Chapter 6 BUSI 1301

A(n) _____ is a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatment.

limited liability company

Ronald, Jamie, Ben, and Joseph are colleagues who want to start a company of their own. All of them want to be actively involved in managing the business. However, they do not want any personal liability for any debts incurred by the company. In this scenario, they should most likely get involved in a _____.

limited liability partnership

A(n) _____ is a voluntary agreement under which two or more people act as co-owners of a business for profit.

partnership

A(n) _____ can operate under simpler arrangements than conventional corporations.

statutory close corporation

Carla and Liang both have shares in HD&Z Corporation, a C corporation that offers limited liability to all its owners. In this context, Carla and Liang are the _____ of HD&Z Corporation.

stockholders

An advantage of franchising is the:

training and support provided by the franchisor.

Which of the following is an example of an institutional investor?

A mutual fund

Which of the following is an issue associated with general partnerships?

Difficulty faced by a partner when withdrawing from the company

Which of the following statements is true of the formation of general partnerships?

Expert legal assistance can be acquired when drawing up a partnership agreement.

A(n) _____ is a combination of two firms that are in unrelated industries.

conglomerate merger

In a sole proprietorship, any debts the company incurs are:

considered to be the owner's personal liabilities.

The basic rules governing how a corporation is organized and how it conducts its business are known as _____.

corporate bylaws

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 _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

distributorship

Samuel and Dexter start a logistics company together. Both of them have an equal right to participate in the company's management and share in the company's profits. In this scenario, Samuel and Dexter most likely _____.

have a general partnership

Unlike a sole proprietorship, a corporation:

is considered to be a legal entity that is separate and distinct from its owners.

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

It is by far the most common type of business organization in the United States.

Which of the following is one of the reasons why many people prefer a sole proprietorship?

Pride of ownership

Which of the following is a disadvantage of franchising?

The franchise agreement usually requires the franchisee to follow the franchisor's procedures to the letter.