Question 1

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 scale by banding together for these things.

Accepted Answer

A) True 
 B)False

Question 2

Due to several years of poor performance, Scrappy's Metal Fabrication, Inc., is closing. Through the use of debt financing, workers plan to purchase the company's stock from current shareholders in order to buy the firm, improve company performance, and save jobs.

Accepted Answer

A) True 
 B)False

Question 3

Finley is a limited partner in Gettout & Associates. Heywood U. Gettout, one of the general partners in the company, must temporarily leave the company to attend to some personal matters. Heywood has asked Finley to perform his managerial duties while he is gone. As a limited partner, Finley:

Accepted Answer

A)   can fill in as a manager whenever necessary, as long as it is for only a limited time.
B)   can make managerial decisions as long as they do not involve the payment of money.
C)   cannot participate in the management of the partnership.
D)   can manage the firm as long as he gets approval from the company's other general partners.E) None of the above
F) A) and B)

Question 4

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Accepted Answer

A limited liability company (LLC) is a r...

Question 5

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 6

An advantage of forming a sole proprietorship is that it allows the owner to have more time for leisure activities.

Accepted Answer

A) True 
 B)False

Question 7

Randy and Mandy plan to pool their money and musical talents to form a general partnership and begin booking weekend gigs. One of the first things Randy and Mandy should do is:

Accepted Answer

A)   seal the deal with at least five clubs where they can book three months' worth of gigs.
B)   consult an attorney and put their agreement in writing.
C)   pay the partnership formation fee to their state's commerce commission.
D)   file the limited liability paperwork at the courthouse in the county in which their partnership will be formed.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A well-known franchised food chain was brought to its knees when several customers got sick from tainted beef. Although the food chain recovered due to its quick and consistent action, several franchisees sued the parent company for loss of sales. The franchisees experienced the coattail effects of the bad publicity this event received.

Accepted Answer

A) True 
 B)False

Question 10

According to the Uniform Partnership Act, the three key elements of any general partnership are (1) common ownership, (2) shared profits and losses, and (3) the right to participate in managing the operations of the business.

Accepted Answer

A) True 
 B)False

Question 11

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

Accepted Answer

A) True 
 B)False

Question 12

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) C) and D)
F) B) and D)

Question 13

A difficulty that sole proprietors try to overcome is the fact that they have trouble competing with large firms for expert talent. Large firms can usually pay better and offer fringe benefits that are unaffordable to the sole proprietor.

Accepted Answer

A) True 
 B)False

Question 14

The organizational structure of a corporation permits:

Accepted Answer

A)   the company management to elect the Board of Directors.
B)   stockholders to elect the Board of Directors.
C)   stockholders to elect the officers and management team.
D)   employees (by committee)  to elect the officers of the company.E) None of the above
F) All of the above

Question 15

Greg plans to open up three Hottie Pata?tee franchises in the greater Denver area. He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants. Greg is likely to learn that:

Accepted Answer

A)   the parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs.
B)   he is making a smart decision because it is not the sign that will bring customers to his potato bar. It is the wide-selection of toppings and six different ways he will cook potatoes.
C)   it is nonnegotiable due to company rules.
D)   his failure rate will not increase or decrease because franchises traditionally have low failure rates.E) B) and D)
F) A) and B)

Question 16

Hole-In-One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf, Inc., one of its major competitors. Hole-In-One Golf Company's plans are an example of a merger.

Accepted Answer

A) True 
 B)False

Question 17

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

Accepted Answer

A) True 
 B)False

Question 18

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 their owners with unlimited liability.
D)   Corporations can attract employees by offering stock options.E) A) and C)
F) None of the above

Question 19

One of the major disadvantages of a partnership is that profits must be divided equally.

Accepted Answer

A) True 
 B)False

Question 20

One of the major disadvantages of a sole proprietorship is the:

Accepted Answer

A)   possibility of disagreements between owners.
B)   unlimited liability the owner has for the debts of the firm.
C)   fact that any income earned by this type of business is taxed twice.
D)   high cost of starting or ending the company.E) B) and C)
F) A) and B)

Exam 5: How to Form a Business

Correct Answer
verified

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

Correct Answer
verified

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

Correct Answer
verified

Greg plans to open up three Hottie Pata?tee franchises in the greater Denver area. He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants. Greg is likely to learn that:

Correct Answer
verified

Hole-In-One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf, Inc., one of its major competitors. Hole-In-One Golf Company's plans are an example of a merger.

