FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: How to Form a Business

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 91

True/False

Review LaterAdd Note

Review Later

According to the Spotlight on Small Business box, "Pick Your Partners Wisely", it is really not necessary to interview your prospective partner carefully, especially if they are an old friend.

A) True
B) False

Correct Answer

verified

Show Answer

Question 92

Multiple Choice

Review LaterAdd Note

Review Later

Mini-Case For as long as she could remember, Jenna Raiter's passion was cars. As a teenager, she spent hours with her dad tinkering with the family car, learning to change the oil and making minor repairs. She got a job at a local garage while still in high school. A few years after graduating from high school and completing the auto mechanics degree at a local community college, Jenna decided she wanted to be her own boss. She quit her job, borrowed some money from her dad, and began her own repair shop, the AutoMotion Garage. Jenna's hard work gradually attracted a loyal clientele of satisfied customers. Her success has her thinking about opening garages in two other locations, but she lacks the financial resources needed for expansion. Furthermore, the success of her business is forcing Jenna to spend more time managing the business and less time doing the actual technical work she still enjoys. She wants to find business partners who can help her with management and provide additional financial resources. She has approached a couple of friends she met in high school: Al Ternator and Lew Banfilter, to see if they would like to join the business. -Jenna approached Al Ternator about joining the business as an owner. She proposed that she continue to provide the technical expertise and deal directly with customers, while Al, who has a college degree in finance, handles many of the financial aspects of running AutoMotion. In addition, Jenna wants Al to contribute some much-needed money for expansion. Under Jenna's proposal, she and Al would operate the business together as:

A) Limited partners.
B) General partners.
C) Majority shareholders.
D) Business consultants.

E) None of the above
F) A) and C)

Correct Answer

verified

Show Answer

Question 93

Multiple Choice

Review LaterAdd Note

The vast majority of corporations in the U.S. are:

The form of business ownership best suited to raising large amounts of money for expansion is the:

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

Last night as you scrolled through the TV channels to find an action flick, you came across an old movie with tough guy, James Cagney, called "Yankee Doodle Dandy". Although not particularly your kind of movie, you stayed on that channel for a few minutes because Cagney and another guy were in partnership together. They were arguing over who was the senior partner and who was the junior partner, even though, clearly, they started the business at the same time. If you were brought on board as their present-day business advisor, you would explain to them that all partnerships have at least one general partner (known as the senior partner) and one limited partner (known as the junior partner).

When entering into a new partnership, a good strategy is to:

One reason Individuals incorporate is to obtain the advantage of limited liability.

Continental Foods is considering a conglomerate merger with a company that makes storage solutions. A likely reason is:

Which of the following statements about partnerships is most accurate?

The S corporation form of business would be particularly attractive to fast growing companies that want to attract thousands of new stockholders.

The form of business ownership that usually requires the most detailed record keeping is the:

Originally, food cooperatives were formed to provide better prices for farmers. These groups now cooperatively buy farm equipment and other products, and realize economies of scales by banding together for these things.

Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business which requires you to:

Stockholders in a corporation have limited liability.

One of the drawbacks of a limited liability company is that most states do not yet recognize this form of ownership.

The purpose of a farm cooperative is to:

Unlimited liability means:

The purpose of corporate by-laws is to maintain a legal structure and also to stipulate how the firm will be managed.

The franchisee pays the franchisor a share of profits or a percentage commission on sales, known as a royalty.