Chapter 4 Quiz

Kayla Langton is considering the purchase of a Bonus Building Care franchise. Langton is likely to get assistance from the commercial cleaning franchisor in which of the following areas?

all of these

_____ are corporate takeovers financed by large amounts of borrowed money.

Leveraged buyouts

There are over 1,100 Corner Stores that market candy. When Valero Energy Corp. purchased the chain of retail stores, it was an example of a _____ merger.

conglomerate

U.S. Lumber Company's purchase of EnviroPlastics, a manufacturer of plastic cutlery, is an example of a _____ merger.

conglomerate

A group of cotton growers in North Georgia and North Alabama pooled their resources to build a cotton gin and storage area for the ginned cotton. They marketed their cotton to textile mills under one label. This collective ownership organization is a:

cooperative

_____ are organizations formed by individuals or businesses with similar interests to achieve greater economies of scale and economic power through collective ownership.

cooperatives

Which of the following is an example of a disadvantage associated with a partnership?

unlimited liability

The franchise agreement:

is the contract that details the terms of the franchise

Tonya Thomas is tired of working for other people. She wants to start her own administrative services businesses and control her own work schedule. She wants to have sole responsibility for all business decisions. Thomas should form a(n):

Sole proprietorship

The development of new drugs is very expensive. For this reason Genentech, a large biotechnical company, has entered into a _____ with Swiss-owned Roche to develop a vaccine for tuberculosis. When the vaccine is developed or when the two biotechnical companies determine the vaccine cannot be developed using their current methodology, this relationship will dissolve.

joint venture

Thom Georges wants to open a store where he sells nothing but antique architectural features that he can salvage from old houses being torn down to make way for progress. He has an eye for the kind of doors, windows, mantels, and so forth that decorators want, but he does not have all the funding he needs to get started. He has invited his parents to invest $40,000 in the enterprise. He has told them that if they do invest, they would have liabilities in the firm equal to but no greater than their investment. Georges is trying to get them to form a _____ with him.

limited partnership

A corporation's board of directors:

sets major corporate goals and policies

The form of business ownership that has the most difficulty in raising capital is the:

sole proprietorship

The most common form of business organization is the:

sole proprietorship

What type of business organization generates the most total sales?

Corporation

A type of business entity that provides liability protection but is taxed like a partnership is a:

S corporation

To avoid double taxation, a new entrepreneur may elect to organize as a(n):

S corporation

Jack Smith and four other people own Persimmon Hill Farm, an agric-entertainment farm which provides corn mazes, bonfires, hay rides, and food treats to paying visitors. All of the owners have limited financial risk. Persimmon Hill Farm is a(n):

corporation

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As a sole proprietor, McAnem:

found the business to be easy and inexpensive to form

Three Sisters Specialty Foods, owned by Judith Coker, Millie Humphreys, and Jade Watson, sells eggless cake mixes for people on a restricted diet. Coker recently purchased an industrial grade mixer without conferring with her sisters who were upset when they learned that they were all three liable for the payments on the mixer. Three Sisters is an example of a:

general partnership