question

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

answer

horizontal merger

question

A corporation whose stock can be purchased by anyone and is traded in stock markets is known as a(n)

answer

open corporation

question

When Alyssa decides that she no longer wants her Radio Shack stock, she will discover that a related benefit of a corporation is

answer

the ease of transfer of ownership

question

All of the following are disadvantages of corporations except

answer

perpetual life

question

Legally, a partnership must

answer

have at least one general partner

question

Corporate officers are

answer

appointed by the board of directors

question

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

answer

sole proprietorship

question

The citizens of a number of small rural owns have decided to form an association that will allow them to purchase electricity at a much cheaper rate than they are currently paying. This allowance is referred to as a(n)

answer

cooperative

question

A voluntary association of two or more people acting as co-owners of a business is known as a

answer

partnership

question

When starting a corporation, people submit articles of incorporation to

answer

a secretary of state

question

Nortons, Inc. is a hardware store that is owned by members of the Norton family as well as a few close friends of the family. This company is called a(n)

answer

closed corporation

question

When the owner of a sole proprietorship dies, what becomes of the business?

answer

It ceases to exist unless the heirs take it over to sell it

question

Unless specified in the charter, a corporation has a

answer

perpetual life

question

The form of business organization that experiences double taxation is the

answer

corporation

question

Before Troy can incorporate his advertising business in Champaign, Illinois, he must have a(n)_______ approved by the ________.

answer

articles of incorporation; secretary of state of Illinois

question

A technique used to gather enough stockholder votes to control a targeted company is a

answer

proxy fight

question

A business partnership that is owned and managed like a corporation but taxed like a partnership is called a(n)

answer

master limited partnership

question

All of the following are disadvantages that Sean should consider before entering a partnership agreement with his cousin except

answer

double taxation

question

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

answer

corporation, partnership, sole proprietorship

question

Keisha Cook and Donna Blackman decide to go into business together. They start by working an agreement listing and explaining the terms of the business they will both own, along with both of their responsibilities

answer

articles of partnership

question

A limited-liability company is

answer

taxed like a partnership

question

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

answer

domestic corporation

question

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

answer

syndicate

question

All of the following are advantages of the partnership form of organization except

answer

unlimited liability

question

A year ago Kevin went to work for B&G. Kevin discovered there was going to be a merger between B&G, Inc and one of its major competitors. Refer to B&G Inc. B&G was going through a _____________ merger.

answer

horizontal

question

As a limited partner in a construction business, Joe

answer

only risks his initial investment

question

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

answer

4

question

The _________ is a legal document that lists and explains the terms of the partnership.

answer

articles of partnership

question

How might sole proprietorship have a possible tax advantage?

answer

It does not pay special state and federal taxes that corporations pay.

question

What does double taxation mean?

answer

Companies must pay taxes on their earnings, and then stockholders pay taxes on their dividends.

question

Which of the following is not a disadvantage of sole proprietorships?

answer

Double taxation

question

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

answer

forming a joint venture

question

The Smithsonian Institution exists to preserve historical and cultural items of value and to share those items with the public; it does not exist to maximize the wealth of any shareholders. This entity is organized as a(n)

answer

not for profit corporation

question

Anyone with the money can purchase shares of Coca-Cola's stock. This makes Coca-Cola a(n) _________ corporation.

answer

open

question

According to the text, which of the following statements is false?

answer

When compared to larger businesses, the lure of employee benefits is one reason why people go to work for sole proprietorships.

question

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)

answer

syndicate

question

Most master limited partnerships are in the areas of

answer

natural resources, energy, and real estate

question

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

answer

not-for-profit corporation

question

Angela is tired of her boss as well as corporate America in general. She decides she would like to start a business where no one tells her what to do, and she can always make the decisions. The best form of business for Angela is a(n)

answer

Sole proprietorship

question

Which of the following is an advantage of a sole proprietorship?

answer

Profits are taxed as individual income

question

Which of the following is an advantage of the corporate form of organization?

answer

Ownership of stock is easy to transfer

question

Which of the following is an example of a horizontal merger?

answer

The purchase of Mobil Oil by Exxon

question

Goodwill Industries is an example of a(n)

answer

not-for-profit corporation

question

A ______ is a form that enables stockholders to allow someone else to vote for them.

answer

proxy

question

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

answer

Internal Revenue Service

question

Which of the following is a requirement for an S-corporation?

answer

The S-corporation can have no more than 100 stockholders

question

Daniel, Thomas, and Lucas are partners in a law firm under a typical partnership agreement in which each owns an equal share of the business. Thomas dies suddenly of a heart attack. What will most likely become of the partnership?

answer

Daniel and Lucas will be able to purchase Thomas's interest from his estate.

