Question 1

A major advantage of S corporations is that they:

Accepted Answer

A)   Can have more stockholders than a C corporation.
B)   Can operate in foreign nations as if they were domestic corporations.
C)   Require less paperwork to set up than a C corporation does.
D)   Avoid the problem of double taxation associated with conventional corporations.E) B) and C)
F) None of the above

Question 2

It is not unusual for members of cooperatives to work for and help manage their cooperative.

Accepted Answer

A) True 
 B)False

Question 3

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Accepted Answer

A) True 
 B)False

Question 4

Chad recently invented Wave-Aerobics,a next generation watercraft that can safely perform water stunts similar to an amusement park ride.As the founder of a fast growing business,you think his goal of incorporating,"to remain in steadfast control of the firm's operations for an indefinite number of years" is good strategy.

Accepted Answer

A) True 
 B)False

Question 5

An alien corporation does business abroad but is chartered in the U.S.

Accepted Answer

A) True 
 B)False

Question 6

Compared to the C-corporation,the limited liability company is an attractive form of business ownership because:

Accepted Answer

A)   Even though it is a little more expensive to form,it has a longer life than the C-corporation.
B)   A limited liability company permits one owner to own all the stock of the company,whereas a C-corporation requires several owners.
C)   Once formed,the limited liability company is a legal form of business ownership,worldwide,whereas the C-corporation must file for corporate status in each nation it elects to do business.
D)   Once formed,the limited liability company does not require the firm to hold annual meetings,and has the option to avoid double taxation.E) None of the above
F) A) and D)

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 night spots 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 court house in the county in which their partnership will be formeD.E) B) and D)
F) All of the above

Question 8

Which of the following statements about partnerships is most accurate?

Accepted Answer

A)   A partnership is a corporation with fewer than 100 owners.
B)   A major advantage of a partnership is that it offers all owners limited liability.
C)   A major drawback of a partnership is that it is difficult to terminate.
D)   Partnerships are taxed at the lowest corporate tax rate.E) All of the above
F) None of the above

Question 9

An entrepreneur who wishes to start a business with little delay or hassle,and who wants to be his or her own boss,should organize the business as a:

Accepted Answer

A)   Sole proprietorship.
B)   Cooperative.
C)   C corporation.
D)   General partnership.E) B) and C)
F) A) and C)

Question 10

Compared to sole proprietorships,an advantage of partnerships is their ability to obtain more financial resources.

Accepted Answer

A) True 
 B)False

Question 11

The board of directors for a corporation is elected by its:

Accepted Answer

A)   Creditors.
B)   Stockholders.
C)   Managers.
D)   Employees.E) A) and B)
F) B) and D)

Question 12

If a corporation distributes after-tax profits to its stockholders in the form of dividends,the government considers these distributions as part of each stockholder's personal income.Stockholders pay taxes on these distributions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Accepted Answer

A)   Ease of formation
B)   Lower taxes
C)   Simplified paperwork
D)   Limited liability of ownersE) C) and D)
F) None of the above

Question 14

Naomi is planning to invest in a new online franchise - the Novel Artist,Inc.The franchisor provides proprietary software and training for designing invitations and cards for special occasions such as weddings,graduations,and birth announcements.The franchisee is obligated to pay a monthly fee to the franchisor.Naomi will use the software to create her own special designs that she will ultimately feature on her website.She also has chat availability so she can accommodate customers with special requests.Order turn-around time must be fast.She can only take on as many clients as she can make good on delivery.An advantage of Naomi's online franchise is:

Accepted Answer

A)   She has a limited territory.
B)   She has a narrow product offering.
C)   She does not need name recognition or marketing assistance.
D)   She has an unlimited territory.E) A) and D)
F) B) and C)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Accepted Answer

A)   U.S.-based franchises are most likely to succeed in a foreign market if they use the same strategies and procedures used by franchises in the United States.
B)   There are limited opportunities for U.S.-based franchises to open in foreign countries because,aside from Canada,Mexico,and a small number of European countries,most foreign nations do not allow American-owned franchises to operate within their borders.
C)   The operating costs for franchises in foreign countries may be fairly high,but chances for success are quite good,because competition is likely to be less intense and the customer base in many foreign countries is expanding.
D)   It is difficult for U.S.-based franchises to succeed in most foreign countries because the low incomes of most households in these countries result in weak demanD.E) All of the above
F) A) and B)

Question 17

Stockholders in a corporation have limited liability.

