BUS100- Chapter 6 Quiz

Describe at least one advantage and one disadvantage of franchising for the franchisor and at least one advantage and disadvantage of franchising for the franchisee.

Advantages -Less risk -Training and support -Brand recognition -Easier access to funding Disadvantages -Costs -Lack of control -Negative halo effect -Growth challenges

Which of the following is one of the reasons why many people prefer a sole proprietorship?

Pride of ownership

Mention the key advantages and limitations of nonprofit corporations.

Key Advantages -Earnings are exempt from federal and state income taxes -Members and directors have limited liability -Individuals who contribute money or property to the nonprofit can take a tax deduction Limitations -Cannot have stockholders -Cannot distribute dividends to members -Cannot contribute funds to a political campaign -Must keep accurate records and file paperwork to document tax-exempt status

A corporation can be a partner in a partnership.

True

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

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

IFGI Life Insurance, an insurance company, is one of the stockholders of a pharmaceutical company. Given this information, IFGI Life Insurance is most likely a(n) _____.

institutional investor

Since sole proprietorships are extensions of their owners, they:

lack permanence.

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 partnership

The earnings of not-for-profit corporations are exempt from federal and state income taxes.

true