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Exam 4: Choosing a Form of Business Ownership

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Question 71

Multiple Choice

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When Compaq and Hewlett-Packard decided to become one company, this was an example of a(n) _____.

A) acquisition
B) hostile takeover
C) horizontal merger
D) conglomerate merger
E) joint venture

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

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Question 72

Multiple Choice

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With respect to combined business skills and knowledge, which of the following partnerships is best?

A) Joe, Louis, and Raul own a bakery.They are able bakers by trade.Each wants to spend all of his time baking items.
B) Carolyn, Melvin, and Cindy own a boutique.Carolyn has marketing expertise.Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit.Cindy is a CPA.Each has agreed to use his or her experience and expertise for the success of the business.
C) Mary and Robert, both young pharmacists, own a pharmacy.Neither has taken a business course, but they are willing to learn.
D) Carter and Renée own a video store.Renée is most experienced as a homemaker and mother.Carter has worked as an auto mechanic for ten years.
E) Vince and Linda own a vacuum cleaner store.Vince knows everything possible about store operations.Linda is wealthy and can provide investment capital.

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

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Question 73

Multiple Choice

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Which form of business organization experiences double taxation?

The most effective form of business organization for raising capital is the _____.

B&G, Inc. A year ago, Kevin went to work for B&G, Inc.He has worked for the finance department ever since he started.He noticed that the corporation was only taxed as though it were a partnership.This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice.He recognized that this was one of the advantages of this type of corporation. While the job was challenging, Kevin was not happy.He wanted to work for a company whose main goal was to provide service to the community, not to make a profit.However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc.A week later, Kevin discovered there was going to be a merger between B&G, Inc.and one of its major competitors.Kevin's boss informed him that he would be getting a promotion and a raise.While he was excited about making more money, he still was not happy.He knew then that he would not be working for the company for long. -Refer to B&G, Inc.What type of corporation is B&G, Inc.?

How does an S-corporation differ from a limited-liability company? Does either type of ownership appeal to you? Explain your answer.

The form of business organization most heavily regulated by the government is the _____.

Common stockholders have the right to elect a corporation's board of directors and vote on corporate matters.

Which of the following is not a disadvantage of the corporate form of ownership?

A corporation organized to provide a social, educational, religious, or other nonbusiness service is known as a(n) _____.

In the state in which the business is incorporated, it is known as a _____.

Shares of Burger House stock cannot be purchased on any stock exchange or by just any individual.This means that Burger House is a(n) _____.

What is an owner of a corporation's stock called? What is the difference between a closed corporation and an open corporation?

The retail card and gift shop chain that Heidi started has been incorporated.Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?

Laura wants to start a business, but she is unsure of the legal form best for her.Short of cash, she has decided to take the form that is the least expensive and most flexible in terms of decision making and implementation.Which would you recommend?

Lisa and John own a partnership that provides rental equipment for parties and special occasions.Which of the following is true about the way Lisa and John would handle company profits?

What does it mean when someone says that a corporation is an artificial person created by law? In your answer, describe some things that an artificial person, and a real person like you, could both do.

Which of the following is a disadvantage of the corporate form of organization?

Local residents have always thought the mom-and-pop store on the corner of Locust and Congress was a partnership between Mr.and Mrs.Jones.But Mr.Jones is the real owner.This probably means that the store is a _____.

When a business incorporates, it receives articles of incorporation from the Internal Revenue Service.