Question 1

At one time there were many farm cooperatives, but more recently, they have been replaced by other forms of business ownership.

Accepted Answer

A) True 
 B)False

Question 2

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Accepted Answer

A) True 
 B)False

Question 3

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

Accepted Answer

A) True 
 B)False

Question 4

A multinational corporation is a firm that operates in several countries.

Accepted Answer

A) True 
 B)False

Question 5

Kristen and her brothers and sisters set up a design firm called Houses by Design LLP. Although key business functions are centralized, each sibling is a licensed architect that designs, builds, and installs residential and commercial buildings for his/her own clients. Unfortunately, a design created and installed for one of their clients resulted in water damage to the basement of the client's new home. The limited liability partnership:

Accepted Answer

A)  Guarantees that none of the company's partners will lose more than the amount they invested in the company.
B)  Guarantees that only those partners who were directly involved in designing and building this home face unlimited liability for claims against the firm.
C)   Protects the partners from any suit by the client.
D)  Will enable the firm to quickly reorganize with only minor financial losses.E) All of the above
F) A) and B)

Question 6

Ted and Mark are partners in a dry cleaning business. They would like their brother Todd to join them. Unfortunately, partnership law states that only two partners can participate in a partnership.

Accepted Answer

A) True 
 B)False

Question 7

A legal entity with authority to act and have liability separate from its owners is called a partnership.

Accepted Answer

A) True 
 B)False

Question 8

An owner of a corporation is known as a(n) :

Accepted Answer

A)  General partner.
B)   Limited partner.
C)   Director.
D)  Stockholder.E) B) and C)
F) A) and D)

Question 9

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) C) and D)
F) A) and D)

Question 10

Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types. One their goals is to maintain the loving relationship they currently enjoy so they are following the Model Business Corporation Act recommendations as they write the partnership agreement. Which of the following is an accurate recommendation of the Act?

Accepted Answer

A)  The business should be actively operating for an extended period before the partners decide who is responsible for what business functions.
B)   Family businesses never take on outside partners, so no discussion of this need take place.
C)  There should be discussion and well-understood ways that the partners will handle disagreements.
D)  Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business, retire, or die.E) A) and D)
F) None of the above

Question 11

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Accepted Answer

A)  The responsibility of the owner.
B)   Limited to the amount the owner has invested in the firm.
C)   Paid for out of a reserve contingency fund that sole proprietors are required by law to set up.
D)  Normally covered by liability insurance.E) A) and C)
F) B) and C)

Question 12

The owners of a corporation are known as general corporate partners.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is the most accurate? Sole proprietorships:

Accepted Answer

A)   Are well suited for people who want to own a business and share in its profits without taking an active role in management.
B)   Are taxed at the owner's personal tax rate.
C)   Is the least risky form of business ownership.
D)   Must receive a state charter before they can legally conduct business.E) B) and C)
F) All of the above

Question 14

A(n)  is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.

Accepted Answer

A)  intrapreneur
B)   franchisee
C)   limited partner
D)  franchisorE) A) and B)
F) All of the above

Question 15

If a sole proprietorship fails, the owner may lose whatever was invested in the business, however, the owner's personal assets are not at risk.

Accepted Answer

A) True 
 B)False

Question 16

A is the share of profits or percentage of sales a franchisee pays to a franchisor.

Accepted Answer

A)  royalty
B)   dividend
C)   premium
D)  co-payE) A) and B)
F) B) and D)

Question 17

To many businesspeople, one of the major attractions of a sole proprietorship is:

Accepted Answer

A)  The ability to obtain additional financial resources.
B)   The protection of limited liability.
C)   An unlimited lifespan.
D)  The chance to be their own boss.E) A) and D)
F) A) and B)

Question 18

Although shares of master limited partnerships can be purchased on one of the national stock exchanges, these companies are taxed like partnerships.

Accepted Answer

A) True 
 B)False

Question 19

A franchise agreement is an arrangement where a franchisor sells the rights to a business name and the right to sell a product or service within a given territory to a franchisee.

Accepted Answer

A) True 
 B)False

Question 20

It is said that corporations have perpetual life.

Accepted Answer

A) True 
 B)False

Exam 5: How to Form a Business

A(n) is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.

Correct Answer
verified

It is said that corporations have perpetual life.

Correct Answer
verified

Ted and Mark are partners in a dry cleaning business. They would like their brother Todd to join them. Unfortunately, partnership law states that only two partners can participate in a partnership.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A is the share of profits or percentage of sales a franchisee pays to a franchisor.

Correct Answer
verified

A franchise agreement is an arrangement where a franchisor sells the rights to a business name and the right to sell a product or service within a given territory to a franchisee.

Correct Answer
verified

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Correct Answer
verified

The owners of a corporation are known as general corporate partners.

Correct Answer
verified

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

Correct Answer
verified

A legal entity with authority to act and have liability separate from its owners is called a partnership.

Correct Answer
verified

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct Answer
verified

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

Correct Answer
verified

If a sole proprietorship fails, the owner may lose whatever was invested in the business, however, the owner's personal assets are not at risk.

Correct Answer
verified

A multinational corporation is a firm that operates in several countries.

Correct Answer
verified

Which of the following statements is the most accurate? Sole proprietorships:

Correct Answer
verified

Correct Answer
verified

Although shares of master limited partnerships can be purchased on one of the national stock exchanges, these companies are taxed like partnerships.

Correct Answer
verified

To many businesspeople, one of the major attractions of a sole proprietorship is:

Correct Answer
verified

An owner of a corporation is known as a(n) :

Correct Answer
verified

Exam 5: How to Form a Business

A(n) is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.

Correct AnswerverifiedShow Answer

It is said that corporations have perpetual life.

Correct AnswerverifiedShow Answer

Ted and Mark are partners in a dry cleaning business. They would like their brother Todd to join them. Unfortunately, partnership law states that only two partners can participate in a partnership.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A is the share of profits or percentage of sales a franchisee pays to a franchisor.

Correct AnswerverifiedShow Answer

A franchise agreement is an arrangement where a franchisor sells the rights to a business name and the right to sell a product or service within a given territory to a franchisee.

Correct AnswerverifiedShow Answer

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Correct AnswerverifiedShow Answer

The owners of a corporation are known as general corporate partners.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A legal entity with authority to act and have liability separate from its owners is called a partnership.

Correct AnswerverifiedShow Answer

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct AnswerverifiedShow Answer

One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets.

Correct AnswerverifiedShow Answer

If a sole proprietorship fails, the owner may lose whatever was invested in the business, however, the owner's personal assets are not at risk.

Correct AnswerverifiedShow Answer

A multinational corporation is a firm that operates in several countries.

Correct AnswerverifiedShow Answer

Which of the following statements is the most accurate? Sole proprietorships:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Although shares of master limited partnerships can be purchased on one of the national stock exchanges, these companies are taxed like partnerships.

Correct AnswerverifiedShow Answer

To many businesspeople, one of the major attractions of a sole proprietorship is:

Correct AnswerverifiedShow Answer

An owner of a corporation is known as a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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