Question 1

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total sales.

Accepted Answer

A)   34
B)   16
C)   9
D)   4
E)   2F) B) and C)
G) A) and E)

Question 2

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

Accepted Answer

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) None of the above
G) A) and C)

Question 3

Unless specified in the charter, a corporation has a

Accepted Answer

A)   legal life of one decade.
B)   life of seventeen years, which is renewable.
C)   life of fifty years.
D)   perpetual life.
E)   legally recognized life, which varies from state to state.F) A) and E)
G) C) and E)

Question 4

Discuss some of the similarities between not-for-profit corporations and for-profit corporations. What are some of the primary differences?

Accepted Answer

Not-for-profit corporations and for-prof...

Question 5

Not-for-profit organizations must meet specific guidelines in order to obtain tax-exempt status. These guidelines are structured by the

Accepted Answer

A)   board of directors.
B)   U.S. Uniform Partnership Act.
C)   U.S. Bureau of the Census.
D)   Chamber of Commerce.
E)   Internal Revenue Service.F) A) and E)
G) B) and C)

Question 6

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy. This sort of association is referred to as a(n)

Accepted Answer

A)   syndicate.
B)   cooperative.
C)   conglomerate.
D)   alliance.
E)   vertical merger.F) C) and D)
G) A) and E)

Question 7

In the state in which it is incorporated, a business is known as a(n)

Accepted Answer

A)   S-corporation.
B)   resident corporation.
C)   public corporation.
D)   foreign corporation.
E)   domestic corporation.F) A) and E)
G) A) and B)

Question 8

A limited-liability company is

Accepted Answer

A)   taxed like a corporation.
B)   taxed like a partnership.
C)   similar to a cooperative.
D)   always used to organize charitable organizations.
E)   the result of a horizontal merger.F) All of the above
G) C) and D)

Question 9

All corporations operate primarily for profit.

Accepted Answer

A) True 
 B)False

Question 10

Of the three common forms of ownership, a corporation can respond to changes in market conditions more rapidly than others can.

Accepted Answer

A) True 
 B)False

Question 11

Units of ownership in a master limited partnership (MLP) are often sold on organized security exchanges.

Accepted Answer

A) True 
 B)False

Question 12

Describe the advantages and disadvantages of the partnership form of ownership.

Accepted Answer

The partnership form of ownership has se...

Question 13

A common tactic of corporate raiders is to start a proxy fight.

Accepted Answer

A) True 
 B)False

Question 14

The simplest form of business owned and operated by one person is called a(n)

Accepted Answer

A)   franchise.
B)   partnership.
C)   S-corporation.
D)   sole proprietorship.
E)   syndicate.F) A) and E)
G) C) and D)

Question 15

Genetech, a biotechnology firm engaging in the new field of genetic engineering, has asked your advice about remaining independent and temporarily gaining access to the marketing and manufacturing expertise it lacks from another firm. You would suggest

Accepted Answer

A)   forming a limited-liability company.
B)   forming a joint venture.
C)   forming an S-corporation.
D)   merging with a company with the necessary expertise.
E)   starting a cooperative.F) A) and B)
G) B) and E)

Question 16

The order of difficulty and expense, from most to least, when forming a business organization is as follows:

Accepted Answer

A)   corporation, sole proprietorship, partnership.
B)   corporation, partnership, sole proprietorship.
C)   partnership, corporation, sole proprietorship.
D)   partnership, sole proprietorship, partnership.
E)   sole proprietorship, partnership, corporation.F) A) and C)
G) A) and E)

Question 17

What is the significance of the name preferred stock?

Accepted Answer

A)   It is the type of stock that most investors would rather have.
B)   Its claims on dividends are paid before those of common stock.
C)   The overall return on preferred stock is higher than that on common stock.
D)   This stock is available only to select individuals associated with the company.
E)   This stock provides the most powerful voting rights.F) A) and D)
G) A) and E)

Question 18

A temporary association organized to perform a specific task requiring a large amount of capital is known as a(n)

Accepted Answer

A)   conglomerate.
B)   cooperative.
C)   master limited partnership.
D)   syndicate.
E)   authority.F) A) and B)
G) A) and C)

Question 19

A limited-liability company is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 20

A hostile takeover is a situation in which

Accepted Answer

A)   the management and board of directors of the targeted firm disapprove of the proposed merger.
B)   stockholders are paid a golden parachute.
C)   the targeted firm is dismantled to avoid the merger.
D)   the government makes the decision that the corporate raider can purchase the targeted firm.
E)   the corporate raider receives a sum of money to leave the targeted firm alone.F) C) and E)
G) A) and E)

Exam 4: Choosing a Form of Business Ownership

Describe the advantages and disadvantages of the partnership form of ownership.

Correct AnswerAnswered by ExamLex AIThe partnership form of ownership has se...View AnswerShow Answer

The simplest form of business owned and operated by one person is called a(n)

Correct AnswerverifiedShow Answer

What is the significance of the name preferred stock?

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Of the three common forms of ownership, a corporation can respond to changes in market conditions more rapidly than others can.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Not-for-profit organizations must meet specific guidelines in order to obtain tax-exempt status. These guidelines are structured by the

Correct AnswerverifiedShow Answer

A temporary association organized to perform a specific task requiring a large amount of capital is known as a(n)

Correct AnswerverifiedShow Answer

Discuss some of the similarities between not-for-profit corporations and for-profit corporations. What are some of the primary differences?

Correct AnswerAnswered by ExamLex AINot-for-profit corporations and for-prof...View AnswerShow Answer

Units of ownership in a master limited partnership (MLP) are often sold on organized security exchanges.

Correct AnswerverifiedShow Answer

A hostile takeover is a situation in which

Correct AnswerverifiedShow Answer

Genetech, a biotechnology firm engaging in the new field of genetic engineering, has asked your advice about remaining independent and temporarily gaining access to the marketing and manufacturing expertise it lacks from another firm. You would suggest

Correct AnswerverifiedShow Answer

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy. This sort of association is referred to as a(n)

Correct AnswerverifiedShow Answer

A common tactic of corporate raiders is to start a proxy fight.

Correct AnswerverifiedShow Answer

The order of difficulty and expense, from most to least, when forming a business organization is as follows:

Correct AnswerverifiedShow Answer

All corporations operate primarily for profit.

Correct AnswerverifiedShow Answer

A limited-liability company is

Correct AnswerverifiedShow Answer

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total sales.

Correct AnswerverifiedShow Answer

A limited-liability company is taxed like a corporation.

Correct AnswerverifiedShow Answer

Unless specified in the charter, a corporation has a

Correct AnswerverifiedShow Answer

In the state in which it is incorporated, a business is known as a(n)

Correct AnswerverifiedShow Answer

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The partnership form of ownership has se...
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Not-for-profit corporations and for-prof...
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