Question 1

The person who assumes full co-ownership of a partnership, including unlimited liability, is a

Accepted Answer

A)  sole proprietor.
B)  stockholder.
C)  shareholder.
D)  limited partner.
E)  general partner.F) C) and E)
G) B) and C)

Question 2

Common stock carries all the following rights except the right to

Accepted Answer

A)  vote on changes to the corporate charter.
B)  share in profits.
C)  receive information about the corporation.
D)  receive part of the profit before other classes of stock.
E)  attend the annual stockholders' meeting.F) B) and D)
G) A) and B)

Question 3

Wade Comer and Tom Busby decide to start a partnership and offer accounting services. Which of the following is the best way to start this partnership?

Accepted Answer

A)  They should orally discuss how they want the partnership to work and who is responsible for certain areas.
B)  They should determine the exact way the business should be run and have a witness listen to their oral discussion.
C)  They should let a third party, such as a consultant or an attorney, draft whatever agreement the consultant or attorney thinks is appropriate.
D)  They should carefully draft an articles of partnership together, outlining each partner's responsibilities and other important information.
E)  With the help of an attorney, they should draft a partnership agreement that states each partner's duties and investments.F) A) and B)
G) C) and E)

Question 4

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) B) and E)
G) A) and E)

Question 5

When Alyssa 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) All of the above
G) A) and D)

Question 6

The form of business organization that accounts for 82 percent of all sales revenues in the United States is the

Accepted Answer

A)  sole proprietorship.
B)  partnership.
C)  corporation.
D)  joint venture.
E)  syndicate.F) C) and D)
G) B) and C)

Question 7

Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

Accepted Answer

A)  corporation.
B)  partnership.
C)  sole proprietorship.
D)  limited partnership.
E)  limited-liability corporation.F) A) and B)
G) C) and D)

Question 8

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

Accepted Answer

A)  authority.
B)  merger.
C)  quasi-government corporation.
D)  S-corporation.
E)  not-for-profit corporation.F) B) and E)
G) A) and B)

Question 9

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid double taxation. Which type of business ownership would you recommend?

Accepted Answer

A)  Regular corporation
B)  S-corporation
C)  Cooperative
D)  Limited-liability company
E)  Limited partnershipF) A) and E)
G) A) and B)

Question 10

Corporate officers are

Accepted Answer

A)  listed in the corporate charter.
B)  elected by stockholders.
C)  appointed by the board of directors.
D)  appointed by management.
E)  elected by incorporators.F) A) and E)
G) C) and E)

Question 11

Lisa and John own a partnership that provides rental equipment for parties and special occasions. Which of the following is true about the way Lisa and John would handle company profits?

Accepted Answer

A)  Automatically split the profits, with 50 percent for Lisa and 50 percent for John.
B)  They would do nothing because partnerships require that profits remain in the business.
C)  Divide the profits according to each person's investment in the business.
D)  Distribute the profits according to the terms of the partnership agreement.
E)  Split the profits according to how many hours each person worked.F) A) and B)
G) A) and C)

Question 12

Twenty-five young investors decided that they want to start a dating service; however, they do not want to be held personally liable for losses of the company. They want to avoid double taxation. Which type of business organization would best fit the needs of these individuals?

Accepted Answer

A)  Corporation
B)  Closed corporation
C)  Partnership
D)  S-corporation
E)  Limited cooperativeF) B) and E)
G) A) and E)

Question 13

Wade serves on Foot Locker's board of directors. How did Wade get this position?

Accepted Answer

A)  He volunteered for the assignment.
B)  He was appointed by the chief executive officer.
C)  He was assigned by the Federal Trade Commission.
D)  Through default as the largest stockholder, Wade got the position.
E)  He was elected by the company's stockholders.F) None of the above
G) A) and B)

Question 14

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 15

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

Accepted Answer

A)  corporation, sole proprietorship, partnership.
B)  corporation, partnership, sole proprietorship.
C)  partnership, corporation, sole proprietorship.
D)  partnership, sole proprietorship, partnership.
E)  sole proprietorship, partnership, corporation.F) A) and B)
G) A) and C)

Question 16

Experts predict that mergers in the first part of the twenty-first century will be the result of cash-rich companies looking to acquire businesses that will enhance their position in the marketplace.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  open corporation.
B)  public corporation.
C)  syndicate.
D)  cooperative.
E)  closed corporation.F) B) and E)
G) C) and E)

Question 18

Walmart is incorporated in Arkansas, the state of its origins and headquarters. Within Arkansas, Walmart is classified as a(n)  ____ corporation.

Accepted Answer

A)  privately-held
B)  foreign
C)  alien
D)  domestic
E)  hometownF) D) and E)
G) All of the above

Question 19

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

Accepted Answer

A)  acquisition.
B)  hostile takeover.
C)  horizontal merger.
D)  conglomerate merger.
E)  joint venture.F) A) and B)
G) All of the above

Question 20

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

Accepted Answer

A)  co-owners' agreement
B)  charter
C)  will
D)  articles of partnership
E)  formation contractF) All of the above
G) A) and E)

Exam 4: Choosing a Form of Business Ownership

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

Correct AnswerverifiedShow Answer

Experts predict that mergers in the first part of the twenty-first century will be the result of cash-rich companies looking to acquire businesses that will enhance their position in the marketplace.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The person who assumes full co-ownership of a partnership, including unlimited liability, is a

Correct AnswerverifiedShow Answer

Wade serves on Foot Locker's board of directors. How did Wade get this position?

Correct AnswerverifiedShow Answer

Corporate officers are

Correct AnswerverifiedShow Answer

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid double taxation. Which type of business ownership would you recommend?

Correct AnswerverifiedShow Answer

Unlimited liability means

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Wade Comer and Tom Busby decide to start a partnership and offer accounting services. Which of the following is the best way to start this partnership?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Walmart is incorporated in Arkansas, the state of its origins and headquarters. Within Arkansas, Walmart is classified as a(n) ____ corporation.

Correct AnswerverifiedShow Answer

The form of business organization that accounts for 82 percent of all sales revenues in the United States is the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Common stock carries all the following rights except the right to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

Correct AnswerverifiedShow Answer

Twenty-five young investors decided that they want to start a dating service; however, they do not want to be held personally liable for losses of the company. They want to avoid double taxation. Which type of business organization would best fit the needs of these individuals?

Correct AnswerverifiedShow Answer

Lisa and John own a partnership that provides rental equipment for parties and special occasions. Which of the following is true about the way Lisa and John would handle company profits?

Correct AnswerverifiedShow Answer

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