Correct Answer
verified

One of the major disadvantages of a sole proprietorship is the:

Correct Answer
verified

One of the major disadvantages of a partnership is that profits must be divided equally.

Correct Answer
verified

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Correct Answer
verified
A limited liability company (LLC) is a r...
View Answer

An advantage of forming a sole proprietorship is that it allows the owner to have more time for leisure activities.

Correct Answer
verified

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 scale by banding together for these things.

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

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

Correct Answer
verified

Due to several years of poor performance, Scrappy's Metal Fabrication, Inc., is closing. Through the use of debt financing, workers plan to purchase the company's stock from current shareholders in order to buy the firm, improve company performance, and save jobs.

Correct Answer
verified

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

Correct Answer
verified

Randy and Mandy plan to pool their money and musical talents to form a general partnership and begin booking weekend gigs. One of the first things Randy and Mandy should do is:

Correct Answer
verified

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

Correct Answer
verified

A difficulty that sole proprietors try to overcome is the fact that they have trouble competing with large firms for expert talent. Large firms can usually pay better and offer fringe benefits that are unaffordable to the sole proprietor.

Correct Answer
verified

The organizational structure of a corporation permits:

Correct Answer
verified

According to the Uniform Partnership Act, the three key elements of any general partnership are (1) common ownership, (2) shared profits and losses, and (3) the right to participate in managing the operations of the business.

Correct Answer
verified

Finley is a limited partner in Gettout & Associates. Heywood U. Gettout, one of the general partners in the company, must temporarily leave the company to attend to some personal matters. Heywood has asked Finley to perform his managerial duties while he is gone. As a limited partner, Finley:

Correct Answer
verified

Exam 5: How to Form a Business

Correct AnswerverifiedShow Answer

A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Greg plans to open up three Hottie Pata?tee franchises in the greater Denver area. He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants. Greg is likely to learn that:

Correct AnswerverifiedShow Answer

Hole-In-One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf, Inc., one of its major competitors. Hole-In-One Golf Company's plans are an example of a merger.

Correct AnswerverifiedShow Answer

One of the major disadvantages of a sole proprietorship is the:

Correct AnswerverifiedShow Answer

One of the major disadvantages of a partnership is that profits must be divided equally.

Correct AnswerverifiedShow Answer

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Correct AnswerverifiedA limited liability company (LLC) is a r...View AnswerShow Answer

An advantage of forming a sole proprietorship is that it allows the owner to have more time for leisure activities.

Correct AnswerverifiedShow Answer

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 scale by banding together for these things.

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

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

Correct AnswerverifiedShow Answer

Due to several years of poor performance, Scrappy's Metal Fabrication, Inc., is closing. Through the use of debt financing, workers plan to purchase the company's stock from current shareholders in order to buy the firm, improve company performance, and save jobs.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Randy and Mandy plan to pool their money and musical talents to form a general partnership and begin booking weekend gigs. One of the first things Randy and Mandy should do is:

Correct AnswerverifiedShow Answer

A disadvantage of farm cooperatives is that they are subject to higher tax rates than corporations.

Correct AnswerverifiedShow Answer

A difficulty that sole proprietors try to overcome is the fact that they have trouble competing with large firms for expert talent. Large firms can usually pay better and offer fringe benefits that are unaffordable to the sole proprietor.

Correct AnswerverifiedShow Answer

The organizational structure of a corporation permits:

Correct AnswerverifiedShow Answer

According to the Uniform Partnership Act, the three key elements of any general partnership are (1) common ownership, (2) shared profits and losses, and (3) the right to participate in managing the operations of the business.

Correct AnswerverifiedShow Answer

Finley is a limited partner in Gettout & Associates. Heywood U. Gettout, one of the general partners in the company, must temporarily leave the company to attend to some personal matters. Heywood has asked Finley to perform his managerial duties while he is gone. As a limited partner, Finley:

Correct AnswerverifiedShow 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
A limited liability company (LLC) is a r...
View 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