Question 1

Juarez would like to open a Honduran restaurant in San Diego.He has determined that,due to the large Hispanic population there,the demand for a Honduran restaurant should be high.He has studied the demographics of the area,the competing businesses,the costs of rent,electricity,gas,licensing,insurance,and all of the costs associated with payroll taxes and employee liabilities.He has determined that he can run the business with a minimum of four people if they work in six-hour shifts and the business is open from 9
A.m.to 9 p.m.After completing all of his costs calculations and subtracting them from his projected income for the first year,he has determined that he will be about two thousand dollars a month short.He had decided to run the business as a sole proprietorship but is now reconsidering this decision.He needs money but he doesn't want to give up control or go into debt.What would be the best form of business for him to have under these circumstances?

Accepted Answer

A)   Corporation
B)   Limited-liability company
C)   Limited partnership
D)   Partnership.E) All of the above
F) None of the above

Question 2

QPD Corporation discovered financial information about its prime competitor which it used to its advantage.QPD did not obtain the information from any illegal source or through any illegal means.As discussed by the authors,which of the following disadvantages of having a corporate form of business is responsible for QPD's knowledge of the details of its competitor's financial situation?

Accepted Answer

A)   Conflict within the corporation giving pressure to increase sales revenue
B)   Government regulation demands necessitating increased paperwork
C)   Lack of secrecy requiring the reporting of specific corporate activities
D)   Requirements for specialized management cause competitors to employ individuals who have worked for competitorsE) B) and C)
F) A) and D)

Question 3

Which form of business is the easiest to start?

Accepted Answer

A)   Corporation
B)   Partnership
C)   Entrepreneurship
D)   Sole proprietorship
E)   S-corporationF) B) and D)
G) D) and E)

Question 4

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

Accepted Answer

A)   the ease of transfer of ownership.
B)   its perpetual life.
C)   limited liability.
D)   specialized management.
E)   avoiding double taxation.F) D) and E)
G) A) and C)

Question 5

A limited-liability company extends the concept of personal-asset protection to small business owners.

Accepted Answer

A) True 
 B)False

Question 6

Unlimited liability means

Accepted Answer

A)   there is no limit on the amount an owner can borrow.
B)   creditors will absorb any loss from nonpayment of debt.
C)   the business can borrow money for any type of purchase.
D)   the owner is responsible for all business debts.
E)   stockholders can borrow money from the business.F) A) and D)
G) All of the above

Question 7

The courts have held that an oral partnership agreement is not legally binding and,therefore,cannot be enforced.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   It will immediately cease to exist and David and Anthony will have to find new jobs.
B)   Richard's share of the business will automatically be split between David and Anthony.
C)   David and Anthony will be able to purchase Richard's interest from his estate.
D)   David and Anthony will have to quickly find a new partner to take Richard's place.
E)   It will dissolve,and David and Anthony will lose personal property to pay business debts.F) B) and D)
G) None of the above

Question 9

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

Accepted Answer

A)   Who will make the final decisions
B)   How much each partner will invest
C)   What the duties of each partner are
D)   What products the company will sell
E)   What will happen if a partner dies or wants to dissolve the partnershipF) A) and D)
G) C) and E)

Question 10

How would you go about incorporating a business?

Accepted Answer

Most experts recommend that a lawyer be ...

Question 11

Bart inherited an interest in an open publicly traded corporation shortly after he graduated from high school.He has now graduated from college and would like to sell his ownership in order to purchase a house.Which of the following best describes the sale process?

Accepted Answer

A)   Ease of transfer of ownership is one of the benefits of corporate ownership therefore he should have no difficulty selling his ownership interest.
B)   Difficulties associated with the transfer of ownership of corporate ownership are one of the disadvantages to forming a business as a corporation,therefore he will have difficulty selling his ownership interest.
C)   If the corporation is an S corporation he may have no difficulty selling his ownership interest in the corporation.
D)   Since this is a publicly traded corporation,he will have difficulty selling his stock.E) C) and D)
F) B) and D)

Question 12

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

Accepted Answer

A)   unlimited liability.
B)   retention of profits.
C)   combined skills and knowledge.
D)   better access to capital and credit.
E)   ease of start-up.F) A) and B)
G) A) and C) A

Question 13

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

Accepted Answer

A)   waiver
B)   rights transfer
C)   proxy
D)   voter registration
E)   dividendF) A) and E)
G) A) and D)

Question 14

With regard to limited-liability companies,which of the following statements is false?

Accepted Answer

A)   Many experts believe that an LLC is nothing more than an S-corporation.
B)   An LLC can have no more than 100 stockholders.
C)   An LLC avoids double taxation.
D)   An LLC provides limited-liability protection to the personal assets of the owners.
E)   When compared to regular corporations,there are fewer government regulations that apply to LLCs.F) C) and E)
G) D) and E)

Question 15

What are the primary responsibilities of the board of directors? What do corporate officers manage?

Accepted Answer

The major responsibilities of the board ...

Question 16

Amanda wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it,and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Amanda?

Accepted Answer

A)   Courtney,an artist with a real flair for new-age jewelry design
B)   Paula,Amanda's best friend who is fun to hang out with and good at solving problems
C)   Gwyn,who has business experience with accounting,management,and marketing
D)   Michelle,who used to work at the jewelry counter at a department store
E)   Georgina,an engineer with industrial management experience but no moneyF) None of the above
G) All of the above

Question 17

A limited-liability company is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 18

As a limited partner in a construction business,Joe

Accepted Answer

A)   has input only on major company decisions.
B)   contributes only his time and not his money.
C)   does not receive any portion of the profits.
D)   only risks his initial investment.
E)   cannot lose his investment in the partnership.F) B) and C)
G) B) and E)

Question 19

Corporate officers are elected by the stockholders.

Accepted Answer

A) True 
 B)False  False

Question 20

The top governing body of a corporation is known as the

Accepted Answer

A)   incorporators.
B)   stockholders.
C)   management.
D)   officers.
E)   board of directors.F) A) and B)
G) B) and E) E

Exam 4: Choosing a Form of Business Ownership

Correct Answer
verified

Correct Answer
verified

Which form of business is the easiest to start?

Correct Answer
verified

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

Correct Answer
verified

A limited-liability company extends the concept of personal-asset protection to small business owners.

Correct Answer
verified

Unlimited liability means

Correct Answer
verified

The courts have held that an oral partnership agreement is not legally binding and,therefore,cannot be enforced.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

How would you go about incorporating a business?

Correct Answer
verified
Most experts recommend that a lawyer be ...
View Answer

Bart inherited an interest in an open publicly traded corporation shortly after he graduated from high school.He has now graduated from college and would like to sell his ownership in order to purchase a house.Which of the following best describes the sale process?

Correct Answer
verified

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

Correct Answer
verified
A

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

Correct Answer
verified

With regard to limited-liability companies,which of the following statements is false?

Correct Answer
verified

What are the primary responsibilities of the board of directors? What do corporate officers manage?

Correct Answer
verified
The major responsibilities of the board ...
View Answer

Amanda wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it,and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Amanda?

Correct Answer
verified

A limited-liability company is taxed like a corporation.

Correct Answer
verified

As a limited partner in a construction business,Joe

Correct Answer
verified

Corporate officers are elected by the stockholders.

Correct Answer
verified
False

The top governing body of a corporation is known as the

Correct Answer
verified
E

Exam 4: Choosing a Form of Business Ownership

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which form of business is the easiest to start?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A limited-liability company extends the concept of personal-asset protection to small business owners.

Correct AnswerverifiedShow Answer

Unlimited liability means

Correct AnswerverifiedShow Answer

The courts have held that an oral partnership agreement is not legally binding and,therefore,cannot be enforced.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How would you go about incorporating a business?

Correct AnswerverifiedMost experts recommend that a lawyer be ...View AnswerShow Answer

Bart inherited an interest in an open publicly traded corporation shortly after he graduated from high school.He has now graduated from college and would like to sell his ownership in order to purchase a house.Which of the following best describes the sale process?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

With regard to limited-liability companies,which of the following statements is false?

Correct AnswerverifiedShow Answer

What are the primary responsibilities of the board of directors? What do corporate officers manage?

Correct AnswerverifiedThe major responsibilities of the board ...View AnswerShow Answer

Amanda wants to start a business to sell handmade jewelry.She is very competent at making the jewelry and teaching others to make it,and she has saved a reasonable amount of money to start the business.Who of the following would make the best partner for Amanda?

Correct AnswerverifiedShow Answer

A limited-liability company is taxed like a corporation.

Correct AnswerverifiedShow Answer

As a limited partner in a construction business,Joe

Correct AnswerverifiedShow Answer

Corporate officers are elected by the stockholders.

Correct AnswerverifiedFalse

The top governing body of a corporation is known as the

Correct AnswerverifiedE

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
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Correct Answer
verified
Most experts recommend that a lawyer be ...
View Answer

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
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Correct Answer
verified

Correct Answer
verified
The major responsibilities of the board ...
View Answer

Correct Answer
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False

Correct Answer
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E