ISOM Chapter 4 Quiz

Which of the following statements about incorporation is true?

Articles of incorporation may vary slightly from state to state.

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 statements about a general partnership is true?

Partners in a general partnership co-own the company's assets.

Clarence Danvers is buying a Cinnabon franchise at the airport in Tulsa. Danvers knows that he will get all of the following benefits EXCEPT: Group of answer choices

assistance in personal income tax preparation

The C Corporation is another term for:

the conventional form of corporation

Rebecca Siddoway own and operate Country Candies. Siddoway specializes in making rich, creamy toffees that she packages in attractive gift boxes and sells through the mail. What would her first step be if she decides to incorporate her business to make it easier to find investors?

to write the articles of incorporation

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

Leveraged buyouts

Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?

A conglomerate merger is done to reduce risk.

Fairmount Food Group purchased Swissrose International Inc., market of several brands of specialty and food service cheese from ConAgra. The _____ will make Fairmount the largest U.S. importer and marketer of specialty and deli-style cheese.

Acquisition

Before selling stock to the public, a corporation must register with the:

Securities and Exchange Commission

IBM purchased MRO Software Inc. for $740 million. MRO was a niche provider of software and services to help customers including nuclear power plants and oil companies. IBM, plans to fold MRO into its software unit. This is an example of a(n): Group of answer choices

acquisition

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. The mushrooms are expensive, and there were other unexpected financial problems, so Nyami and Rice asked Bill Ng to become a limited partner. This means that Ng:

agrees not to participate in day-to-day management of the firm

Which of the following describes a disadvantage associated with a corporation?

all of the above

Jayson Tully is contemplating the purchase of a Popeye's Chicken franchise. Tully has made a list of the disadvantages that he assumes he will face as a new business owner. Which of the following is actually an advantage?

assistance in building plans

Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:

business dies with her

What type of business organization generates the most total sales?

corporation

An S corporation:

does not make the owners of the corporation personally liable for its debts

The purchaser of a franchise is called the:

franchisee

The headquarters, seller, and supplier of the service or method of operation of a franchise is called the:

franchisor

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

A firm's stockholders have the right to do all of the following EXCEPT:

get discounts on the company's product or service

The franchisor generally does NOT provide the franchisee with:

helps in employee selection

International Association of Food Industry Suppliers has completed its _____ merger with the Food Processing Machinery Association. The action represents a coming together of equals in which both boards and staffs are committed to creating a new association that is stronger and better equipped to serve its members' growing needs to more effectively compete in their marketplaces. Group of answer choices

horizontal

North American Van Lines and Allied Van Lines combined in a _____ merger that will create the world's largest moving company. Prior to the merger, North American was the leading company in moving high-end merchandise such as computer and hospital equipment, while Allied specialized in households. Group of answer choices

horizontal

The franchise agreement:

is the contract that details the terms of the franchise

A _____ is when two or more companies form a special entity to undertake a specific project, usually for a specific period of time.

joint venture

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

Fred Pittman has invested $10,000 in his son's motorcycle repair shop, but he takes no part in its management. Pittman is a(n):

limited partner

Karl Metzger plans to invest $5,000 in a partnership with his brother to produce and sell handcrafted violins, zithers, and other string instruments. Metzger does not plan to work in the business and wants no more liability than his investment. He should be a: Group of answer choices

limited partner

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

The combination of two companies that join to form one company is called a: Group of answer choices

merger

Partnership agreements generally specify all of following EXCEPT:

methods of taxation of each partner

The fact that a corporation has limited liability means:

owners' liabilities are limited to the amount invested

A disadvantage of franchising to the franchisee is:

restricted opporating freedom

Which of the following is a disadvantage for the fast-food franchisee?

royalty fees

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

sole proprietorship

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

A term that means that business damages and/or debts can also be attached to the personal assets of the owners is ______ liability.

unlimited

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

unlimited liability

The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a(n) _____ merger.

vertical