Introduction to Business - ch. 5

which are considered disadvantaged of incorporating

- double taxation - initial cost - extensive paperwork

members of cooperatives often participate by:

- electing a board of directors to hire managers - working in the cooperative for a period of time each month

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

- hold annual meetings - file written resolutions - keep minutes

the advantages of home-based work include

- relief from commuting stress - low overhead expenses

the three major forms of business are:

- sole proprietorship, - partnership - corporation

which are attributes of a master limited partnership

- traded on the stock exchange - acts like a corporation - taxed like a partnership

rank the form of business ownership based on ease of starting. put the easiest form at the top

1. corporation 2. partnership 3. sole proprietorship

a corporation is defined as:

a legal entity with authority to act apart from its owners

the biggest disadvantage of a home-based franchise is _______

a sense of isolation

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

acquisition

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

an S corporation

an individual who incorporates a business must file:

an individual and a corporate tax return

Many people do not like working for someone, so being your own __________ is an advantage of sole proprietorships.

boss

if a software company and a snack food company merged, it would be called a _______ merger

conglomerate

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

conglomerate merger

the ____ form of business allows people to become owners without having to work at the firm

coorporate

a corporation is a legal _______ with authority to act and have liability separate from its owners

entity

true or false: if producers, consumers, or workers with similar needs pool their resources for mutual gain, they have created a franchise

false

true or false: partnerships are less likely to survive than sole proprietorships

false

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

farm

a disadvantage of franchises is the most demand a _______ from the franchisee for the right to start the franchise

fee

an agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n)

franchise

_______ partners participate in operating the business while limited partners do not

general

the joining of two firms in the same industry is a(n) ______ merger

horizontal

when a soft drink company and a mineral water company merge and then are able to supply a variety of drinking products they have formed a _______ merger

horizontal

double taxation of a corporation occurs because the company pays tax on _____, and then individual shareholders pay income tax on the dividends they receive

income

an advantage of a sole proprietorship is

independent decision making

a limited liability partnership limits the liability of limited partners to their

initial investment

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

sole proprietors can leave their business to their heirs. this is called:

leaving a legacy

a ______ _______ can be initiated by employees, managers, or investors who borrow necessary funds to purchase all shares of a firms stock

leveraged buyout

in a general partnership, all partners share the responsibility for operating the business and assume ________ for the business's debts

liability

a ________ partnership has partners who do not share in operating the business

limited

the responsibility for a loss only up to the amount invested is ___________ liability

limited

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(n) ________ ___________ partnership

limited liability

stockholders liability for losses only up to the amount they invest is called ______

limited liability

large size may be a disadvantage to corporations because they:

lose flexibility to respond to change-

the ___________ limited partnership looks much like a corporation in that it acts like a corporation and is traded on a stock exchange

master

when two firms join together to form one new company is called a ______

merger

the right to participate in managing the _______ of the business is a key element of general partnerships in the uniform partnership act

operations

An LLC submits a written operating agreement, similar to a(n) _________ agreement, describing hot the company is to be operated

partnership

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

partnership

of the various forms of business ownership, a _______ is an easy way for two individuals to conduct business

partnership

termination of a partnership is difficult with a ______ agreement

partnership

the limited liability partnership ensures that the limited partners' _________ assets are not at risk

personal

unlimited liability as it relates to sole proprietorships is the risk of loss of ______ assets beyond the assets of the business

personal

limited liability is considered an advantage of forming an LLC because:

personal assets are protected

the share of profits or sales revenue paid to the franchisor is called a _____

royalty

stockholders are ______ from the managers and employees of the firm because they are not actively involved in the operations of the firm

separate

if you start and manage a landscaping business on your own, you have likely started a:

sole proprietorship

a business person concerned about high ______ costs should not invest in a franchise which is associated with this disadvantage

startup

BK and gymboree were publicly traded companies until a group of stock holders bought all the firms stock in order to regain control. this is referred to as _____ a firm _________

taking ; private

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as

the coattail effect

true or false: a business can start in one form of ownership, but does not have to stay in that form

true

true or false: the failure rate of franchises is lower than other business ventures

true

elements such as common, shared management, and shared profits and losses are those used to define the :

uniform partnership act

the responsibility of the owner of a sole proprietorship for all of the debts of the business is _______ liability

unlimited

a merger that joins two companies involved in different but related levels of an industry is a(n) _______ merger

vertical

when two firms operating in different stages of related businesses join, its called a(n) _________ merger

vertical

the attributes of a corporation include that:

- it is a legal entity - corporate liability is separate from owners - it is state charted

a sole proprietorship has a limited life span unless:

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

among the reasons that disagreements can ruin a partnership are:

- opposing management styles - arguments over divings profits - disagreement over workload

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 health insurance - a pensions plan - paid sick or vacation leave time

the start up costs of filing for incorporation are high because:

lawyers and accountants are needed to do the complex filings