there were many farm cooperatives, but more recently other forms of business ownership have replaced them.

Accepted Answer

A) True 
 B)False

Question 11

The organization structure of a corporation allows for stockholders to exert a significant degree of control over the company's daily operations.

Accepted Answer

A) True 
 B)False

Question 12

A(n)  ___________ is an arrangement whereby someone with a proven idea for a business sells the rights to use the business model, to sell a product or service to others in a given territory.

Accepted Answer

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

Question 13

_____________ are companies that are similar to S corporations but are not restricted with similar eligibility requirements.

Accepted Answer

A)   Regulated equity companies
B)   Corporate cooperatives
C)   Limited liability companies
D)   Private drawing companiesE) A) and B)
F) B) and C)

Question 14

A quasi-public corporation is a corporation chartered by the government as an approved monopoly to perform services to the general public.

Accepted Answer

A) True 
 B)False

Question 15

Emily wants to open a chain of hair styling salons and hopes to attract investors to help finance growth. She considered forming a C corporation, but wants to have more flexibility about how the new business will be taxed. She also wants to offer investors/owners limited liability. Emily can satisfy her objectives by setting up a(n) :

Accepted Answer

A)   limited liability company.
B)   S corporation.
C)   alien corporation.
D)   general partnership.E) All of the above
F) A) and C)

Question 16

Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business:

Accepted Answer

A)   automatically continues under new management as a sole proprietorship.
B)   automatically converts into a public corporation with stock sold to interested investors.
C)   ceases to exist unless sold or taken over by Joe's heirs.
D)   becomes the property of the most senior employee who wishes to continue operating the firm.E) None of the above
F) All of the above

Question 17

One reason franchises have become so popular is that this arrangement provides the franchisee with:

Accepted Answer

A)   a nationally recognized name and product.
B)   a low cost way to start a business.
C)   limited liability.
D)   the right to retain all profits earned by their franchise.E) A) and D)
F) A) and C)

Question 18

One disadvantage of a limited liability company is that it:

Accepted Answer

A)   requires all earnings of the business be taxed at the corporate rate.
B)   has a limited life span.
C)   requires the owners to divide up profits and losses in a fixed proportion.
D)   has a more restrictive ownership requirement than S corporations.E) All of the above
F) B) and D)

Question 19

In a franchise arrangement, ownership remains in the hands of the franchisor.

Accepted Answer

A) True 
 B)False

Question 20

The strategy of investors who are attempting a leveraged buyout is to:

Accepted Answer

A)   shape up the company for quick resale.
B)   use debt to finance the buyout of the firm's stockholders and gain control of the firm themselves.
C)   secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock.
D)   use investment tax credits from the government to acquire all of the physical assets owned by the firm.E) B) and C)
F) All of the above

Exam 5: How to Form a Business

One reason franchises have become so popular is that this arrangement provides the franchisee with:

Correct Answer
verified

A merger between two businesses in different stages of related businesses is known as a vertical merger.

Correct Answer
verified

A ____________ is two firms combining to form one company.

Correct Answer
verified

When one of the owners of a corporation dies, the corporation legally ceases to exist.

Correct Answer
verified

The organization structure of a corporation allows for stockholders to exert a significant degree of control over the company's daily operations.

Correct Answer
verified

A horizontal merger refers to a merger between two companies in the same industry, and serving the same markets.

Correct Answer
verified

At one time there were many farm cooperatives, but more recently other forms of business ownership have replaced them.

Correct Answer
verified

Few people today start their own business.

Correct Answer
verified

A quasi-public corporation is a corporation chartered by the government as an approved monopoly to perform services to the general public.

Correct Answer
verified

A major advantage of S corporations is that they:

Correct Answer
verified

A(n) ___________ is an arrangement whereby someone with a proven idea for a business sells the rights to use the business model, to sell a product or service to others in a given territory.

Correct Answer
verified

In a franchise arrangement, ownership remains in the hands of the franchisor.

Correct Answer
verified

Franchising in global markets has demonstrated that high operating costs are counterbalanced by high profit opportunities.

Correct Answer
verified

Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business:

Correct Answer
verified

The strategy of investors who are attempting a leveraged buyout is to:

Correct Answer
verified

_____________ are companies that are similar to S corporations but are not restricted with similar eligibility requirements.

Correct Answer
verified

One disadvantage of a limited liability company is that it:

Correct Answer
verified

Correct Answer
verified

What is a C corporation? What are the major advantages and disadvantages of this form of business ownership?

Correct Answer
verified
The C corporation is a state-chartered l...
View Answer

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.

Correct Answer
verified
A general partner is an owner (partner) ...
View Answer

Exam 5: How to Form a Business

One reason franchises have become so popular is that this arrangement provides the franchisee with:

Correct AnswerverifiedShow Answer

A merger between two businesses in different stages of related businesses is known as a vertical merger.

Correct AnswerverifiedShow Answer

A ____________ is two firms combining to form one company.

Correct AnswerverifiedShow Answer

When one of the owners of a corporation dies, the corporation legally ceases to exist.

Correct AnswerverifiedShow Answer

The organization structure of a corporation allows for stockholders to exert a significant degree of control over the company's daily operations.

Correct AnswerverifiedShow Answer

A horizontal merger refers to a merger between two companies in the same industry, and serving the same markets.

Correct AnswerverifiedShow Answer

At one time there were many farm cooperatives, but more recently other forms of business ownership have replaced them.

Correct AnswerverifiedShow Answer

Few people today start their own business.

Correct AnswerverifiedShow Answer

A quasi-public corporation is a corporation chartered by the government as an approved monopoly to perform services to the general public.

Correct AnswerverifiedShow Answer

A major advantage of S corporations is that they:

Correct AnswerverifiedShow Answer

A(n) ___________ is an arrangement whereby someone with a proven idea for a business sells the rights to use the business model, to sell a product or service to others in a given territory.

Correct AnswerverifiedShow Answer

In a franchise arrangement, ownership remains in the hands of the franchisor.

Correct AnswerverifiedShow Answer

Franchising in global markets has demonstrated that high operating costs are counterbalanced by high profit opportunities.

Correct AnswerverifiedShow Answer

Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business:

Correct AnswerverifiedShow Answer

The strategy of investors who are attempting a leveraged buyout is to:

Correct AnswerverifiedShow Answer

_____________ are companies that are similar to S corporations but are not restricted with similar eligibility requirements.

Correct AnswerverifiedShow Answer

One disadvantage of a limited liability company is that it:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is a C corporation? What are the major advantages and disadvantages of this form of business ownership?

Correct AnswerverifiedThe C corporation is a state-chartered l...View AnswerShow Answer

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.

Correct AnswerverifiedA general partner is an owner (partner) ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The C corporation is a state-chartered l...
View Answer

Correct Answer
verified
A general partner is an owner (partner) ...
View Answer