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Exam 8: The Human Resources Plan: Managers, Owners, Allies, and Directors

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Question 1

Multiple Choice

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If partners cannot resolve disputes between themselves they may be wise to hire a(n)

A) business mediator
B) arbitrator
C) business judge
D) business attorney

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Question 2

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The sole proprietorship is a business owned by two or more people but operated by only one person.

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Question 3

Multiple Choice

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Which of the following entities is liable for a corporation's debts?

An S corporation may have no more than 35 stockholders.

A sole proprietorship is a business owned by one person.

Ownership in a corporation

A strategic alliance is

Partners always share profits and losses equally.

A corporation's life span is equal to that of its owners.

You Make the Call-Situation 2 Matthew Freeman started a business in 1993 to provide corporate training in project management. He initially organized his business as a sole proprietorship. Until 1999, he did most of his work on a contract basis for Corporation Education Services (CES). Under the terms of his contract, Freeman was responsible for teaching 3- to 5-day courses to corporate clients-primarily Fortune 1000 companies. He was compensated according to a negotiated daily rate, and expenses incurred during a course (hotels, meals, transportation, etc.) were reimbursed by CES. Although some expenses were not reimbursed by CES (such as those for computers and office supplies), Freeman's expenses usually amounted to less than 1 percent of his revenues. In 1999, Freeman increasingly found himself working directly with corporate clients rather than contracting with CES. Over the years, he had considered incorporating but had assumed the costs and inconveniences of this option would outweigh the benefits. However, some of his new clients said that they would prefer to contract with a corporation rather than with an individual. And Freeman sometimes wondered about potential liability problems. On the one hand, he didn't have the same liability issues as some other businesses-he worked out of his home, clients never visited his home office, all courses were conducted in hotels or corporate facilities, and his business involved only services. But he wasn't sure what would happen if a client were dissatisfied with the content and outcomes of his instruction. Finally, he wondered whether there would be tax advantages to incorporating.

The owner of a new venture wants to supplement the managerial talent of its management team by drawing on outside assistance. Which of the following would be the least likely source of help?

Upon the death of the majority stockholder in a corporation, direct control may pass to

S corporations are taxed as

One benefit of an S Corporation is that it allows shareholders to receive dividends without

The board of directors is elected by the stockholders of a corporation.

Any weakness in the management of a new business will mean its certain failure, since no one outside the business will be able to provide management assistance.

An entrepreneur's social network could include all of the following except:

To be eligible to be an S corporation, a firm must

The key to strong management in a new firm is

Explain the importance of a strong management team for a new venture.