Question 1

A corporation is a business entity created by filing a form, which is known in most states as the
articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true of franchises in the United States?

Accepted Answer

A)   They offer access to a proven business system and product.
B)   Estimates show that women own about 75% of all franchises.
C)   Minority participation in franchises, both as franchisees and franchisors, is relatively high.
D)   The growth and expansion of franchises are restricted domestically.

Question 3

Which of the following features of a sole proprietorship proves that it is a risky endeavor?

Accepted Answer

A)   The complications associated with operating in more than one state
B)   Its lack of continuity
C)   The potential for disagreements
D)   Its unlimited liability D

Question 4

Harry is one of the top managers in RPLD Corporation. He, along with seven other members, takes the major decisions of the company and oversees its operation. Although Harry is not the owner of the corporation, he holds stocks in the company and has the power to appoint a chief executive officer (CEO)  for the company. In this scenario, Harry is part of the _____ of RPLD Corporation.

Accepted Answer

A)   board of valuers
B)   board of directors
C)   board of corporators
D)   board of regents

Question 5

A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

Accepted Answer

A)   crave-out trade
B)   non-disclosure agreement
C)   distributorship
D)   divestiture

Question 6

Common stock represents the basic ownership interest in a corporation.

Accepted Answer

A) True 
 B)False  True

Question 7

John and Lena sign a contract with the owner of Little Fairy, a well-known preschool chain, to start a preschool in their city. They take permission from the owner to use the name and products of Little Fairy. They also furnish their preschool in Little Fairy's trademark style. In this scenario, John and Lena are starting a _____.

Accepted Answer

A)   corporation
B)   sole proprietorship company
C)   limited liability company
D)   franchise D

Question 8

In the context of franchising, which of the following statements is true of a business format franchise?

Accepted Answer

A)   It is an agreement that a franchisee sends to the franchisor to acquire the items required to set up the franchise.
B)   It is an arrangement which allows a franchisor to make a product and issue a license to a franchisee to sell it.
C)   It is an agreement that a franchisor sends to a franchisee, communicating all the standard requirements that the franchisor expects him to follow.
D)   It is an agreement in which franchisor grants the franchisee the right to both make and sell its good or service.

Question 9

A firm considers _____ to increase size and market power within the industry.

Accepted Answer

A)   a buyer-supplier consolidation
B)   a conglomerate consolidation
C)   vertical mergers
D)   horizontal mergers

Question 10

One of the disadvantages of general partnerships is the lack of continuity.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an issue associated with general partnerships?

Accepted Answer

A)   Complexities related to the formation of the company
B)   Double taxation of the partners
C)   Difficulty faced by a partner when withdrawing from the company
D)   Weaker financial base when compared to that of a sole proprietorship

Question 12

An owner of a C corporation is called a _____.

Accepted Answer

A)   director
B)   sole proprietor
C)   stockholder
D)   chief executive officer

Question 13

CofBean Corp. and Coffeedust Inc. are leading producers and distributors of coffee beans. They join together to become the world's largest distributor of coffee. This association allows the amalgamated company to increase its size and market power within the coffee industry. This is an example of a(n)  _____.

Accepted Answer

A)   acquisition
B)   horizontal merger
C)   conglomerate consolidation
D)   divestiture

Question 14

Heinrich Chemical Corporation holds an annual meeting in which it invites all individuals who hold shares in the company. The occasion is also set aside for the election of a new member to the company's board of directors. However, the company ensures that only individuals who have the right to vote participate in the election. In this scenario, the _____ of the company take part in the voting process.

Accepted Answer

A)   general partners
B)   limited partners
C)   common stockholders
D)   preferred stockholders

Question 15

In the context of limited partnerships, which of the following statements is true of limited partners?

Accepted Answer

A)   Their ultimate authority in the business often compels them to perform tasks or make decisions in areas where they lack expertise.
B)   They assume unlimited personal liability for debts incurred by the company.
C)   They are not only liable for their own mistakes but also for that of their partners.
D)   Their personal wealth is not at risk as long as they do not actively participate in managing the company.