question

Recently there have been several mergers involving Big Four accounting firms. One such merger involved the firms of Arthur Young and Ernst & Whinney, who combined to form Ernst & Young. This is an example of a

answer

horizontal merger

question

Shane is looking for ways to get more capital for his appliance sales and service business. He is very protective of his company's information and fears that it will get into the wrong hands. Shane would probably not want to

answer

incorporate his money

question

The partner who can lose only what he or she has invested in a business is the

answer

limited partner

question

Unlimited liability means

answer

the owner is responsible for all business debts.

question

A merger between firms in completely unrelated industries is known as a

answer

conglomerate merger

question

Mars, Inc., maker of M&M's and other candy, is 100 percent owned by the Mars family and is therefore referred to as a(n)

answer

closed corporation

question

Which of the following has a restriction on the number of owners, members, or stockholders?

answer

S-corporation

question

Jack has been saving his excess funds for several years and has contemplated entering a partnership with a friend from college. Jack hesitates because he knows that it is ______ to invest money in a partnership and ________ to get the money back out.

answer

easy; difficult

question

Common stock carries all the following rights except the right to

answer

receive part of the profit before other classes of stock

question

Which of the following is not an advantage of a sole proprietorship?

answer

It has unlimited liability

question

Suppose Bill Gates, founder of Microsoft, is interested in a small software company. He may offer to purchase the stock of this company at a price that is just high enough to tempt the stockholders. This action would be called a

answer

tender offer

question

B&G. Kevin wanted to work for a company whose main goal was to provide a service to the community, not to make a profit.

answer

Not-for-profit corporation

question

Habitat for Humanity and Girl Scouts are both examples of

answer

not-for-profit corporation

question

A distribution of earnings to the stockholders of a corporation is a(n)

answer

dividend

question

When incorporating, a business

answer

may incorporate in any state it chooses

question

After Flora has gotten all the money she can from the bank and still cannot keep up with her fast-growing business, what is she most likely to do next if she wants her company to continue growing?

answer

Obtain a partner or form a corporation to attract more money

question

Brian wants to start a business that provides canoe and kayak trips. He decides that it would be better to ask his brother Brad to become his partner because

answer

together they will be able to get more capital and credit to start the business

question

Because of rising fuel costs, a group of farmers have organized a retail gasoline outlet so they can make more reasonable purchases. This type of business is referred to as a(n)

answer

cooperative

question

Which of the following states offers the lowest organizational costs for corporations?

answer

Delaware

question

A merger between two firms that make and sell similar products in similar markets is known as a

answer

horizontal merger

question

To close a sole proprietorship, the owner must

answer

pay creditors

question

A company generally needs more than __________ employees in order to be considered large.

answer

500

question

You have just opened a new small business. You're really happy to learn that studies show that small-business workers

answer

are more innovative than workers in large businesses.

question

Which statement best describes the general success rate for franchises?

answer

Franchises have a very high success rate compared to other small businesses.

question

In a franchise business, the party paying the franchise fee is known as the

answer

franchisee

question

Ben has been thinking about going into business. However, he has discounted entering automobile manufacturing because it

answer

requires huge investments in machinery and equipment

question

You have been running a successful art and framing shop for three years. You have decided to allow others to use your business name, materials, and methods in operating their own business for a fee. You are going to enter a

answer

franchise agreement

question

Which of the following is an advantage to the franchisor in a franchise agreement?

answer

fast and selective distribution of products.

question

The franchisee supplies

answer

labor and capital, and owns and operates the outlet

question

Penicillin, airplanes, and air conditioning were all

answer

created by individual inventors and small companies

question

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

answer

sole proprietorship

question

Which of the following would least likely be stated in the articles o partnership?

answer

what products the company will sell

question

Tiffany is about to finish her degree in business management and wants to find a job that will provide her with opportunities to advance within an organization. What type of business organization should Tiffany work for?

answer

A corporation

question

The purchase of one corporation by another is referred to as a

answer

merger

question

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

answer

Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment.

question

Mike Nettles approached Nathan Lang about becoming a partner firm that destroys environmental waste. While Mike would like to become a partner in the firm, he is concerned about his liability because he has recently inherited a lot of money. In this situation, Mike should become a

answer

limited partner

question

Which of the following is necessary for starting a sole proprietorship?

answer

no specific legal documents

question

Samantha graduated from college and needed to decide where she wanted to work. What would not be an advantage of Samantha's aunt's business?

answer

Ability to be your own boss.

question

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

answer

syndicate

question

Most partnerships have _____ partners.

answer

two

question

In the United States, approximately percent of all businesses are

answer

sole proprietorships

question

The top governing body of a corporation is known as the

answer

board of directors

question

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

answer

corporation

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