Question 1

Few brick-and-mortar franchisees are expanding online.

Accepted Answer

A) True 
 B)False

Question 2

A general partner has unlimited liability for the debts of the partnership only if he or she personally approved the decisions that resulted in those debts.

Accepted Answer

A) True 
 B)False

Question 3

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Accepted Answer

A)  the sole responsibility of the owner.
B)  limited to the amount the owner has invested in the firm.
C)  paid for out of a reserve contingency fund that sole proprietors are required by law to set up.
D)  normally covered by liability insurance.E) None of the above
F) A) and B)

Question 4

Sharon,Lois and Sam have just formed a business partnership.Under their arrangement,Sharon will actively manage the company and assume unlimited liability for the firm's debts.Sam and Lois will invest several thousand dollars of their money and will share in the profits,but will not actively manage the firm and will not have liability for losses beyond their initial investment.This describes a limited partnership.

Accepted Answer

A) True 
 B)False

Question 5

Once a business is established,it's almost impossible to change from one form of business ownership to another.

Accepted Answer

A) True 
 B)False

Question 6

Mel is a major stockholder in Precision Transmission Services (PTS) ,a nationwide network of transmission repair shops founded by his father.Currently,PTS stock is sold on the open market,but Mel has talked to several relatives about his desire to get all of the PTS stock back in his family's hands.Mel is interested in:

Accepted Answer

A)  taking the firm private.
B)  a hostile takeover in the firm.
C)  converting the firm to a general partnership.
D)  forming a master limited partnership.E) A) and C)
F) All of the above

Question 7

Trans Globe Airlines has recently looked into a merger with Royal Blue Airlines,a financially troubled rival.The firms believe the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations.This proposed merger is an example of a:

Accepted Answer

A)  conglomerate merger.
B)  leveraged buyout.
C)  horizontal merger.
D)  joint venture.E) A) and D)
F) None of the above

Question 8

Which of the following people would be most interested in participating in a business organized as a co-operative?

Accepted Answer

A)  Joe is intrigued by the idea of combining his time and resources with many other people to operate a business providing a good or service that they all will use.
B)  Joan wants to be an owner of a business and share in its profits,but has no desire to take an active role in managing the company or participating in its daily operations.
C)  Jeff wants to work for a government owned business because he believes government ownership ensures a more equitable distribution of income and wealth.
D)  Jennifer prefers to work for a charitable organization that emphasizes helping people who are less fortunate than her.E) B) and C)
F) A) and B)

Question 9

A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

Accepted Answer

A) True 
 B)False

Question 10

A co-operative is simply another name for a corporation.

Accepted Answer

A) True 
 B)False

Question 11

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

Accepted Answer

A) True 
 B)False

Question 12

The most popular global market for U.S.franchisors has been Canada.

Accepted Answer

A) True 
 B)False

Question 13

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about buying a franchise is most accurate?

Accepted Answer

A)  One of the advantages of buying a franchise is that franchisors are so closely regulated that there is virtually no chance for scams to succeed.
B)  Before purchasing a franchise,the buyer should carefully evaluate the franchise,the franchisor,his or her own situation,and the nature of the market.
C)  Franchise agreements are simple to evaluate,since federal law requires that all such agreements must be written in plain English with all fees and terms clearly explained.
D)  Buying a franchise is the simplest and least expensive way to set up a business,since the franchisor has already worked out all of the details for setting up and running the business.E) All of the above
F) A) and B)

Question 15

One advantage of corporations is that the initial cost of setting them up is usually lower than for other forms of ownership.

Accepted Answer

A) True 
 B)False

Question 16

Rhonda has agreed to invest $16,000 in a partnership with her sister and brother-in-law.Rhonda does not plan to work in the partnership,nor does she wish to risk any of her own wealth other than the $16,000 she invests,but she does intend to share in any profits earned by the partnership.Evidently,Rhonda will be a:

Accepted Answer

A)  restricted partner.
B)  preferred stockholder.
C)  secondary partner.
D)  limited partner.E) A) and D)
F) B) and D)

Question 17

Dr.Wright is interested in incorporating as an individual.While this is legally possible,there are really no advantages to doing so.

