Question 1

Faye Adkins had a relish that her family and friends raved about. As a result of moral and financial support from her family, Adkins began her own business and sells her relish in local supermarkets and on the Internet. Adkins is an example of which of the following?

Accepted Answer

A)   sole partnership
B)   sole proprietorship
C)   S corporation
D)   limited partnershipE) None of the above
F) A) and D)

Question 2

Why do most private companies become public companies?

Accepted Answer

A)   to diversify the shareholders
B)   to raise extra money
C)   to gain more exposure
D)   so the owners can get out of the businessE) A) and D)
F) A) and C)

Question 3

Al Tomlin and Wilson Nkata recently closed their frame shop because they could not pay the outstanding business debts. Since Tomlin and Nkata are both liable for the debts, what sort of business do they have?

Accepted Answer

A)   general partnership
B)   private corporation
C)   open corporation
D)   limited partnershipE) A) and B)
F) A) and C)

Question 4

What is a disadvantage of franchising to the franchisee?

Accepted Answer

A)   defined territory
B)   restricted operating freedom
C)   minimal assistance in site location
D)   lack of management trainingE) A) and B)
F) A) and C)

Question 5

The franchisor generally does NOT provide the franchisee with which of the following?

Accepted Answer

A)   assistance in site selection
B)   wholesale prices on supplies
C)   use of company name and logo
D)   help in employee selectionE) A) and B)
F) A) and D)

Question 6

List the three major categories of business ownership.

Accepted Answer

sole propr...

Question 7

Which of the following is an advantage of sole proprietor ownership?

Accepted Answer

A)   direct control of the business
B)   keeping 50 percent of the profits
C)   limited liability
D)   better terms from suppliersE) C) and D)
F) None of the above

Question 8

Which of the following is a disadvantage associated with a partnership?

Accepted Answer

A)   unlimited liability
B)   inflexibility
C)   harder to terminate business
D)   less credit availableE) C) and D)
F) All of the above

Question 9

A private corporation sells only half of its shares on the stock exchange.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements best describes the partnership as a form of business ownership?

Accepted Answer

A)   Disagreements between partners are rare.
B)   Termination of the partnership is simple.
C)   Formation of the partnership is simple.
D)   Liability for the partners is limited.E) A) and B)
F) A) and C)

Question 11

Double taxation is a distinct advantage that corporations have over other forms of ownership.

Accepted Answer

A) True 
 B)False

Question 12

One of the advantages of the sole proprietorship is that the owner keeps all the profits.

Accepted Answer

A) True 
 B)False  True

Question 13

What type of liability means that business damages and/or debts can also be attached to the personal assets of the owners?

Accepted Answer

A)   informal liability
B)   limited liability
C)   unlimited liability
D)   funding liabilityE) A) and C)
F) All of the above C

Question 14

An advantage of a partnership is the availability of capital.

Accepted Answer

A) True 
 B)False

Question 15

What is the combination of two companies that join to form one company?

Accepted Answer

A)   merger
B)   joint venture
C)   cartel
D)   conglomerateE) A) and B)
F) A) and C)

Question 16

How is the board of directors for a corporation created?

Accepted Answer

It is elec...

Question 17

Which of the following provides the legal and managerial guidelines for operating the company?

Accepted Answer

A)   the constitution
B)   the articles of incorporation
C)   the corporate structure
D)   the bylawsE) A) and B)
F) A) and C) D

Question 18

Which of the following is a disadvantage for the fast-food franchisee?

Accepted Answer

A)   ongoing management training programs
B)   short-term credit for buying supplies
C)   a peer group for support
D)   royalty feesE) B) and D)
F) B) and C)

Question 19

Which type of merger brings together companies in unrelated businesses to reduce risk?

Accepted Answer

A)   diagonal merger
B)   horizontal merger
C)   vertical merger
D)   conglomerateE) All of the above
F) C) and D)

Question 20

A corporation can best be described by which of the following statements?

Accepted Answer

A)   It cannot sue or be sued.
B)   It ends when the owner of the corporation charter dies.
C)   It does not have a life separate from its owners.
D)   It does not have a size limitation.E) None of the above
F) B) and C)

Exam 8: Forms of Business Ownership

Faye Adkins had a relish that her family and friends raved about. As a result of moral and financial support from her family, Adkins began her own business and sells her relish in local supermarkets and on the Internet. Adkins is an example of which of the following?

Correct AnswerverifiedShow Answer

Why do most private companies become public companies?

Correct AnswerverifiedShow Answer

Al Tomlin and Wilson Nkata recently closed their frame shop because they could not pay the outstanding business debts. Since Tomlin and Nkata are both liable for the debts, what sort of business do they have?

Correct AnswerverifiedShow Answer

What is a disadvantage of franchising to the franchisee?

Correct AnswerverifiedShow Answer

The franchisor generally does NOT provide the franchisee with which of the following?

Correct AnswerverifiedShow Answer

List the three major categories of business ownership.

Correct Answerverifiedsole propr...View AnswerShow Answer

Which of the following is an advantage of sole proprietor ownership?

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage associated with a partnership?

Correct AnswerverifiedShow Answer

A private corporation sells only half of its shares on the stock exchange.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the partnership as a form of business ownership?

Correct AnswerverifiedShow Answer

Double taxation is a distinct advantage that corporations have over other forms of ownership.

Correct AnswerverifiedShow Answer

One of the advantages of the sole proprietorship is that the owner keeps all the profits.

Correct AnswerverifiedTrue

What type of liability means that business damages and/or debts can also be attached to the personal assets of the owners?

Correct AnswerverifiedC

An advantage of a partnership is the availability of capital.

Correct AnswerverifiedShow Answer

What is the combination of two companies that join to form one company?

Correct AnswerverifiedShow Answer

How is the board of directors for a corporation created?

Correct AnswerverifiedIt is elec...View AnswerShow Answer

Which of the following provides the legal and managerial guidelines for operating the company?

Correct AnswerverifiedD

Which of the following is a disadvantage for the fast-food franchisee?

Correct AnswerverifiedShow Answer

Which type of merger brings together companies in unrelated businesses to reduce risk?

Correct AnswerverifiedShow Answer

A corporation can best be described by which of the following statements?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
sole propr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It is elec...
View Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified