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Summer Foods is a public corporation that is experiencing difficulty growing its vegetable products during an especially dry summer season. Wanting the flexibility to make decisions for restructuring the company's operations, its managers buy all the stock, which means the company is


A) changing to a quasi-public corporation.
B) initiating an initial public offering.
C) essentially shutting down operations.
D) taking the company private.
E) converting the company to a nonprofit.

F) A) and D)
G) None of the above

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In sole proprietorships, owners


A) are limited in their ability to make decisions quickly.
B) are limited in the sources of funding available to them.
C) do not have to pay any income tax.
D) have to share their profits.
E) cannot easily dissolve the business.

F) A) and E)
G) B) and E)

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Keesha, Mandy, and Isabel are starting their own pet grooming business, and they are drafting articles of partnership. What item should they be sure to include in their articles of partnership?


A) what to do if one of the partners becomes disabled
B) the total money and assets of each partner's estate
C) how to manage customer information
D) the age of each partner
E) the number of pets each partner owns

F) A) and E)
G) A) and D)

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A

Carmen owns a small gift shop and is solely responsible for its debts and liabilities. She is also entitled to all the profits the shop makes after paying off taxes and other expenses. Her business is an example of a(n)


A) joint venture.
B) S corporation.
C) sole proprietorship.
D) partnership.
E) C corporation

F) A) and E)
G) B) and E)

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Geraldine is a professor at a local college who serves on the board of directors for a leading academic publisher. She is a valued member of the board because she brings her unique perspective from the field, and she is qualified, knowledgeable, and independent of the company. Geraldine is a(n)


A) inside director.
B) outside director.
C) corporate officer.
D) chief executive officer.
E) field director.

F) B) and E)
G) D) and E)

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Why is it difficult for sole proprietorships to hire qualified employees?


A) Many large corporations are downsizing and outsourcing tasks, so there are less well-trained employees available for small businesses.
B) It is difficult for sole proprietorships to match the wages and benefits offered by large corporations.
C) There is more room for advancement within sole proprietorships.
D) Sole proprietorships prefer to spend their high profits on running the business, rather than on hiring qualified employees.
E) Sole proprietors prefer to do all the work themselves, so they don't want to hire qualified employees.

F) A) and B)
G) A) and C)

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Briefly discuss domestic, foreign, alien, private, and public corporations.

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If a corporation does business in the st...

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When it comes to borrowing funds, a sole proprietor


A) usually pays lower interest rates on funds borrowed from banks than do large corporations.
B) has access to more sources of funds than do large corporations.
C) oftentimes must pledge a car, a house, other real estate, or other personal assets to guarantee a loan.
D) can sell stocks and bonds to the public to raise money.
E) does not need to rely on his or her credit standing in order to obtain funds.

F) A) and B)
G) None of the above

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Mountain Outfitters is a large company that manufactures durable outdoor clothing. The company has stock that anyone can buy, sell, or trade, but since it is a large company, its stockholders are far removed from its management. What type of business is this?


A) a public corporation
B) a private corporation
C) a general partnership
D) a limited partnership
E) a domestic corporation

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

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A

What is an advantage that corporations provide as a form of business ownership?


A) The owners of corporations do not have to share their profits with stockholders.
B) The income earned by corporations is taxed only once.
C) Corporations have the most freedom from government regulations.
D) The process involved in forming corporations is very easy and inexpensive.
E) It is easy to transfer ownership in corporations.

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

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A merger occurs when


A) one company purchases another.
B) a group of investors borrows money from banks and other institutions to acquire a company.
C) a company splits into two separate companies.
D) two companies combine to form a new company.
E) a company buys most of the stock of another company.

F) A) and D)
G) A) and E)

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Victor is asked to be a part of a new business venture for a revolutionary mechanism to repair Internet cables that are placed on the ocean floor. Since the business involves high risk, Victor does not want to be held completely liable for the firm's debts if the project fails. In this case, Victor is most likely to prefer to participate as a(n)


A) member of a cooperative.
B) limited partner.
C) general partner.
D) owner of an S corporation.
E) sole proprietor.

F) B) and E)
G) A) and B)

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Brewer Bikes, Inc. is a company that sells bicycles and accessories. It has been owned and operated by the Brewer family for 25 years. The Brewers own all the corporation's stock, and they are not required to disclose financial information publicly. What type of business is this?


A) a domestic corporation
B) a public corporation
C) a sole proprietorship
D) a private corporation
E) a limited partnership

F) A) and D)
G) A) and E)

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A(n) ________ is a form of business ownership that is taxed as though it were a partnership; it is very popular among entrepreneurs and represents almost half of all corporate filings.


A) worker cooperative
B) S corporation
C) C corporation
D) consumer cooperative
E) general partnership

F) A) and E)
G) A) and B)

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David, Shannon, and Greg are starting a new accounting firm together, and they are drafting articles of partnership. All of the following are items they should include EXCEPT


A) the business's name, purpose, and location.
B) the authority and responsibility of each partner.
C) the total money and assets of each partner's estate.
D) the duration of the agreement.
E) how much each partner is allowed to withdraw.

F) B) and E)
G) A) and E)

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C

The "limited" part of a limited liability company refers to the


A) length of time the business will be in operation.
B) number of employees in the business.
C) limited taxation of the business.
D) limited types of businesses that can use this form of ownership.
E) limited liability of the business.

F) A) and D)
G) C) and E)

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In the context of the various forms of business ownership, discuss the two basic types of partnerships.

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There are two basic types of partnership...

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When a business decides to incorporate, it will do so according to the laws of the ________ in which it incorporates.


A) city
B) country
C) state
D) municipality
E) county

F) B) and D)
G) A) and D)

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Isaac starts a consulting firm with his friend Arnie. They decide to equally share the profits and have unlimited liability for the debts of their business. Such unlimited liability can be a distinct disadvantage for Isaac if he has


A) less financial resources than Arnie.
B) more financial resources than Arnie.
C) comparable financial resources to Arnie.
D) the exact same financial resources as Arnie.
E) the status of a limited partner.

F) A) and B)
G) B) and D)

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The Food Palace, Inc. is a large grocery chain that was incorporated in the United States. Over the years, the corporation has grown, and it has now opened locations in five other nations. In those nations, The Food Palace is considered to be a(n)


A) foreign corporation.
B) domestic corporation.
C) alien corporation.
D) private corporation.
E) public corporation.

F) A) and E)
G) B) and D)

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