CHAPTER 5 QUESTIONS

A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called a(n

S

A franchise owner will experience the coattail effect when:

a fellow franchisee does something that has an impact on growth and profitability

One company's purchase of the property and obligations of another company is a(n)

acquisition

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors:

are not involved in daily operations

A corporation is formally formed with

articles of incorporation and bylaws

Franchises are attractive to minority populations because:

come offer financial support to aspiring business owners they provide personal ownership of a business

An S corporation has the liability protections of a corporation but is taxed:

like a partnership or sole proprietorship

The result of two firms joining to form one is called a(n):

merger

Termination of a partnership is difficult without a(n) ______ agreement.

partnership agreement

The easiest type of business entity to form is a

sole proprietorship

A business that is owned and managed by one person is a(n)

sole proprietorships

Studies have indicated that partnerships are four times more likely to succeed than:

sole proprietorships

Many minority business owners prefer a(n) _________because it offers business connections and support.

Fanchise

LLC's are considered to have operational flexibility because while they must submit articles of organization, they are not required to:

keep minutes or hold annual meetings

One of the most notable advantages of an online franchise is

there is no brick-and-mortar real estate cost.

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called

unlimited liability

True or false: Partnerships are less likely to survive than sole proprietorships.

false

True or false: The main advantage of a sole proprietorship is ease of start up.

true

A state-chartered legal entity with authority to act and have liability separate from its owners is a:

Corporation

disadvantages of incorporating

Extensive paperwork Double Taxation Initial Cost

The right to use a specific business' name and sell its products or services in a given territory is a(n)

Franchise Agreemnet

One of the most important advantages of the sole proprietor form of ownership is that a business owner:

finds it easier to start and end a business

One of the most important advantages of the sole proprietor form of ownership is that a business owner

finds it easier to start and end the business

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a:

general partnership

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as

the coattail effect

While your are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

true

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as

unlimited liability