Multiple Choice Questions

Corporations can rase large amount of money, take advantage of economies o scale and hire experts in all areas of operation. This can be summarized as _____ advantage
  • stock
  • financial
  • bylaws
  • size
Perpetual life for a corporation means that the death of one owner does not _____ the corporation.
  • general
  • life span
  • terminate
  • death
Limited liability is considered an advantage of forming an LLC because:
  • personal
  • initial investment
  • personal assets are protected.
  • profits/losses do not have to be distributed in proportion to the money each person invests
Having more _______ resources is an advantage of partnership so there is more money and credit available to the business
  • personal
  • consumer
  • franchise
  • financial
a corporation is formally formed with
  • personal assets are protected.
  • increase the economic power of members.
  • articles of incorporation and bylaws
  • ease of transfer of ownership
Unlike an LLC, conventional and S corporations' stockholders can ____ their shares as they wish
  • sell
  • personal
  • credit
  • stock
Select the reasons a business might change ownership form
  • 1) acquire the latest equipment 2) build modern facilities3) diversify through acquisition 4) attract expert for hire
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
  • 1) can you support global partners?2) will you intellectual property be protected?3) are you able to adapt to franchise regulations in other countries?
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
If the owner of a sole proprietorship wants to incorporate, the following disadvantages must be considered:
  • profits generated by the firm
  • 1) cost of incorporation 2) double taxation
  • 1) in the same industry2) different industries3) different levels of an industry
  • stock
Among the questions to ask before franchising internationally is:
  • partnerships have unlimited liabilities for the debts incurred by the business.
  • stockholders pay income tax on the dividends they receive double taxation occurs
  • 1) pooled skills2) more financial resources3) longer survival
  • 1) can you support global partners?2) will you intellectual property be protected?3) are you able to adapt to franchise regulations in other countries?
The higher costs of starting up an international franchise are usually counterbalanced by an expanding _____ base and less competition
  • consumer
  • financial
  • personal
  • cooperatives
Franchise are important to the _____ because of the number of new businesses started and jobs created.
  • franchise
  • credit
  • economy
  • personal
A corporation is formally formed with:
  • profits generated by the firm
  • 1) cost of incorporation 2) double taxation
  • articles of incorporation and bylaws
  • ease of transfer of ownership
The failure rate for franchises is lower than other business ventures because of:
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
  • 1) pooled skills2) more financial resources3) longer survival
  • 1) financial advice and assistance 2) nationally recognized names
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
In addition to the articles of incorporation, a corporation has _____ which describes how the firms is to be operated from both legal and managerial points of view
  • income
  • bylaws
  • risks
  • financial
Select all the advantages of the partnership form of business
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
  • 1) pooled skills2) more financial resources3) longer survival
  • 1) acquire the latest equipment 2) build modern facilities3) diversify through acquisition 4) attract expert for hire
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
Partners can not only bring money into the business but also _____ which allows the business to borrow additional resources
  • credit
  • markets
  • financial
  • franchise
___________ of company profits is considered an advantage of a sole proprietorship
  • perpetual life
  • retention
  • personal
  • partnership
Select the reasons why size is an advantage of the corporation
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
  • 1) acquire the latest equipment 2) build modern facilities3) diversify through acquisition 4) attract expert for hire
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
  • 1) can you support global partners?2) will you intellectual property be protected?3) are you able to adapt to franchise regulations in other countries?
This is considered an advantage of corporations
  • what the owner can provide
  • ease of transfer of ownership
  • profits generated by the firm
  • articles of incorporation and bylaws
The paperwork needed to start a corporation is extensive but a corporation must also keep detailed _____ records documenting all financial transactions in detail
  • coattail
  • consumer
  • financial
  • personal
In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. The disadvantage is known as:
  • unlimited liability
  • cooperatives
  • double taxation
  • initial investment
_____ do not pay taxes when submitting the organization's tax return to the Internal Revenue Service.
  • markets
  • personal
  • partners
  • partnership
Although members may choose to reconstitute an LLC after it dissolves, limited ___ ____ is considered a disadvantage of this form of business
  • general
  • terminate
  • life span
  • taking, private
Flexible distribution of profits and losses is considered an advantage of an LLC because:
  • profits/losses do not have to be distributed in proportion to the money each person invests
  • 1) in the same industry2) different industries3) different levels of an industry
  • 1) financial advice and assistance 2) nationally recognized names
  • personal assets are protected.
A LLC has the choice of taxation and can be taxed as a(n) ____ or as a corporation
  • partnership
  • perpetual life
  • initial investment
  • partnerships have unlimited liabilities for the debts incurred by the business.
Corporations shield their stockholders from unlimited liability and allow them to share in the:
  • personal assets are protected.
  • articles of incorporation and bylaws
  • profits generated by the firm
  • profits/losses do not have to be distributed in proportion to the money each person invests
A limited liability partnership limits the liability of limited partners to their:
  • partnership
  • perpetual life
  • initial investment
  • personal
Sole proprietors have pride of ownership in their business and they deserve all the credit for taking ______
  • risks
  • members
  • partners
  • credit
Being owned by those using the products of a firm rather than simply being a shareholder is what makes a ______ unique
  • cooperatives
  • taking, private
  • general
  • cooperative
Though start-up costs are higher in international franchising, there is less_____ because thee are not as many other companies in the franchisor's industries
  • financial
  • coattail
  • competition
  • market, price
The ______ of a member can cause LLCs to dissolve automatically
  • taking, private
  • death
  • stock
  • cooperative
Select ways an LLP deals with liability for partners
  • 1) pooled skills2) more financial resources3) longer survival
  • 1) can you support global partners?2) will you intellectual property be protected?3) are you able to adapt to franchise regulations in other countries?
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
  • 1) partners are not held liable for each other's actions 2) when a partner is sued individually for malpractice, it doe snot affect other partners. 3) liability is limited to losing only personal assets directly related to personal acts.
What are the advantages of the LLC form of organization?
  • partnerships have unlimited liabilities for the debts incurred by the business.
  • 1) in the same industry2) different industries3) different levels of an industry
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
  • stockholders pay income tax on the dividends they receive double taxation occurs
In evaluating the market for a franchise a study must made to determine if your product has a ______ in your territory at the _____ you want to charge
  • double taxation
  • market, price
  • cooperatives
  • unlimited liability
Except for states like Delaware and Nevada, _____ creates a disadvantage to incorporating
  • perpetual life
  • extensive paperwork
  • profits generated by the firm
  • initial investment
All of the following are advantages of partnerships except:
  • 1) adding a partner to the firm2) seeking limited liability3) dropping a partner from the firm
  • partnerships have unlimited liabilities for the debts incurred by the business.
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
  • 1) pooled skills2) more financial resources3) longer survival
Some people dislike the notion of owners, managers, workers, and buyers being separate individuals with separate goals. To meet their needs, they have formed:
  • market, price
  • members
  • cooperatives
  • coattail
Franchises are expanding internationally to access additional _____ that have new customers and to increase their profit potential
  • partners
  • markets
  • members
  • economy
a ____ _____ means that a corporation's existence will not terminate if one or more owners die
  • perpetual life
  • personal
  • retention
  • partnership
An advantage of cooperatives is that they:
  • increase the economic power of members.
  • 1) cost of incorporation 2) double taxation
  • articles of incorporation and bylaws
  • 1) flexible ownership rules2) limited liability 3) choice of taxation
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Multiple Choice Questions
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