Chapter 4 Business Quiz

Articles of incorporation do NOT include:

a list of all stockholders' names

Double taxation in a corporation means:

earnings of the corporation and dividends of the shareholders both are taxed

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As a sole proprietor, McAnem:

found the business to be easy and inexpensive to form

Croutakie seemed like a great idea. Chef Leo Nyami and Sara Rice decided to take advantage of the popularity of shitake mushrooms and create some shitake mushrooms products that could be sold to restaurant patrons and other gourmets through their new company. Nyami and Rice have recently abandoned their business because they could not pay its outstanding business debts. Since Nyami and Rice are both liable for the debts, their business was a(n):

general partnership

The growing popularity of bread machines has become a new business opportunity for Shelly Clemins and Jan Schoenbarr. The women make and sell bread machine covers and fabric gift bags to hold the bread loaves made in the machines. The women share the responsibilities of running the business (called Bread & Butter) as well as its profits equally. Bread & Butter would be an example of a(n):

general partnership

Paul Hyatt owns and operates DeepClean, a Florida-based company that cleans up mold and mildew in homes and businesses. As the sole proprietor of the business, he has unlimited liability, which means:

he is fully liable for all business debts

The franchisor generally does NOT provide the franchisee with:

help in the employee section

Hard Rock Cafe International and Sol Melia Hotels and Resorts have allied to develop a multimillion-dollar hotel. This relationship is a _____ because their alliance will end as soon as the hotel is completed.

joint venture

Why do most large companies have outside directors on their boards

to bring a fresh view to all of the corporations activities

_____ are organizations formed by individuals or businesses with similar interests to achieve greater economies of scale and economic power through collective ownership.

Cooperatives

Which of the following statements about the taxation of partnerships is true?

Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns.

Which of the following statements about limited liability companies (LLCs) is true? LLCs offer their owners the option of being taxed as either a partnership or a corporation. LLCs are like S corporations in that they appeal to small businesses. LLCs are legal in all states in the U.S. LLCs are not corporations.

All of the above statements about LLCs are true.

Three Sisters Specialty Foods, owned by Judith Coker, Millie Humphreys, and Jade Watson, sells eggless cake mixes for people on a restricted diet. Coker recently purchased an industrial grade mixer without conferring with her sisters who were upset when they learned that they were all three liable for the payments on the mixer. Three Sisters is an example of a:

general partnership

North American Van Lines and Allied Van Lines combined in a _____ merger that will create the world's largest moving company. Prior to the merger, North American was the leading company in moving high-end merchandise such as computer and hospital equipment, while Allied specialized in households.

horizontal

A corporation: can own property is subject to the laws of the state in which it was formed can sue and be sued is a taxable entity

is accurately described by all of the above

Jayson Tully is contemplating the purchase of a Popeye's Chicken franchise. Tully has made a list of the disadvantages that he assumes he will face as a new business owner. Which of the following is actually an advantage?

assistance in building plans

Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:

business dies with her

The two types of cooperatives are

buyer and seller

Which of the following provides the legal and managerial guidelines for operating the firm?

bylaws

There are over 1100 Corner Store that market candy. When Valero Energy Corp. purchased the chain of retail stores, it was an example of a ______merger

conglomerate

Which of the following is a disadvantage of sole proprietor ownership?

difficulty in raising capital

An S corporation:

does not make the owners of the corporation personally liable for its debts

The combination of two companies that join to form one company is called a:

merger

Ease of formation, flexibility, and diversity of management are advantages of the ______ form of the business ownership

partnership

an S corporation

reduce tax burdens

The first step to incorporating a company is to:

select the company's name

Aaron Medford has invested $600 in the corporate stock of a manufacturer of offshore oil drilling equipment. If the company goes bankrupt, the most Medford could lose would be:

600$

_____ are corporate takeovers financed by large amounts of borrowed money

leveraged buyouts

Fred Pittman has invested $10,000 in his son's motorcycle repair shop, but he takes no part in its management. Pittman is a(n):

limited partner

The merger of McKesson, the leading US drug wholesaler, and HBOC, a producer of health-care inventory software, is an example of a ______ meger

vertical