Business Dynamics - Chapter 6: Business Formation

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

The negative halo effect

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

a single owner actively manages the company

A large film production company merges with a popular sound processing studio, resulting in the formation of a new company out of the two previously independent firms. This is most likely an example of a ...

vertical merger

Which of the following is a difference between a C corporation and an S corporation?

A C corporation is double taxed, whereas an S corporation is taxed as a partnership.

Which of the following is a difference between limited partnerships and limited liability partnerships?

In limited liability partnerships, all the partners actively participate in the management of the company, whereas in limited partnerships, only the general partners actively manage the company.

A(n)__________is a combination of two firms that are in unrelated industries.

conglomerate merger

A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

distributorship

An advantage of franchising is:

easier access to funding.

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

limited liability corporation

A corporation is a separate entity from its owners where the:

owners are not personally responsible for the obligations of the company.

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

partnership

A(n) _____ is a corporation that has limited number of owners that operates under simpler, less formal rules than a C corporation.

statutory close corporation

In the context of an acquisition, the firm that is purchased by another firm is called the ...

target firm