Accepted Answer

A) True 
 B)False

Question 18

A merger is a mutual agreement where a firm joins together with another firm,whereas an acquisition is when one firm purchases the assets and obligations of another firm.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

The following companies: Blue Diamond,Ocean Spray,and Land O'Lakes are well known cooperatives.

Accepted Answer

A) True 
 B)False

Exam 5: How to Form a Business

An alien corporation does business abroad but is chartered in the U.S.

Correct Answer
verified

Stockholders in a corporation have limited liability.

Correct Answer
verified

The following companies: Blue Diamond,Ocean Spray,and Land O'Lakes are well known cooperatives.

Correct Answer
verified

Correct Answer
verified

Which of the following statements about partnerships is most accurate?

Correct Answer
verified

It is not unusual for members of cooperatives to work for and help manage their cooperative.

Correct Answer
verified

A merger is a mutual agreement where a firm joins together with another firm,whereas an acquisition is when one firm purchases the assets and obligations of another firm.

Correct Answer
verified

Correct Answer
verified

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Correct Answer
verified

Compared to sole proprietorships,an advantage of partnerships is their ability to obtain more financial resources.

Correct Answer
verified

A major advantage of S corporations is that they:

Correct Answer
verified

An entrepreneur who wishes to start a business with little delay or hassle,and who wants to be his or her own boss,should organize the business as a:

Correct Answer
verified

If a corporation distributes after-tax profits to its stockholders in the form of dividends,the government considers these distributions as part of each stockholder's personal income.Stockholders pay taxes on these distributions.

Correct Answer
verified

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Correct Answer
verified

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct Answer
verified

Compared to the C-corporation,the limited liability company is an attractive form of business ownership because:

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 scales by banding together for these things.

Correct Answer
verified

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

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

The board of directors for a corporation is elected by its:

Correct Answer
verified

Exam 5: How to Form a Business

An alien corporation does business abroad but is chartered in the U.S.

Correct AnswerverifiedShow Answer

Stockholders in a corporation have limited liability.

Correct AnswerverifiedShow Answer

The following companies: Blue Diamond,Ocean Spray,and Land O'Lakes are well known cooperatives.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about partnerships is most accurate?

Correct AnswerverifiedShow Answer

It is not unusual for members of cooperatives to work for and help manage their cooperative.

Correct AnswerverifiedShow Answer

A merger is a mutual agreement where a firm joins together with another firm,whereas an acquisition is when one firm purchases the assets and obligations of another firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Correct AnswerverifiedShow Answer

Compared to sole proprietorships,an advantage of partnerships is their ability to obtain more financial resources.

Correct AnswerverifiedShow Answer

A major advantage of S corporations is that they:

Correct AnswerverifiedShow Answer

An entrepreneur who wishes to start a business with little delay or hassle,and who wants to be his or her own boss,should organize the business as a:

Correct AnswerverifiedShow Answer

If a corporation distributes after-tax profits to its stockholders in the form of dividends,the government considers these distributions as part of each stockholder's personal income.Stockholders pay taxes on these distributions.

Correct AnswerverifiedShow Answer

Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Correct AnswerverifiedShow Answer

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct AnswerverifiedShow Answer

Compared to the C-corporation,the limited liability company is an attractive form of business ownership because:

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 scales by banding together for these things.

Correct AnswerverifiedShow Answer

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

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

The board of directors for a corporation is elected by its:

Correct AnswerverifiedShow Answer

Correct Answer
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