Question 1

The legal documents that identify the basic agreements between partners are called:

Accepted Answer

A)  articles of proprietorship.
B)  partnership charters.
C)  articles of incorporation.
D)  articles of partnership.
E)  partnership bonds.

Question 2

Brenda runs a bookstore in her locality.She started the business with her own money and solely manages the day-to-day operations of the business.Which of the following is true in this scenario?

Accepted Answer

A)  Brenda's business will be constantly regulated by federal and state laws.
B)  Brenda must file articles of incorporation to start her business.
C)  Brenda can easily dissolve the business whenever she wants.
D)  Brenda will have to share her profits with stockholders.
E)  Brenda's business will be subjected to double taxation.

Question 3

Which of the following is an advantage of a partnership?

Accepted Answer

A)  Unlimited liability
B)  Unrestricted access to funds
C)  Distribution of profits
D)  Few regulatory controls
E)  Lack of business responsibility

Question 4

Which of the following forms of business ownership is the easiest to establish?

Accepted Answer

A)  Partnerships
B)  Sole proprietorships
C)  S Corporations
D)  Joint ventures
E)  C Corporations

Question 5

Which of the following statements is true of sole proprietorships?

Accepted Answer

A)  They are very difficult to start and maintain.
B)  They are exempted from paying any taxes.
C)  They give their owners limited liability.
D)  They cannot be dissolved easily.
E)  They have the most freedom from government regulations. E

Question 6

The form of business ownership that has the ability to raise capital most easily is a:

Accepted Answer

A)  public corporation.
B)  private corporation.
C)  sole proprietorship.
D)  joint venture.
E)  limited partnership.

Question 7

Which of the following is an advantage of partnerships over sole proprietorships?

Accepted Answer

A)  Partnerships are easy to form,whereas sole proprietorships are not.
B)  In partnerships,all owners have limited liability,whereas in sole proprietorships they have unlimited liability.
C)  Partnerships make possible the greatest degree of secrecy,whereas sole proprietorships do not.
D)  In partnerships,the owners have access to more funds than in sole proprietorships.
E)  In partnerships,the owners have complete control of the business,whereas in sole proprietorships they do not.

Question 8

Big Sandwiches merges with its supplier,FC Ingredients,in an effort to have a constant supply of sauce for its sandwiches.This is an example of a:

Accepted Answer

A)  shark repellant.
B)  vertical merger.
C)  conglomerate merger.
D)  white knight.
E)  horizontal merger.

Question 9

Which of the following is an accurate description of dividends?

Accepted Answer

A)  They indicate the money invested by sole proprietors in their business.
B)  They refer to profits in a general partnership.
C)  They indicate the capital invested by each partner in a limited partnership.
D)  They are cash payments received through distribution of profits in a corporation.
E)  They indicate the amount of tax the incorporators of a business need to pay annually. D

Question 10

Big Lite Inc.purchases Canton Bulbs,its direct competitor,by buying most of its stock.In this scenario,Big Lite Inc.is involved in a(n) _____.

Accepted Answer

A)  conglomerate merger
B)  acquisition
C)  vertical merger
D)  leveraged buyout
E)  franchise

Question 11

Which of the following forms of business allows for the greatest degree of secrecy?

Accepted Answer

A)  Partnerships
B)  Joint ventures
C)  S Corporations
D)  Sole proprietorships
E)  C Corporations

Question 12

Which of the following is a disadvantage of corporations?

Accepted Answer

A)  The owners will have limited access to external funds in a corporation.
B)  The owners will have unlimited liability for the debts of a corporation.
C)  The formation of a corporation can be costly and it faces double taxation.
D)  The transfer of ownership in a corporation is very difficult.
E)  The life expectancy of a corporation is very short and it lacks continuity.

Question 13

Which of the following items is found in the Model Business Corporation Act issued by the American Bar Association?

Accepted Answer

A)  Information about salaries of employees in a corporation
B)  Guidelines for hiring new employees in a corporation
C)  Information about the personal assets of a corporation's stockholders
D)  Provisions for promoting an employee within a corporation
E)  Provisions for the regulation of internal corporate affairs

Question 14

According to the U.S.Bureau of the Census (2012) ,which form of business ownership is least used in the United States?

