BUS 110 _ Exam (Ch. 5 & 6)

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

Rank the forms of business ownership based on ease of starting. Put the easiest form at the top. *corporation *sole proprietorship *partnership

1. Sole proprietorship 2. Partnership 3. Corporation

A legal form of business with two or more owners is a(n)

partnership

A corporation is defined as:

a chartered legal entity with authority to act from its owners

The three major forms of business most common in the US are...

corporations Sole proprietorships partnerships

Sole proprietorships far outnumber _____ and ____, but they net far fewer sales and less income.

corporations; partnerships

Among the advantages of farm cooperatives for their members is that they:

do not pay taxes as corporations do increase economic power

A corporation is a legal ______ with authorities to act and have liability separate from its owners.

entity

The three major types of partnerships are:

general, limited, and master limited

Many companies eventually ____ to avoid liability for losses.

incorporate

A limited liability partnership limits the liability of limited partners to their:

initial investment

A master limited partnership looks much like a corporation because it:

is traded on the stock exchange

A sole proprietorship has a limited life span unless:

it is sold to someone else it is taken over by an heir

LLCs do have to submit articles of organization and an operating agreement, but do not have to:

keep minutes hold annual meetings file written resolutions

Bob and Dan are doctors in a medical practice. Dan is being sued for malpractice,but it will not affect Bob's assets because they formed a _________________ partnership.

limited liability

Select those items considered fringe benefits that people working for a company are likely to receive, but a sole proprietor has to develop on his own:

paid sick or vacation leave time a pension plan paid health insurance

An advantage of a sole proprietorship is that the owner:

retains profits

T or F: A disadvantage of a sole proprietorship is limited financial resources.

true

T or F: a business can start in one form of ownership, but does not have to stay in that form.

true

a key disadvantage of operating a sole proprietorship is:

unlimited liability

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n) ______ partner.

limited

The responsibility for a loss only up to the amount invested is ______ liability.

limited

T or F: Being your own boss is a disadvantage of a sole proprietorship.

False

The result of two firms (usually corporations) combining to form one company is called a ________

merger

Select the reasons why size is an advantage of the corporation:

1. diversity through acquisition 2. build modern facilities 3. acquire the latest equipment 4. attract experts for hire

Select the most popular businesses for franchising:

1. gas stations with convenience stores 2. fast food 3. full service

The various responsibilities of each partner, especially any issues involving _____, should be agreed to in discussions and put in writing before agreeing to a partnership..

Money

Which are attributes of a master limited partnership?

Traded on the stock exchange taxed like a partnership acts like a corporation

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n):

cooperative

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n):

horizontal merger

A(n) _______ is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

leveraged buyout.

The ____ limited partnership looks much like a corporation in that it acts like a corporation and is traded on a stock exchange.

master

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

A business that is owned and managed by one person is a(n) ______ ________

sole proprietorship

When you own a sole proprietorship you and the business are considered one, so you have _________ liability for financial obligations such as debt.

unlimited

In a sole proprietorship, debts of the business are considered the responsibility of the owners if the business can't pay. This is referred to as ___________ ________.

unlimited liability

A common characteristic of most entrepreneurs is that they:

accept the risks involved in starting and managing a business

One company's purchase of the property and obligations of another company is a(n) _________

acquisition

The actions of a fellow franchisee will affect your franchise. This is known as the ______ _______

coattail effect

a merger that joins firms in completely unrelated industries in a:

conglomerate merger

The initial goal of a(n) ______ cooperative was to join together to get better prices for their food products

farm

One of the most important advantages of the sole proprietor form of ownership is that a business owner:

finds it easier to start and end the business.

Ed has decided to purchase and follow a business format by becoming a franchisee. The _______ _______ he will sign gives him the right to use the business name and sell the products of the firm.

franchise agreement

Select the attribute of a corporation.

legal entity state chartered liability separate from owners

Sole Proprietors can leave their business to their heirs. This is called:

leaving a legacy