chapter 8 business

A consists of the terms and conditions associated with purchasing the franchise. franchise fee partnership agreement franchise description franchise agreement

franchise agreement

true or false When two companies in the same industry combine the merger or acquisition is a vertical one.

false

true or false In a sole proprietorship, the owner alone bears the burden of any losses or liabilities incurred by the business.

true

true or false Lawsuits directed at a sole proprietor's business can also be directed toward the sole proprietor's personal assets.

true

A merger occurs when one company takes over another company, usually by purchasing it from its owners. two companies enter into an agreement to operate as a new company. the owner of a business allows the someone else the right to run and operate their business for a fee. a company operates under a name distinct from the names of its owners.

two companies enter into an agreement to operate as a new company.

General partners are subject to liability. partial retroactive limited unlimited

unlimited

General partners are subject to_______ liability. unlimited retroactive limited partial

unlimited

Which one of the following statements best describes what a dividend is? A dividend is a monetary payment paid by a franchisee to a franchisor. A dividend is an ongoing fee based on the amount of revenue a franchise earns. A dividend is what one company pays to acquire another company. A dividend is a percentage of the profits that is distributed to each owner of a corporation.

A dividend is a percentage of the profits that is distributed to each owner of a corporation.

Which one of the following statements best describes what a royalty is? A royalty is a monetary payment paid by a franchisor to a franchisee. A royalty is what one company pays to acquire another company. A royalty is a percentage of the profits that is distributed to each owner of a corporation. A royalty is an ongoing fee based on the amount of revenue a franchise earns.

A royalty is an ongoing fee based on the amount of revenue a franchise earns.

Which of the following are advantages of sole proprietorships? Check All That Apply Because all earnings are treated as personal income, the only taxes that need to be paid are the individual federal, state and local income taxes. It typically is easy to raise financial resources. The owner has complete decision-making control of the business operations. The sole proprietor keeps all of the profits if the business is successful. The sole proprietor's liability is limited to the amount that they invested in the business.

Because all earnings are treated as personal income, the only taxes that need to be paid are the individual federal, state and local income taxes. The owner has complete decision-making control of the business operations. The sole proprietor keeps all of the profits if the business is successful.

_______must keep detailed financial records and file reports on their business operations and finances with local, state and federal governments Corporations General partnerships Limited partnerships Sole proprietorships

Corporations

Which one of the following statements about the limited partners in a limited partnership is true? Limited partners are involved in the day-to-day decision making of the business. Limited partners can only be partners for a limited period of time. Limited partners have a financial stake in the business. Limited partners are subject to unlimited liability.

Limited partners are involved in the day-to-day decision making of the business.

How does a partnership get the financial resources it needs to fund the start-up expenses and to expand the business when needed The partners pool their financial resources. The partners find venture capitalists who are willing to invest in the company. The partners sell shares of stock. The partners sell shares of ownership to the public.

The partners pool their financial resources.

Which of the following are essential elements of a general partnership? Check All That Apply a joint ownership of the business a sharing of profits or losses an equal right to be involved in the management of the business limited liability the ability to sell shares of ownership

a joint ownership of the business a sharing of profits or losses an equal right to be involved in the management of the business

_______ are mergers or acquisitions where the companies are not in the same industry or do not provide access to customers or supplies. Conglomerates Franchises Limited liability companies Corporations

conglomerates

Which of the following is the most difficult and expensive legal form of business to set up? general partnership corporation limited partnership sole proprietorship

corporation

a ______ is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners. partnership sole proprietorship franchise corporation

corporation

Double taxation means that: l corporations collect taxes on their sales and remit those to state governments, and they must pay corporate taxes on their profits. corporations pay sales taxes on items they purchase, and they must pay corporate taxes on their profits. corporations must pay taxes on their profits, and once shareholders receive their dividends from a corporation, they too must pay taxes on the dividends received. corporations in the United States must pay federal taxes on their profits, and they must also pay state taxes on their profits

corporations must pay taxes on their profits, and once shareholders receive their dividends from a corporation, they too must pay taxes on the dividends received.

An acquisition occurs when two companies enter into an agreement to operate as a new company. when the owner of a business allows the someone else the right to run and operate their business for a fee. one company takes over another company, usually by purchasing it from its owners. when a company operates under a name distinct from the names of its owners.

one company takes over another company, usually by purchasing it from its owners.

A ________ is an owner of a corporation. shareholder stakeholder manager sole proprietor

shareholder

In a one person is responsible for all aspects of a business ranging from accounting and marketing to human resources and production techniques. partnership sole proprietorship corporation franchise

sole proprietorship

true or false More than 70% of all U.S. businesses are sole proprietorships, and they account for most of the sales earned by businesses in the United States.

false

true or false Partnerships are taxed the same way as sole proprietorships.

false

A franchise is an arrangement in which the -the owner of a trademark, a trade name, business process, or a copyright-licenses the to use the trademark, trade name or copyright in the selling of goods and services in a given territory for a monetary payment. franchisee; franchisor franchise manager; franchise licensee franchise manager; franchisee franchisor; franchisee

franchisor; franchisee

When two large companies in the same industry combine, the transaction often requires the approval of the U.S. Justice Department because of concerns about how it will impact the suppliers of the combined companies. how it will impact the profits of the combined companies. how it will impact competition within the industry. how it will impact employees of the combined companies.

how it will impact competition within the industry.

Which of the following are disadvantages of general partnerships? Check All That Apply Forming a general partnership is a difficult way to form a business. General partners are subject to unlimited liability. In addition to federal, state and local income taxes, general partnerships have to pay additional partnership taxes. It can be difficult to end a general partnership There is a risk for disagreements that could complicate business decisions and possibly create ill will among partners.

General partners are subject to unlimited liability. It can be difficult to end a general partnership There is a risk for disagreements that could complicate business decisions and possibly create ill will among partners.

How does a partnership get the financial resources it needs to fund the start-up expenses and to expand the business when needed The partners sell shares of ownership to the public. The partners sell shares of stock. The partners pool their financial resources. The partners find venture capitalists who are willing to invest in the company.

The partners pool their financial resources.

The is the simplest form of business. partnership sole proprietorship limited liability company corporation

sole proprietorship

Which of the following are advantages of franchises? Check All That Apply the ability to work as an independent businessperson while enjoying the advantages of a regional or national organization the franchisee acquires an established brand name the start-up costs are minimal there are few or no rules and regulations on how the franchise will be run training and support to help with production, marketing, accounting, and human resource management

the ability to work as an independent businessperson while enjoying the advantages of a regional or national organization the franchisee acquires an established brand name training and support to help with production, marketing, accounting, and human resource management

true or false Approximately 70% of corporations in the U.S. are classified as C corporations.

false

Which of the following are advantages of corporations? Check All That Apply All income earned by corporations is treated as personal income for tax purposes. Forming a corporation is an easy and inexpensive way to form a business. Owners of a corporation have limited liability. The ability to raise capital is perhaps easiest among the different forms of business. The death of an owner does not end the corporation.

Owners of a corporation have limited liability. The ability to raise capital is perhaps easiest among the different forms of business. The death of an owner does not end the corporation.

Which of the following statements correctly describes a difference between S corporations and C corporations? Forming an S corporation has fewer restrictions than forming a C corporation. Owners of an S corporation have limited liability, while owners of a C corporation are subject to unlimited liability. An S corporation is limited to no more than 100 owners, while a C corporation may have an unlimited number of owners. A C corporation is taxed like a partnership, while an S corporation faces double taxation.

Owners of an S corporation have limited liability, while owners of a C corporation are subject to unlimited liability.