Busi Princl ch 5

Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy. (Fig. 5.4)

1. Owners/stockholders elect board of directors 2. Board of Directors hire officers of the corporation 3. Officers hire managers of the corporation 4. Managers hire employees

Which of these are advantages of a limited liability companies?

Choice of taxation Flexible ownership rules Limited liability

Partnerships are less likely to survive than sole proprietorships.

False

Which of following are true about the advantages and disadvantages of being a franchise owner

Having a nationally recognized name for your business in a franchise can help with marketing and awareness While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch

Match the role and responsibility to the position in a corporation.

Hire officers- board of directors Supervise employees - managers Perform the daily work to keep the company in business - employees Set corporate objectives and select managers- officers Elect board of directors - stockholders

Which are considered disadvantages of incorporating?

Initial Cost Double Taxation Extensive paperwork

Limited liability, choice of taxation, flexible ownership rules, and operating flexibility are all advantages of a(n) __ __ company.

Limited Liability

Which is an advantage of the corporate form of business ownership?

Limited liability

What are two advantages of the corporate form of business?

Limited liability Ability to raise more money for investment

What can be said about the survival rate of partnerships as compared to sole proprietorships?

Partnerships are more likely to succeed.

he main advantage of a sole proprietorship is ease of start up. True false question.

True

Because of the difficulty in ending a partnership, decisions regarding which two areas should be spelled out in a partnership agreement?

When a partner can retire How to distribute assets

Which of following are true about the advantages and disadvantages of being a franchise owner:

While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch Having a nationally recognized name for your business in a franchise can help with marketing and awareness

A franchise owner will experience the coattail effect when

a fellow franchisee does something that has an impact on growth and profitability

Because owners are only responsible for losses up to the amount they have invested in a corporation, limited liability is considered:

a major advantage

One company's purchase of the property and obligations of another company is a(n

acquisition

One company's purchase of the property and obligations of another is called a(n)

acquisition

______ is where one company purchases the property and obligations of another.

acquisition

A partnership __ can spell out the requirements of terminating a partnership.

agreement

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is

an S corporation

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors

are not involved in daily operations

A corporation is formally formed with

articles of incorporation and bylaws

In addition to the articles of incorporation, a corporation has ___, which describe how the firm is to be operated from both legal and managerial points of view.

bylaws

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n)

cooperative

A state-chartered legal entity with authority to act and have liability separate from its owners is a __

corporation

A major disadvantage of the corporate form deals with the tax situation called __ taxation

double

A corporation is a legal __ with authority to act and have liability separate from its owners

entity

An agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n) ___

franchise

Many minority business owners prefer the ______ form of business ownership because it offers business connections and support.

franchise

xAn agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n)

franchise

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) __ partnership.

general

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of ___-____ franchises.

home based

When a soft drink company and a mineral water company merge and then are able to supply a variety of drinking products they have formed a(n) ___ merger.

horizontal

In terms of operating flexibility, what are three things that LLCs are not required to do?

keep minutes file written resolutions hold annual meetings

LLC's are considered to have operational flexibility because while they must submit articles of organization, they are not required to

keep minutes or hold annual meetings

In a general partnership, all partners share the responsibility for operating the business and assume ___ for the business's debts.

liability

An S corporation has the liability protections of a corporation but is taxed

like a partnership or sole proprietorship

A ___ partnership has partners who do not share in operating the business.

limited

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n) ___ partner

limited

The form of business ownership called Blank______ protects the person's personal assets from the debts of the business. Multiple choice question.

limited liability

Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose to form a(n) ___ ___ company.

limited liability company

Franchises are expanding internationally ____ to access additional that have new customers and to increase their profit potential.

markets or consumers

The result of two firms (usually corporations) combining to form one company is called a __

merger

Limited liability is considered an advantage of forming an LLC because

personal assets are protected

Home-based franchises have many advantages, such as:

relief from the stress of commuting low overhead expenses

A business that is owned and managed by one person is a(n)

sole proprietorship

If you start and manage a landscaping business on your own, you have likely started a

sole proprietorship

Shareholders are not liable for the debts of a corporation beyond the money they invest in it by buying company

stock or shares

For a business to grow, prosper, and create economic opportunity, many people have to be willing to invest money in it. An advantage of a corporation is its ability to raise money through the sale of

stock, bonds, shares, or equity

A corporation can sell ___ to anyone who is interested to raise more money for investment.

stock, shares, bonds, or equity

Gathering leads on a company website, selling products and keeping up to date on news via email, and chat rooms all serve as examples of using __ to assist franchisees and customers.

technology

Many brick and mortar franchisees are using Blank______ to expand their businesses online to lower costs and better meet the needs of their customers.

technology websites

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as

the coattail effect

What two items are delineated in a franchise agreement?

the right to use a specific business' name the right to sell a business' products in a given territory

Many franchises are expanding internationally because

there are large new markets available

What are two reasons that franchises are attractive to minority populations?

they provide personal ownership of a business some offer financial support to aspiring business owners

While your are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

true

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called __ __

unlimited liability

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as

unlimited liability

A merger between a soft drink company and an artificial sweetener maker could be considered a(n) merger.

vertical