Intro to Business- Chapter 6

Unlike a sole proprietorship, a corporation:

is considered to be a legal entity that is separate and distinct from its owners.

Which of the following is a disadvantage of franchising for a franchisee?

The negative halo effect

Which of the following is an issue associated with general partnerships?

Difficulty faced by a partner when withdrawing from the company

Which of the following is an advantage of a C corporation?

Shareholders have limited liability in the firm.

Which of the following statements is true of sole proprietors?

They often must perform tasks in areas where they lack expertise.

A sole proprietorship is a form of business ownership in which:

a single owner actively manages the company.

Fabotels is a hotel aggregator that buys budget hotels that succumb to financial losses and then refurbishes them under the company's brand name. Fabotels recently purchased Ravine Comforts, a small lodge that was running into huge debts. The business deal between Fabotels and Ravine Comforts exemplifies a(n) _____.

acquisition

A textile corporation has two hundred odd stockholders. As it is inconvenient for so many stockholders to manage the company, the stockholders elect a group of individuals to oversee the company's operation and to represent their interests. In this scenario, the stockholders elect a _____.

board of directors

Razak's, a popular chain of fast-food restaurants in the Middle East, plans to expand its market in Asia and signs a contract with an Indian firm. The contract allows the firm to set up restaurants with Razak's name and trademark and use the supplies provided by Razak to make its products. Under the contract, the Indian firm is required to adhere to the same cooking procedures and use the same equipment that are used by other outlets of the restaurant. The given scenario exemplifies a _____.

business format franchise

Conall is appointed by a nine-member board of directors of a real estate company to manage the company on a daily basis. The board ensures that Conall acts in a manner that is consistent with the interests of the stockholders. Given this information, Conall is most likely a _____.

chief executive officer

In a sole proprietorship, any debts the company incurs are:

considered to be the owner's personal liabilities.

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

corporation

John and Lena sign a contract with the owner of Little Fairy, a well-known preschool chain, to start a preschool in their city. They take permission from the owner to use the name and products of Little Fairy. They also furnish their preschool in Little Fairy's trademark style. In this scenario, John and Lena are starting a _____.

franchise

Clara and Sandra collaborate to open a cafe. They come to an arrangement wherein Sandra manages the cafe from Monday to Wednesday, Clara manages it from Thursday to Saturday, and both jointly manage it on Sunday. Both Clara and Sandra share the profits of the business equally while facing a personal liability for any debts or losses that the cafe may incur. In this scenario, Clara and Sandra most likely _____.

have a general partnership

Similar to a corporation, all owners of a limited liability company (LLC):

have restricted debts.

A(n) _____ is a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatment.

limited liability company

FoodieGo, a catering company, is owned by foreign investors and local businessmen. Its earnings are equally divided among its members. It does not face the problem of double taxation as taxes are only levied on the personal income of the members. The owners of FoodieGo do not have personal liability for any debts incurred by the company. In the given scenario, FoodieGo is an example of a _____.

limited liability company

Matisse and Oliver own an antique furniture business. They are in a form of partnership where Oliver is only a dormant partner who contributes financially to the business, whereas Matisse actively manages the business and takes care of imports and exports. Matisse and Oliver are bound by an agreement where, unlike Oliver, Matisse is personally responsible for all the debts incurred by the business. In the given scenario, Matisse and Oliver have a _____.

limited liability partnership

Happta is a corporation with tax-exempt status. It has members but cannot have stockholders. Given this information, Happta is most likely a(n):

not-for-profit corporation

A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.

partnership

An owner of a C corporation is called a _____.

stockholder

An advantage of franchising is the _____

training and support provided by the franchiser.