chapter 4 business principals exam

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

bylaws

the sole proprietorship is considered a legal entity; therefore, it is taxed separately from the owner

False

which of the following is an advantage of sole proprietor ownership?

Freedom from government regulation

When Ashland Plastics and Melamine Chemicals formed a joint venture to develop flame-resistant plastic sheeting, the relationship most likely ended as soon as the project was completed.

True

a disadvantage of a partnership is that any partner may have to pay all of the debts of the company regardless of who incurred the debts.

True

which of the following statements about incorporation is true?

a corporation has to incorporate in the state in which it is based

which of the following statements about about limited liability companies (LLC's) is true?

all of the above statements about LLCs are true

which of the following statements about cooperatives is true?

cooperatives increase their members buying power

what type of business organization generates the most total sales?

corporation

the headquarters, seller, and supplier of the service or method of operation of a franchise is called the:

franchisor

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

partnership

an S corporation is generally set up to:

reduce tax burdens

which of the following is a disadvantage for the fast-food franchise?

royalty fees

a corporations board of directors

sets major corporate goals and policies

the form of business ownership that has the most difficulty in raising capital is the:

sole proprietorship

A group of cotton growers in North Georgia and North Alabama pooled their resources to build a cotton gin and storage are for .......

cooperative

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

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As a sole proprietor. as the business grew, she realized that she did not want to be personally liable for the business

incorporate stirya

Thom Georges wants to open a store where he sells nothing but antique architectural features that he can salvage from old houses being torn down to make way for progress. He has an eye for the kind of doors, windows, mantels, and so forth that decorators want, but he does not have all the funding he needs to get started. He has invited his parents to invest $40,000 in the enterprise. He has told them that if they do invest, they would have liabilities in the firm equal to but no greater than their investment. Georges is trying to get them to form a _____ with him.

limited partnership

partnership agreements generally specify all of the following EXCEPT:

methods of taxation of each partner