Business Structures

How do corporations raise money and resources to expand? Check all that apply. They request a bank loan. They save business profits. They cash in dividends. They agree to sell stocks. They issue bonds.

1,4,5

Which are examples of sole proprietorships? Check all that apply. lawyers working for a corporation doctors in a partnership independent workers franchise restaurants in a partnership tax preparer working his own business freelance writers

3,5,6

Franchises are attractive to business owners because they have a proven business model. they are typically inexpensive to buy. they get to keep all profits. they come with very little risk.

a

Entrepreneurs who want to open a franchise buys the rights from the parent company and creates his or her own rules. buy the rights from the parent company and invest in a location approved by the parent company. invest in a location and create a business model for the franchise. invest in a location and develop a trademark for the franchise.

b

The most common business organizations in the United States are partnerships. sole proprietorships. corporations. franchises.

b

Which document determines the number of shares a company can sell? a stock prospectus an annual bill of rights a corporate charter an annual report

c

A disadvantage of forming a partnership is that owners can find it tougher to start and stop a business. can find it more difficult to get a bank loan. are only responsible for their own finances. are fully responsible for their partners' losses.

d

Which can be considered disadvantages of sole proprietorships and partnerships? Partnerships require many people to write a charter, while sole proprietorships require one person to write a charter. Sole proprietorships require one person to know complicated tax laws, while partnerships require many people to know the rules. Partnerships require one person to do many things, while sole proprietorships require many people to weigh in on decisions. Sole proprietorships require one person to do many things, while partnerships require many people to weigh in on decisions.

d

Which best describes the difference between preferred and common stocks? Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights. Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights. Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends. Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.

not: c

People who buy stock in a company are known as .

shareholders