Question 1

Every partnership must have at least one limited partner.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   partnership.
B)   corporation.
C)   sole traders.
D)   conglomerate.
E)   syndicate.F) A) and C)
G) A) and D)

Question 3

Corporations account for about 95 percent of all sales revenues.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   lack of continuity.
B)   effects of disagreements with his cousin.
C)   the inability to get out the money he invests.
D)   unlimited liability.
E)   double taxation.F) A) and B)
G) None of the above

Question 5

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

Accepted Answer

A)   The purchase of a catering firm by Delta Airlines
B)   The purchase of Marathon Oil Company by U.S.Steel
C)   The purchase of Kentucky Fried Chicken by PepsiCo
D)   The purchase of Fred Meyer grocery store chain by the Kroger supermarket chain
E)   The purchase of Mobil Oil by ExxonF) A) and C)
G) C) and D)

Question 6

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

Accepted Answer

A)   hire new employees.
B)   incorporate his company.
C)   get a loan from a bank.
D)   take on a trustworthy friend as a partner.
E)   use a computerised accounting system.F) B) and C)
G) A) and E)

Question 7

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 a(n)

Accepted Answer

A)   sole trader.
B)   partnership.
C)   open corporation.
D)   closed corporation.
E)   public corporation.F) A) and C)
G) A) and E)

Question 8

As with a sole trader, one disadvantage of a partnership is a lack of continuity.

Accepted Answer

A) True 
 B)False

Question 9

When many banks join together to lend money to developing countries such as Bangladesh and Malaysia, they seek to spread out the risk of default.This is called

Accepted Answer

A)   a not-for-profit organisation.
B)   a cooperative.
C)   diversification.
D)   a quasi-government corporation.
E)   a syndicate.F) A) and D)
G) A) and C)

Question 10

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

Accepted Answer

A)   All stockholders vote on all the major issues and problems that a company faces on a monthly basis.
B)   Stockholders are intricately involved in the daily operations of a corporation.
C)   Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation.
D)   Stockholders vote for the members of the board of directors, and this board makes all the daily business decisions for the corporation.
E)   Stockholders usually call company management and tell executives better ways to run the organisation.F) B) and D)
G) None of the above

Question 11

When incorporating, a business

Accepted Answer

A)   may incorporate in any state it chooses.
B)   must incorporate in the state in which its headquarters are located.
C)   must incorporate in the state in which it does the most business.
D)   must receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located.
E)   must do none of the above.F) A) and C)
G) B) and D)

Question 12

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.

Accepted Answer

A)   difficult; difficult
B)   easy; difficult
C)   easy; impossible
D)   easy; easy
E)   difficult; easyF) None of the above
G) C) and D)

Question 13

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

Accepted Answer

A)   S-corporation
B)   Not-for-profit corporation
C)   Open corporation
D)   Limited-liability company
E)   CooperativeF) B) and D)
G) A) and B)

Question 14

Unlimited liability holds a sole trader personally responsible for all the debts of the business.

Accepted Answer

A) True 
 B)False

Question 15

Stephen decides his business will begin staying open until 7 p.m.instead of 6 p.m.The next day, the shop stays open until 7 p.m.This environment of flexibility to quickly change is characteristic of what form of business organisation?

Accepted Answer

A)   Corporation
B)   Partnership
C)   S-corporation
D)   Flexible partnership
E)   Sole traderF) A) and E)
G) None of the above

Question 16

If the owner of a sole trader retires or dies, the owner's heirs may take over a profitable business and either sell it or continue to operate it.

Accepted Answer

A) True 
 B)False

Question 17

Most master limited partnerships are in the areas of

Accepted Answer

A)   natural energy and health care.
B)   health care, the energy sector, and real estate.
C)   health care, services, and food prep.
D)   natural resources, energy, and real estate.
E)   medical and dental care, natural resources, and health support services.F) C) and D)
G) All of the above

Question 18

Darrell inherited a large amount of money from his uncle.Darrell wishes to start his own business, and his lawyers encourage him to make it a corporation.What disadvantage of a sole trader are the lawyers trying to avoid?

Accepted Answer

A)   Unlimited liability
B)   Lack of management skills
C)   Retention of all profits
D)   Lack of money
E)   Double taxationF) A) and B)
G) A) and C)

Question 19

All corporations operate primarily for profit.

Accepted Answer

A) True 
 B)False

Question 20

All not-for-profit corporations rely solely on volunteers to perform services of the organisation.

Accepted Answer

A) True 
 B)False

Exam 4: Types of Business Ownership

Unlimited liability holds a sole trader personally responsible for all the debts of the business.

Correct AnswerverifiedShow Answer

Darrell inherited a large amount of money from his uncle.Darrell wishes to start his own business, and his lawyers encourage him to make it a corporation.What disadvantage of a sole trader are the lawyers trying to avoid?

Correct AnswerverifiedShow Answer

Corporations account for about 95 percent of all sales revenues.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As with a sole trader, one disadvantage of a partnership is a lack of continuity.

Correct AnswerverifiedShow Answer

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Every partnership must have at least one limited partner.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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 a(n)

Correct AnswerverifiedShow Answer

Stephen decides his business will begin staying open until 7 p.m.instead of 6 p.m.The next day, the shop stays open until 7 p.m.This environment of flexibility to quickly change is characteristic of what form of business organisation?

Correct AnswerverifiedShow Answer

Most master limited partnerships are in the areas of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All corporations operate primarily for profit.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All not-for-profit corporations rely solely on volunteers to perform services of the organisation.

Correct AnswerverifiedShow Answer

When many banks join together to lend money to developing countries such as Bangladesh and Malaysia, they seek to spread out the risk of default.This is called

Correct AnswerverifiedShow Answer

When incorporating, a business

Correct AnswerverifiedShow Answer

If the owner of a sole trader retires or dies, the owner's heirs may take over a profitable business and either sell it or continue to operate it.

Correct AnswerverifiedShow Answer

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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.

Correct Answer
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