Accepted Answer

A) True 
 B)False

Question 18

A difference between partnerships and sole proprietorships is that partnerships:

Accepted Answer

A)  are easier to form.
B)  are managed by an elected board of directors.
C)  have the advantage of limited liability.
D)  have a greater chance of long term survival.E) All of the above
F) A) and B)

Question 19

An evaluation of franchising would conclude that this type of arrangement:

Accepted Answer

A)  has become the dominant form of business organization in Canada because it has many advantages and almost no disadvantages.
B)  appeals to people who want to own a business,but are not comfortable starting a company from scratch.
C)  has a much higher risk of failure than independent companies.
D)  has little chance of success outside the United States because many foreign countries do not allow such arrangements.E) C) and D)
F) B) and D)

Question 20

Many mergers in recent years were motivated by a desire of firms to:

Accepted Answer

A)  switch from the corporate form of ownership to the partnership form of ownership.
B)  expand within their market to save costs.
C)  downsize their operations.
D)  avoid problems with antitrust regulations.E) A) and B)
F) A) and C)

Exam 6: Forms of Business Ownership

Correct Answer
verified

A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

Correct Answer
verified

Once a business is established,it's almost impossible to change from one form of business ownership to another.

Correct Answer
verified

Few brick-and-mortar franchisees are expanding online.

Correct Answer
verified

A general partner has unlimited liability for the debts of the partnership only if he or she personally approved the decisions that resulted in those debts.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Trans Globe Airlines has recently looked into a merger with Royal Blue Airlines,a financially troubled rival.The firms believe the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations.This proposed merger is an example of a:

Correct Answer
verified

Many mergers in recent years were motivated by a desire of firms to:

Correct Answer
verified

A co-operative is simply another name for a corporation.

Correct Answer
verified

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

Correct Answer
verified

One advantage of corporations is that the initial cost of setting them up is usually lower than for other forms of ownership.

Correct Answer
verified

An evaluation of franchising would conclude that this type of arrangement:

Correct Answer
verified

Which of the following people would be most interested in participating in a business organized as a co-operative?

Correct Answer
verified

Dr.Wright is interested in incorporating as an individual.While this is legally possible,there are really no advantages to doing so.

Correct Answer
verified

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Correct Answer
verified

Which of the following statements about buying a franchise is most accurate?

Correct Answer
verified

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct Answer
verified

The most popular global market for U.S.franchisors has been Canada.

Correct Answer
verified

A difference between partnerships and sole proprietorships is that partnerships:

Correct Answer
verified

Exam 6: Forms of Business Ownership

Correct AnswerverifiedShow Answer

A drawback of sole proprietorships is that they usually have limited access to additional financial resources.

Correct AnswerverifiedShow Answer

Once a business is established,it's almost impossible to change from one form of business ownership to another.

Correct AnswerverifiedShow Answer

Few brick-and-mortar franchisees are expanding online.

Correct AnswerverifiedShow Answer

A general partner has unlimited liability for the debts of the partnership only if he or she personally approved the decisions that resulted in those debts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Trans Globe Airlines has recently looked into a merger with Royal Blue Airlines,a financially troubled rival.The firms believe the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations.This proposed merger is an example of a:

Correct AnswerverifiedShow Answer

Many mergers in recent years were motivated by a desire of firms to:

Correct AnswerverifiedShow Answer

A co-operative is simply another name for a corporation.

Correct AnswerverifiedShow Answer

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

Correct AnswerverifiedShow Answer

One advantage of corporations is that the initial cost of setting them up is usually lower than for other forms of ownership.

Correct AnswerverifiedShow Answer

An evaluation of franchising would conclude that this type of arrangement:

Correct AnswerverifiedShow Answer

Which of the following people would be most interested in participating in a business organized as a co-operative?

Correct AnswerverifiedShow Answer

Dr.Wright is interested in incorporating as an individual.While this is legally possible,there are really no advantages to doing so.

Correct AnswerverifiedShow Answer

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Correct AnswerverifiedShow Answer

Which of the following statements about buying a franchise is most accurate?

Correct AnswerverifiedShow Answer

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct AnswerverifiedShow Answer

The most popular global market for U.S.franchisors has been Canada.

Correct AnswerverifiedShow Answer

A difference between partnerships and sole proprietorships is that partnerships:

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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Correct Answer
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Correct Answer
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Correct Answer
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