Business Principles - Chapter 5

Select all the advantages of the partnership form of business

1) pooled skills 2) more financial resources 3) longer survival

In franchise, having management support from the franchisor is a(n) _____ whereas the coattail is effect is considered a ______

advantage, disadvantage

The fastest way for a foreign firm to enter the U.S. market may be to _____ to operations of a U.S. company

buy

Partners can not only bring money into the business but also _____ which allows the business to borrow additional resources

credit

The ______ of a member can cause LLCs to dissolve automatically

death

When the corporation pays a tax on its profits and individual stockholders each pay tax on dividends distributed by the corporation it is called:

double taxation

Except for states like Delaware and Nevada, _____ creates a disadvantage to incorporating

extensive paperwork

Having more _______ resources is an advantage of partnership so there is more money and credit available to the business

financial

The paperwork needed to start a corporation is extensive but a corporation must also keep detailed _____ records documenting all financial transactions in detail

financial

The owners of a corporate business are those individuals that own _____

stock

a corporation is formally formed with

articles of incorporation and bylaws

Select the reasons why size is an advantage of the corporation

1) acquire the latest equipment 2) build modern facilities 3) diversify through acquisition 4) attract expert for hire

Select the reasons a business might change ownership form

1) adding a partner to the firm 2) seeking limited liability 3) dropping a partner from the firm

Among the questions to ask before franchising internationally is:

1) can you support global partners? 2) will you intellectual property be protected? 3) are you able to adapt to franchise regulations in other countries?

If the owner of a sole proprietorship wants to incorporate, the following disadvantages must be considered:

1) cost of incorporation 2) double taxation

The failure rate for franchises is lower than other business ventures because of:

1) financial advice and assistance 2) nationally recognized names

What are the advantages of the LLC form of organization?

1) flexible ownership rules 2) limited liability 3) choice of taxation

When analyzing which type of merger a firm uses to grow we can classify them by whether they are:

1) in the same industry 2) different industries 3) different levels of an industry

Select ways an LLP deals with liability for partners

1) partners are not held liable for each other's actions 2) when a partner is sued individually for malpractice, it doe snot affect other partners. 3) liability is limited to losing only personal assets directly related to personal acts.

A corporation is formally formed with:

articles of incorporation and bylaws

In addition to the articles of incorporation, a corporation has _____ which describes how the firms is to be operated from both legal and managerial points of view

bylaws

When the actions of other franchises have an impact on your future growth and profitability, this is an example of _____ effects

coattail

Though start-up costs are higher in international franchising, there is less_____ because thee are not as many other companies in the franchisor's industries

competition

The higher costs of starting up an international franchise are usually counterbalanced by an expanding _____ base and less competition

consumer

Being owned by those using the products of a firm rather than simply being a shareholder is what makes a ______ unique

cooperative

Some people dislike the notion of owners, managers, workers, and buyers being separate individuals with separate goals. To meet their needs, they have formed:

cooperatives

This is considered an advantage of corporations

ease of transfer of ownership

Franchise are important to the _____ because of the number of new businesses started and jobs created.

economy

An entrepreneur would join a _______ if they are uncomfortable starting their business from scratch.

franchise

Franchising has grown very quickly, and many times there is little information on the many new franchises available. Prospective franchisees must concern themselves about _____ franchisors

fraudulent

______ partners participate in operating the business while limited partners do not

general

Double taxation of a corporation occurs because the company pays tax on_____ and then individual shareholders pay income tax on the dividends they receive

income

An advantage of cooperatives is that they:

increase the economic power of members.

A limited liability partnership limits the liability of limited partners to their:

initial investment

Although members may choose to reconstitute an LLC after it dissolves, limited ___ ____ is considered a disadvantage of this form of business

life span

In evaluating the market for a franchise a study must made to determine if your product has a ______ in your territory at the _____ you want to charge

market, price

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

markets

Some co-ops ask _____ to work for a number of hours a month as a part of their membership duties

members

_____ do not pay taxes when submitting the organization's tax return to the Internal Revenue Service.

partners

A LLC has the choice of taxation and can be taxed as a(n) ____ or as a corporation

partnership

All of the following are advantages of partnerships except:

partnerships have unlimited liabilities for the debts incurred by the business.

a ____ _____ means that a corporation's existence will not terminate if one or more owners die

perpetual life

The limited liability partnership ensure that the limited partner's _____ assets are not at risk.

personal

Limited liability is considered an advantage of forming an LLC because:

personal assets are protected.

Corporations shield their stockholders from unlimited liability and allow them to share in the:

profits generated by the firm

Flexible distribution of profits and losses is considered an advantage of an LLC because:

profits/losses do not have to be distributed in proportion to the money each person invests

___________ of company profits is considered an advantage of a sole proprietorship

retention

Sole proprietors have pride of ownership in their business and they deserve all the credit for taking ______

risks

Unlike an LLC, conventional and S corporations' stockholders can ____ their shares as they wish

sell

Corporations can rase large amount of money, take advantage of economies o scale and hire experts in all areas of operation. This can be summarized as _____ advantage

size

Which statements are accurate as related to corporate taxation?

stockholders pay income tax on the dividends they receive double taxation occurs

Burger King and Gymboree were publicly traded companies until a group of stock holders regained all the firms' stock in order to regain control. This is referred to as _____ a firm______

taking, private

Perpetual life for a corporation means that the death of one owner does not _____ the corporation.

terminate

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

unlimited liability

Funds available for a sole proprietorship are limited to:

what the owner can provide