Accepted Answer

A)  S-corporations
B)  Joint ventures
C)  Sole proprietorships
D)  C-corporations
E)  Partnerships

Question 15

Most tender offers of corporate raiders are hostile.

Accepted Answer

A) True 
 B)False

Question 16

When are limited partnerships generally used?

Accepted Answer

A)  When a firm sells its stock to the public
B)  When a project is risky and the chance of loss is great
C)  When articles of incorporation are mandatory
D)  When all partners wish to share equal liability
E)  When all partners want to participate in the management of a business B

Question 17

Which of the following is a disadvantage of partnerships over sole proprietorships?

Accepted Answer

A)  Unlike sole proprietorships,partnerships do not face any regulatory controls that affect their activities.
B)  In partnerships,all owners have unlimited liability,whereas in sole proprietorships they have limited liability.
C)  In partnerships,profits have to be shared,whereas in sole proprietorships all profits belong exclusively to the owner.
D)  In sole proprietorships,the owners have access to more funds than in partnerships.
E)  Unlike a sole proprietorship,a partnership is terminated when a partner dies or withdraws.

Question 18

Which of the following is an advantage of a sole proprietorship?

Accepted Answer

A)  It is heavily regulated by the government.
B)  It has limited liability for the debts incurred by the business.
C)  It is hard to dissolve.
D)  It is unaffected by the death or withdrawal of its owner.
E)  It is easy and inexpensive to form.

Question 19

Which of the following organizational forms is the most expensive to set up?

Accepted Answer

A)  A sole proprietorship
B)  A general partnership
C)  A limited liability company
D)  A limited partnership
E)  A corporation

Question 20

SunRay Foundation,a corporation owned and managed by volunteers,supplies medicines and vaccines to impoverished people in Asia and Africa.Its focus is not on earning a surplus but on serving the community.SunRay Foundation is an example of a(n) _____.

Accepted Answer

A)  S corporation
B)  domestic corporation
C)  nonprofit corporation
D)  quasi-public corporation
E)  C corporation

Exam 4: Options for Organizing Business

The legal documents that identify the basic agreements between partners are called:

Correct AnswerverifiedShow Answer

Brenda runs a bookstore in her locality.She started the business with her own money and solely manages the day-to-day operations of the business.Which of the following is true in this scenario?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of a partnership?

Correct AnswerverifiedShow Answer

Which of the following forms of business ownership is the easiest to establish?

Correct AnswerverifiedShow Answer

Which of the following statements is true of sole proprietorships?

Correct AnswerverifiedE

The form of business ownership that has the ability to raise capital most easily is a:

Correct AnswerverifiedShow Answer

Which of the following is an advantage of partnerships over sole proprietorships?

Correct AnswerverifiedShow Answer

Big Sandwiches merges with its supplier,FC Ingredients,in an effort to have a constant supply of sauce for its sandwiches.This is an example of a:

Correct AnswerverifiedShow Answer

Which of the following is an accurate description of dividends?

Correct AnswerverifiedD

Big Lite Inc.purchases Canton Bulbs,its direct competitor,by buying most of its stock.In this scenario,Big Lite Inc.is involved in a(n) _____.

Correct AnswerverifiedShow Answer

Which of the following forms of business allows for the greatest degree of secrecy?

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of corporations?

Correct AnswerverifiedShow Answer

Which of the following items is found in the Model Business Corporation Act issued by the American Bar Association?

Correct AnswerverifiedShow Answer

According to the U.S.Bureau of the Census (2012) ,which form of business ownership is least used in the United States?

Correct AnswerverifiedShow Answer

Most tender offers of corporate raiders are hostile.

Correct AnswerverifiedShow Answer

When are limited partnerships generally used?

Correct AnswerverifiedB

Which of the following is a disadvantage of partnerships over sole proprietorships?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of a sole proprietorship?

Correct AnswerverifiedShow Answer

Which of the following organizational forms is the most expensive to set up?

Correct AnswerverifiedShow Answer

SunRay Foundation,a corporation owned and managed by volunteers,supplies medicines and vaccines to impoverished people in Asia and Africa.Its focus is not on earning a surplus but on serving the community.SunRay Foundation is an example of a(n) _____.

Correct AnswerverifiedShow Answer

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E

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D

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B

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