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
