Business chapter 5

Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy. (Fig. 5.4)

1. owner/stockholders elect board of directors 2. Board of directors hire officers of the corporation 3. officers hire managers of the corporation 4. Managers hire employees

What are some of the advantages of a corporation?

Ability to raise more money for investment Limited liability

Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose to form a(n) company.

Blank 1: limited Blank 2: liability

Limited liability, choice of taxation, flexible ownership rules, and operating flexibility are all advantages of a(n) company.

Blank 1: limited Blank 2: liability

Which of these are advantages of a limited liability companies?

Choice of taxation Limited liability Flexible ownership rules

Which are considered disadvantages of incorporating?

Double Taxation Extensive paperwork Initial Cost

True or false: If producers, consumers, or workers with similar needs pool their resources for mutual gain, they have created a franchise.

False

Which of following are true about the advantages and disadvantages of being a franchise owner

Having a nationally recognized name for your business in a franchise can help with marketing and awareness While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch

A company similar to an S corporation but without the special eligibility requirements is an:

LLC

Which is an advantage of the corporate form of business ownership?

Limited liability

Which of the following are true regarding the process of forming a corporation.

The bylaws of the corporation describe how the firm is to be operated The articles of incorporation must be filed in the state in which the company will be incorporated

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 is called a(n):

acquisition

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

acquisition or buyout

A partnership can spell out the requirements of terminating a partnership.

agreement

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

A corporation is formally formed with:

articles of incorporation and bylaws

The actions of a fellow franchisee will affect your franchise. This is known as the .

coattail effect

A business owned and controlled through pooled resources by the people who use it is a(n) ______. Multiple choice question.

cooperative

Selling shares of stock to anyone allows a _________ to raise more money to grow.

corporation

A major disadvantage of the corporate form deals with the tax situation called taxation.

double

A corporation is a legal with authority to act and have liability separate from its owners.

entitiy

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

false

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

An agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n):

franchise

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

franchise

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

franchise

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) partnership.

general

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

general partnership

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of - franchises.

home-based

When a soft drink company and a mineral water company merge and then are able to supply a variety of drinking products they have formed a(n) merger.

horizontal

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n):

horizontal merger

The attributes of a conventional corporation include that:

it is a legal entity corporate liability is separate from owners it is state chartered

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

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

like a partnership or sole proprietorship

An advantage of the corporate form of business is that limited liability allows it to:

limit individual responsibility for losses

A partnership has partners who do not share in operating the business.

limited

The form of business ownership called _______ protects the person's personal assets from the debts of the business.

limited liability

When there is one or more general partners and one or more limited partners, the firm is a(n):

limited partnership

Franchises are expanding internationally to access additional that have new customers and to increase their profit potential.

markets

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

merger

When two firms join together to form one new company, it is called a(n)

merger

Advantages of starting an online franchise are:

no upfront fee may be required online franchisees can compete in world markets franchisees pay only a set monthly fee

An LLC submits a written operating agreement, similar to a(n) agreement, describing how the company is to be operated.

partnership

Limited liability is considered an advantage of forming an LLC because:

personal assets are protected

Home-based franchises have many advantages, such as:

relief from the stress of commuting low overhead expenses

Stockholders are from the managers and employees of the firm because they are not actively involved in the operations of the firm.

separate

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

sole proprietorships

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

sole proprietorship

If you start and manage a landscaping business on your own, you have likely started a:

sole proprietorship

Shareholders are not liable for the debts of a corporation beyond the money they invest in it by buying company

stock or shares

For a business to grow, prosper, and create economic opportunity, many people have to be willing to invest money in it. An advantage of a corporation is its ability to raise money through the sale of .

stock, shares, bonds, equity

Gathering leads on a company website, selling products and keeping up to date on news via email, and chat rooms all serve as examples of using to assist franchisees and customers.

technology

Many brick and mortar franchisees are using ______ to expand their businesses online to lower costs and better meet the needs of their customers.

technology e-commerce websites

Ending a partnership can be difficult because of problems deciding:

the worth of a retiring partner's share when a partner can retire how to distribute assets

Many franchises are expanding internationally because:

there are large new markets available

One of the most notable advantages of an online franchise is

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

Franchises are attractive to minority populations because:

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

The main advantage of a sole proprietorship is ease of start up.

true

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

true

The responsibility of the owner of a sole proprietorship for all of the debts of the business is liability.

unlimited

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

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

The disadvantage of sole proprietorships is that any debts or losses incurred by the business are your debts because you and the business are legally one and you have:

unlimited liability

A merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger.

vertical

When two firms operating in different stages of related businesses join, it is called a(n) merger.

vertical