Question 16

When a business that is incorporated in one state does business in other states, it is called a(n)  _____ in the state where it is incorporated.

Accepted Answer

A)   statutory corporation
B)   overseas corporation
C)   domestic corporation
D)   alien corporation

Question 17

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

Accepted Answer

A)   sole proprietorship
B)   partnership
C)   cooperative
D)   corporation

Question 18

When people use the term "corporation" without specifying which type, they are generally referring to a(n)  _____.

Accepted Answer

A)   statutory close corporation
B)   nonprofit corporation
C)   S corporation
D)   C corporation

Question 19

Mention the key advantages and limitations of nonprofit corporations.

Accepted Answer

Answers will vary. The following are the...

Question 20

Which of the following is an advantage of an S corporation?

Accepted Answer

A)   Its stockholders have limited liability.
B)   It can be owned by foreigners or other corporations.
C)   Its earnings are exempt from federal and state income taxes.
D)   It can have more than 100 stockholders.

Exam 6: Business Formation: Choosing the Form That Fits

A corporation is a business entity created by filing a form, which is known in most states as the articles of incorporation.

Correct Answer
verified

Which of the following statements is true of franchises in the United States?

Correct Answer
verified

Which of the following features of a sole proprietorship proves that it is a risky endeavor?

Correct Answer
verified
D

Correct Answer
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A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

Correct Answer
verified

Common stock represents the basic ownership interest in a corporation.

Correct Answer
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True

Correct Answer
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D

In the context of franchising, which of the following statements is true of a business format franchise?

Correct Answer
verified

A firm considers _____ to increase size and market power within the industry.

Correct Answer
verified

One of the disadvantages of general partnerships is the lack of continuity.

Correct Answer
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Which of the following is an issue associated with general partnerships?

Correct Answer
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An owner of a C corporation is called a _____.

Correct Answer
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Correct Answer
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Correct Answer
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In the context of limited partnerships, which of the following statements is true of limited partners?

Correct Answer
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When a business that is incorporated in one state does business in other states, it is called a(n) _____ in the state where it is incorporated.

Correct Answer
verified

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

Correct Answer
verified

When people use the term "corporation" without specifying which type, they are generally referring to a(n) _____.

Correct Answer
verified

Mention the key advantages and limitations of nonprofit corporations.

Correct Answer
verified
Answers will vary. The following are the...
View Answer

Which of the following is an advantage of an S corporation?

Correct Answer
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Exam 6: Business Formation: Choosing the Form That Fits

A corporation is a business entity created by filing a form, which is known in most states as the articles of incorporation.

Correct AnswerverifiedShow Answer

Which of the following statements is true of franchises in the United States?

Correct AnswerverifiedShow Answer

Which of the following features of a sole proprietorship proves that it is a risky endeavor?

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

Correct AnswerverifiedShow Answer

Common stock represents the basic ownership interest in a corporation.

Correct AnswerverifiedTrue

Correct AnswerverifiedD

In the context of franchising, which of the following statements is true of a business format franchise?

Correct AnswerverifiedShow Answer

A firm considers _____ to increase size and market power within the industry.

Correct AnswerverifiedShow Answer

One of the disadvantages of general partnerships is the lack of continuity.

Correct AnswerverifiedShow Answer

Which of the following is an issue associated with general partnerships?

Correct AnswerverifiedShow Answer

An owner of a C corporation is called a _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the context of limited partnerships, which of the following statements is true of limited partners?

Correct AnswerverifiedShow Answer

When a business that is incorporated in one state does business in other states, it is called a(n) _____ in the state where it is incorporated.

Correct AnswerverifiedShow Answer

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

Correct AnswerverifiedShow Answer

When people use the term "corporation" without specifying which type, they are generally referring to a(n) _____.

Correct AnswerverifiedShow Answer

Mention the key advantages and limitations of nonprofit corporations.

Correct AnswerverifiedAnswers will vary. The following are the...View AnswerShow Answer

Which of the following is an advantage of an S corporation?

Correct AnswerverifiedShow Answer

Correct Answer
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D

Correct Answer
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True

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D

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Answers will vary. The following are the...
View Answer

Correct Answer
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