Eco Test- Ch 8 – Flashcards
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In return for a fee to a franchiser, a business owner receives the right
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to sell the franchiser's goods and services
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The combination of two or more firms involved in different stages of producing the same good or service is called
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Vertical merger
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What are assets?
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money and other valuables
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All of the following are major advantages of a sole proprietorship except
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unlimited personal liability
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The most important decisions in a corporation are made by
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The board of directors
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The most common form of business organization is the corporation
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False
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Which of the following is an advantage of a sole proprietorship?
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It is the least-regulated form of business organization
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What is the term for the joining of two or more firms involved in different stages of producing the same good or service?
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vertical merger
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Dividends represent a portion of corporate profits
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True
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A nonprofit organization like Northwest Assistance Ministries has limited life
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False
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Liability is the
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Legal obligation to pay debts
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Which of the following is NOT a common reason for a business combination
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A business wants to change its name
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A partnership is a business organization owned by
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two or more individuals
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A major disadvantage of the sole proprietorship is that
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banks are often unwilling to lend money to the business
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Corporations raise large sums of money by
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All of the answers
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A common factor in all nonprofit businesses is that they
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pay no income tax
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In a limited liability partnership, all partners
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are limited from personal liability in certain situatons
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A nonprofit organization like the YMCA enjoys limited liability
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True
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Why is it easier for a partnership to borrow money and to hold good employees than it is for a sole proprietorship to do so?
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A partnership has more personal stability and access to more money
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What is a fringe benefit?
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a payment other than wages or salaries
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Which type of business organization faces the most government regulation
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Corporation
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Most large businesses are
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corporations
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The authorization to start a business issued by the local government is
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business license
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a joining of two or more businesses that are involved in different stages of producing the same good or service is called which of the following
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vertical merger
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All of the following are true of multinational corporations except
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Multinationals are a type of business organization that has no weaknesses
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If a sole proprietorship fails, the owner of the business
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Must pay all the business debts
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A business organization owned by two or more persons who agree on a specific division of responsibilities is called a
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Partnership
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A large corporation that produces and sells its goods and services throughout the world is called a
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multinational corporation
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The owner of a bond owns a portion of the corporation that issued it
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False
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Which type of business organization faces double taxation?
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Corporations
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Corporate bonds pay dividends
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False
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The Securities and Exchange Commission supervises and regulates the
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sale of corporate stock to the public
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A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area is called a
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Business franchise
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The function of a retail or purchasing cooperative business or co-op is to
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obtain lower prices for members
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What is a major reason for conglomerate mergers
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Diversification
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Which of the following is an example of a merger
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A company combines with a company that supplies it with raw materials
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A company paid health plan would be an example of a fringe benefit
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True
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The most common form of business organzation is
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The sole proprietorship
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The share of earnings that a business owner pays for the right to be part of a certain business are
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royalties
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All of the following are disadvantages of a franchise business EXCEPT
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The parent company's guidance on running the business
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A business fails and the owners lose their investment in the company, along with their homes, automobiles, and other personal property. The owners are
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general partners in a general partnership
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A bond is a certificate issued by a corporation promising to repay the amount it has borrowed plus interest at a specified time in the futre
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True
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Preferred stockholders have the right to vote for nominees to the board of directors of corporations
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False
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What does the limited liability of the owners of stock in a case corporation mean?
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The stockholders of a corporation can lose only what they have invested in the corporation
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Although a sole proprietorship is the least-regulated, which type of regulation do these business owners face that may keep them from operating out of their homes?
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zoning laws
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Museums, public schools, and YMCAs are all
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ecempt from paying income taxes
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A business's net income is defined as
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total income after expenses
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What is the main purpose of incubators?
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providing entrepreneurs with training to be successful
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A venture capitalist's main goals is usually to
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get a good return on an invenstment
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If a corporation goes out of business, common stockholders get their investment back before preferred stockholders do
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False
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In a retail business, the stock held in reserve is called
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Inventory
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Which of the following is a noncast charge?
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Depreciation
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A company with four or more businesses that make unrelated products is called a
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conglomerate
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A credit union is an example of a
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service cooperative
