Eco Test- Ch 8

Which of the following is NOT a common reason for a business combination

A business wants to change its name

Which of the following is an example of a merger

A company combines with a company that supplies it with raw materials

Why is it easier for a partnership to borrow money and to hold good employees than it is for a sole proprietorship to do so?

A partnership has more personal stability and access to more money

Corporations raise large sums of money by

All of the answers

A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area is called a

Business franchise

Which type of business organization faces the most government regulation

Corporation

Which type of business organization faces double taxation?

Corporations

Which of the following is a noncast charge?

Depreciation

What is a major reason for conglomerate mergers

Diversification

A nonprofit organization like Northwest Assistance Ministries has limited life

False

Corporate bonds pay dividends

False

If a corporation goes out of business, common stockholders get their investment back before preferred stockholders do

False

Preferred stockholders have the right to vote for nominees to the board of directors of corporations

False

The most common form of business organization is the corporation

False

The owner of a bond owns a portion of the corporation that issued it

False

In a retail business, the stock held in reserve is called

Inventory

Which of the following is an advantage of a sole proprietorship?

It is the least-regulated form of business organization

Liability is the

Legal obligation to pay debts

All of the following are true of multinational corporations except

Multinationals are a type of business organization that has no weaknesses

If a sole proprietorship fails, the owner of the business

Must pay all the business debts

A business organization owned by two or more persons who agree on a specific division of responsibilities is called a

Partnership

The most important decisions in a corporation are made by

The board of directors

All of the following are disadvantages of a franchise business EXCEPT

The parent company's guidance on running the business

The most common form of business organzation is

The sole proprietorship

What does the limited liability of the owners of stock in a case corporation mean?

The stockholders of a corporation can lose only what they have invested in the corporation

A bond is a certificate issued by a corporation promising to repay the amount it has borrowed plus interest at a specified time in the futre

True

A company paid health plan would be an example of a fringe benefit

True

A nonprofit organization like the YMCA enjoys limited liability

True

Dividends represent a portion of corporate profits

True

The combination of two or more firms involved in different stages of producing the same good or service is called

Vertical merger

What is a fringe benefit?

a payment other than wages or salaries

In a limited liability partnership, all partners

are limited from personal liability in certain situatons

A major disadvantage of the sole proprietorship is that

banks are often unwilling to lend money to the business

The authorization to start a business issued by the local government is

business license

A company with four or more businesses that make unrelated products is called a

conglomerate

Most large businesses are

corporations

A business fails and the owners lose their investment in the company, along with their homes, automobiles, and other personal property. The owners are

general partners in a general partnership

A venture capitalist's main goals is usually to

get a good return on an invenstment

What are assets?

money and other valuables

A large corporation that produces and sells its goods and services throughout the world is called a

multinational corporation

The function of a retail or purchasing cooperative business or co-op is to

obtain lower prices for members

A common factor in all nonprofit businesses is that they

pay no income tax

What is the main purpose of incubators?

providing entrepreneurs with training to be successful

The share of earnings that a business owner pays for the right to be part of a certain business are

royalties

The Securities and Exchange Commission supervises and regulates the

sale of corporate stock to the public

A credit union is an example of a

service cooperative

In return for a fee to a franchiser, a business owner receives the right

to sell the franchiser's goods and services

A business's net income is defined as

total income after expenses

A partnership is a business organization owned by

two or more individuals

All of the following are major advantages of a sole proprietorship except

unlimited personal liability

What is the term for the joining of two or more firms involved in different stages of producing the same good or service?

vertical merger

a joining of two or more businesses that are involved in different stages of producing the same good or service is called which of the following

vertical merger

Although a sole proprietorship is the least-regulated, which type of regulation do these business owners face that may keep them from operating out of their homes?

zoning laws

Museums, public schools, and YMCAs are all

ecempt from paying income taxes