Chapter 8 BUS 101 Questions

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Which of the following are advantages of sole proprietorships?

- Because all earnings are treated as personal income, the only taxes that need to be paid are the individual federal, state and local income taxes. - The owner has complete decision-making control of the business operations. - The sole proprietor keeps all of the profits if the business is successful.

Which of the following are essential elements of a general partnership?

- a joint ownership of the business - a sharing of profits or losses - an equal right to be involved in the management of the business

Which of the following are advantages of corporations?

- owners of a corporation have limited liability - the ability to raise capital is perhaps the easiest among the different forms of business - death of owner does not end corporation

Which one of the following statements best describes what a dividend is?

A dividend is a percentage of the profits that is distributed to each owner of a corporation.

Which one of the following statements best describes what a royalty is?

A royalty is an ongoing fee based on the amount of revenue a franchise earns.

Which of the following is not a key advantage of a partnership?

All partners enjoy limited liability.

Which of the following is the simplest legal form of business organization?

Sole proprietorship

Why does the government oversee and regulate mergers and acquisitions?

To prevent possible monopolies.

The franchisee ______ a regional, national or globally established brand name.

acquires

A ________ is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners.

corporation

Which of the following is the most difficult and expensive legal form of business to set up?

corporation

a ----------is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners.

corporation

Double taxation means that:

corporations must pay taxes on their profits, and once shareholders receive their dividends from a corporation, they too must pay taxes on the dividends received.

More than 70% of all U.S. businesses are sole proprietorships, and they account for most of the sales earned by businesses in the United States.

false

True or false: An important disadvantage of forming a corporation is the difficulty in raising capital.

false

True or false: Entrepreneurs are people who are unwilling to take risks in the business world.

false

true or false: An advantage associated with a franchise is the low start-up costs and fees.

false

An arrangement in which one party licenses another party to use the trademark, trade name, or copyright in the selling of goods and services in a given territory for monetary payment is called a:

franchise

A franchise is an arrangement in which the ________—the owner of a trademark, a trade name, business process, or a copyright—licenses the ________ to use the trademark, trade name or copyright in the selling of goods and services in a given territory for a monetary payment.

franchisor; franchisee

a ----- partner faces unlimited liability.

general

One of the most important advantages of forming a business as a corporation is:

limited liability

Which one of the following statements about the limited partners in a limited partnership is true?

limited partnerships have a financial stake in the business

A ______ is when two companies combine to create a new company. A ______ is when one company takes over a different company.

merger; acquisition

A limited partner has ______ say in business operations but can only lose ______ assets.

no ; business

How does a partnership get the financial resources it needs to fund the start-up expenses and to expand the business when needed

partners pool their finance resources

S corporations are taxed like a ______ while C corporations face ______.

partnership; double taxation

Benefits of forming a franchise include the following except:

royalty payments

Benefits of forming a franchise include the following :

training and support, managerial instruction, name recognition

Anyone who does business without creating a separate business organization has a sole proprietorship.

true

true or false: Lawsuits directed at a sole proprietor's business can also be directed toward the sole proprietor's personal assets.

true

true or false: Partnerships are taxed the same way as sole proprietorships.

true


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