Question 1

According to the Uniform Partnership Act,the three key elements of any general partnership are:

Accepted Answer

A)  A board of directors,a written partnership agreement,and a well-defined product or service.
B)  Two owners,an adequate financial base,and a written statement describing the manner in which profits and losses will be divided.
C)  Common ownership,shared profits and losses,and right to participate in management.
D)  Common stock,a board of directors,and a statement of limited liability.

Question 2

Being your own boss means:

Accepted Answer

A)  Reducing your working hours.
B)  Having the freedom to set your own working hours and taking lots of vacations,particularly when just beginning the business.
C)  Accepting accountability for the mistakes of the business.
D)  Having limited financial resources to throw into the business.

Question 3

To qualify as an S corporation,a company must:

Accepted Answer

A)  Have no more than 50 shareholders.
B)  Have shareholders who are individuals or estates,and,qualify as permanent residents of the U.S.
C)  Have a different class of stock for each owner.
D)  Have not more than 5 percent of income derived from passive sources.

Question 4

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Accepted Answer

A)  Corporations
B)  Partnerships
C)  Sole proprietorships
D)  Limited liability companies

Question 5

One advantage of an S Corporation is that the profits of the business are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

Accepted Answer

A) True 
 B)False

Question 6

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Accepted Answer

A) True 
 B)False

Question 7

A limited liability company is similar to an S corporation,but without the special eligibility requirements.

Accepted Answer

A) True 
 B)False

Question 8

Taking a firm private involves converting a firm from a corporation to a general partnership.

Accepted Answer

A) True 
 B)False

Question 9

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Accepted Answer

A) True 
 B)False

Question 10

Franchisors may send reverse royalties to franchisees who:

Accepted Answer

A)  Have not yet created their own web site.
B)  Feel their sales have been hurt by the franchisor's Internet sales.
C)  Are using e-commerce to expand their sales territory.
D)  Desire to streamline their communication with employees,customers,and vendors.

Question 11

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set-up a:

Accepted Answer

A)  Master Limited Partnership.
B)  Sole proprietorship.
C)  Limited amount of time each can actively spend in the business.
D)  Limited Liability Partnership.

Question 12

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Accepted Answer

A) True 
 B)False

Question 13

Modern Screen Entertainment,Inc. ,recently bought Star Power Pictures,Inc. ,for an undisclosed amount of money.It now owns all of Star Power Picture's properties and obligations.This is an example of a(n) :

Accepted Answer

A)  Merger.
B)  Combination.
C)  Expropriation.
D)  Acquisition.

Question 14

Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types.One of their goals is to maintain the loving relationship they currently enjoy so they are following the Model Business Corporation Act recommendations as they write the partnership agreement.Which of the following is an accurate recommendation of the Act?

Accepted Answer

A)  The business should be actively operating for an extended period before the partners decide who is responsible for what business functions.
B)  Family businesses never take on outside partners,so no discussion of this need take place.
C)  There should be discussion and well-understood ways that the partners will handle disagreements.
D)  Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business,retire,or die.

Question 15

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional) corporation as a form of business ownership is that it:

Accepted Answer

A)  Has the ability to raise more money.
B)  Is easier and less expensive to form.
C)  Qualifies for simplified tax treatment.
D)  Creates unlimited liability for its owners.

Question 16

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

Accepted Answer

A) True 
 B)False

Question 17

In a cooperative,members/customers:

Accepted Answer

A)  Democratically control their businesses by electing a board of directors.
B)  Are known as limited partners.
C)  Each have unlimited liability for the debts of the firm.
D)  Take turns serving on the board that manages the company.

Question 18

Which of the following is normally considered a disadvantage of the corporate form of business?

Accepted Answer

A)  Unlimited liability of owners.
B)  Difficult transfer of ownership.
C)  Limited life.
D)  Double taxation of earnings.

Question 19

A general partner takes an active role in the management of the business.

Accepted Answer

A) True 
 B)False

Question 20

When two firms join together to form one company,it is called a merger.

Accepted Answer

A) True 
 B)False

Exam 5: How to Form a Business

Taking a firm private involves converting a firm from a corporation to a general partnership.

Correct Answer
verified

Franchisors may send reverse royalties to franchisees who:

Correct Answer
verified

Being your own boss means:

Correct Answer
verified

Which of the following is normally considered a disadvantage of the corporate form of business?

Correct Answer
verified

When two firms join together to form one company,it is called a merger.

Correct Answer
verified

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional) corporation as a form of business ownership is that it:

Correct Answer
verified

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Correct Answer
verified

A limited liability company is similar to an S corporation,but without the special eligibility requirements.

Correct Answer
verified

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set-up a:

Correct Answer
verified

In a cooperative,members/customers:

Correct Answer
verified

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Correct Answer
verified

To qualify as an S corporation,a company must:

Correct Answer
verified

According to the Uniform Partnership Act,the three key elements of any general partnership are:

Correct Answer
verified

One advantage of an S Corporation is that the profits of the business are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

Correct Answer
verified

A general partner takes an active role in the management of the business.

Correct Answer
verified

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Correct Answer
verified

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Correct Answer
verified

Correct Answer
verified

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

Correct Answer
verified

Modern Screen Entertainment,Inc. ,recently bought Star Power Pictures,Inc. ,for an undisclosed amount of money.It now owns all of Star Power Picture's properties and obligations.This is an example of a(n) :

Correct Answer
verified

Exam 5: How to Form a Business

Taking a firm private involves converting a firm from a corporation to a general partnership.

Correct AnswerverifiedShow Answer

Franchisors may send reverse royalties to franchisees who:

Correct AnswerverifiedShow Answer

Being your own boss means:

Correct AnswerverifiedShow Answer

Which of the following is normally considered a disadvantage of the corporate form of business?

Correct AnswerverifiedShow Answer

When two firms join together to form one company,it is called a merger.

Correct AnswerverifiedShow Answer

Compared to partnerships and sole proprietorships,a major advantage of the C (conventional) corporation as a form of business ownership is that it:

Correct AnswerverifiedShow Answer

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Correct AnswerverifiedShow Answer

A limited liability company is similar to an S corporation,but without the special eligibility requirements.

Correct AnswerverifiedShow Answer

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set-up a:

Correct AnswerverifiedShow Answer

In a cooperative,members/customers:

Correct AnswerverifiedShow Answer

____________ comprise about 20% of all businesses but account for about 81% of U.S.business receipts.

Correct AnswerverifiedShow Answer

To qualify as an S corporation,a company must:

Correct AnswerverifiedShow Answer

According to the Uniform Partnership Act,the three key elements of any general partnership are:

Correct AnswerverifiedShow Answer

One advantage of an S Corporation is that the profits of the business are distributed to the owners and taxed as each owner's personal income,thus avoiding the problem of double taxation.

Correct AnswerverifiedShow Answer

A general partner takes an active role in the management of the business.

Correct AnswerverifiedShow Answer

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Correct AnswerverifiedShow Answer

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Franchisors give franchisees the right to use their name and product,with the understanding that franchisees obtain all financing and develop all marketing strategies on their own.

Correct AnswerverifiedShow Answer

Modern Screen Entertainment,Inc. ,recently bought Star Power Pictures,Inc. ,for an undisclosed amount of money.It now owns all of Star Power Picture's properties and obligations.This is an example of a(n) :

Correct AnswerverifiedShow Answer

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