BUSN 1003 Ch.6 Quiz

Which of the following is a disadvantage of a limited liability company (LLC)?

Complexity of formation

From the franchisee's perspective, which of the following is an advantage offered by franchising?

Easy access to funding

_____ are organizations that pool contributions from investors, clients, or depositors and use these funds to buy stocks and other securities.

Institutional investors

The _____ considers a C corporation to be a separate legal entity and taxes its earnings accordingly.

Internal Revenue Service

Which of the following statements is true of franchises set up across borders?

The limit of a franchisee's right over a territory is decided through a franchise agreement.

Which of the following statements is true of limited liability companies (LLCs)?

There is no separate tax on the earnings of the companies if they choose to be treated as a partnership.

In the context of a limited partnership, which of the following statements is true of general partners?

They have the right to participate fully in managing their partnership.

In the context of corporations, _____ is a corporate restructuring in which one firm buys another.

an acquisition

In the context of business ownership, the document filed with a state government to establish the existence of a new corporation is referred to as the _____.

articles of incorporation

In accordance with corporate bylaws, stockholders elect a _____ and rely on it to oversee the operation of their company and protect their interests.

board of directors

An advantage of a general partnership is that the:

business is taxed as the personal income of its owners.

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

A _____ occurs when a firm transfers total or partial ownership of some of its operations to investors or to another company.

divestiture

An individual who decides to establish a sole proprietorship must realize that he or she would be:

facing unlimited personal liability for the company's debts.

A _____ is a licensing arrangement under which one party allows another party to use its name, trademark, patents, copyrights, business methods, and other property in exchange for monetary payments and other considerations.

franchise

In the context of corporate restructuring, a _____ is defined as a combination of firms in the same industry.

horizontal merger

One of the drawbacks of sole proprietorships is that the owners:

may find it difficult to attract and maintain talented employees.

A _____ refers to a corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.

merger

The _____ is a situation where the behavior of an incompetent or an irresponsible franchisee adversely affects not only the franchise as a whole but also the success of other franchisees.

negative halo effect

The vast majority of limited liability companies (LLCs) elect to be taxed as:

partnerships

In the context of corporate restructuring, a _____ refers to a combination of firms that are at different stages in the production of a good or service.

vertical merger