cq4. 1. Identify an advantage of sole proprietorships. Unlimited sources of fund
ID: 2756034 • Letter: C
Question
cq4.
1.
Identify an advantage of sole proprietorships.
Unlimited sources of funds
Perpetual life of business
Flexibility and control of the business
Limited liability
Diverse skills and knowledge
2.
Richard runs a small convenience store in his neighborhood. He hires two part-time workers to help him with the day-to-day operations of the business. However, Richard alone is responsible for all the debts and liabilities of the business. Thus, Richard's business is an example of a(n) _____.
cooperative
sole proprietorship
franchise
S corporation
joint venture
3.
_____ have the most freedom from government regulation.
Limited liability companies
C corporations
S corporations
Cooperatives
Sole proprietorships
4.
In the context of the different forms of business ownership, unlimited liability, limited skills, lack of qualified employees, and lack of continuity are all disadvantages of a(n) _____.
limited partnership
joint venture
public corporation
S corporation
sole proprietorship
5.
Which form of business ownership involves a complete sharing in the management of a business, where all the owners have unlimited liability for the debts of the business?
An S corporation
A public corporation
A limited partnership
A sole proprietorship
A general partnership
6.
Which of the following statements is true of general partners in a limited partnership?
They have limited liability for the debts of the business.
They do not accept the risk of loss associated with the business.
They invest money in the business but do not participate in its management.
They receive a larger share of profits after the limited partners have received their initial investment back.
They pay taxes when submitting the partnership tax return to the Internal Revenue Service.
7.
Ease of organizing, availability of capital and credit, combined knowledge and skills, and quasi-taxable systems are typical characteristics of a(n):
partnership.
S corporation.
cooperative.
sole proprietorship.
limited liability company.
8.
Which of the following is a disadvantage of general partnerships?
Unlimited liability
Lack of combined skills
Intense regulatory controls
Double taxation
Difficulty in organization
9.
Which of the following is true of corporations?
They are prohibited from entering into contracts with individuals.
They are quasi-taxable organizations.
They have the right to receive, own, and transfer property.
Their assets and liabilities are not separate from that of their owners'.
Their existence is affected by the death or withdrawal of any of the stockholders.
10.
A(n) _____ is a legal entity whose assets and liabilities are separate from that of its owners'. It can also enter into contracts with individuals or with other legal entities.
proprietorship
corporation
limited partnership
cartel
general partnership
11.
Which of the following is the difference between a foreign corporation and an alien corporation?
A foreign corporation does business outside the state in which it is chartered, whereas an alien corporation does business outside the nation in which it is incorporated.
A foreign corporation does business outside the nation in which it is incorporated, whereas an alien corporation does business outside the state in which it is chartered.
A foreign corporation does business outside the nation in which it is incorporated, whereas an alien corporation does business in the state where it is chartered.
A foreign corporation does business in the state where it is chartered, whereas an alien corporation does business outside the nation in which it is incorporated.
All foreign corporations are privately owned, whereas all alien corporations are publicly owned.
12.
Selling a corporation's stock in public markets for the first time is called:
leveraged buyout.
vertical integration.
initial public offering.
seasoned equity offering.
stock depletion.
13.
Identify a true statement about common stockholders.
They are the voting owners of a corporation.
They constitute the board of directors of a corporation.
They have a claim to profits before preferred stockholders do.
They have unlimited liability for the debts of a corporation.
They are prohibited from interfering in the operations of a corporation.
14.
Common stockholders are usually entitled to _____ per share of common stock of a corporation, and they elect its board of directors.
five votes
one vote
two votes
three votes
four votes
15.
Which of the following is an advantage of corporations as a form of business ownership?
Highest degree of secrecy
Unlimited liability
Lack of employee-owner separation
Ease of transfer of ownership
Double taxation
16.
Which of the following forms of business is owned by just one or a few people who are closely involved in managing the business?
A quasi-public corporation
A cooperative
An S corporation
A private corporation
A publicly-traded company
17.
A _____ is owned and operated by the federal, state, or local government and focuses on providing a service to citizens rather than earning profits.
private corporation
quasi-public corporation
sole proprietorship
publicly-traded company
C corporation
18.
Public corporations must file reports related to stocks and bonds with the:
Financial Accounting Standards Board.
Federal Trade Commission.
National Advisory Committee on Accounting Standards.
Securities and Exchange Commission.
Warren Commission.
19.
A _____ is a form of business ownership that can be subjected to double taxation.
sole proprietorship
corporation
partnership
limited liability company
cooperative
20.
Which of the following is an implication of employee–owner separation in a corporation?
Employees are not answerable to the owners of a business.
Employees are not remunerated by the owners of a business.
Employees are not stockholders of the company for which they work.
Employees are exempted from paying taxes for working in a corporation.
Employees cannot make decisions on behalf of the owners of a business.
21.
A(n) _____ is a form of business ownership that can have up to 100 shareholders, has limited liability, and is taxed as a partnership.
S corporation
limited liability company
sole proprietorship
C corporation
amalgamated company
22.
_____ are especially popular in situations that call for large investments and can even take place between businesses and governments.
Sole proprietorships
Cooperatives
General partnerships
Joint ventures
Private corporations
23.
_____ are a form of business organization that are expected to operate without profit or to create only enough profit to maintain an organization.
Sole proprietorships
Joint ventures
Corporations
Cooperatives
General partnerships
24.
Huechi Inc., a mobile phone manufacturer, purchases its direct competitor, OnePhone Inc., by buying most of its stocks. In this scenario, Huechi is involved in a(n) _____.
equity swap
acquisition
vertical merger
leveraged buyout
franchise
25.
Which of the following strategies used by businesses to grow reduces the number of corporations competing in an industry and needs to be reviewed carefully by federal regulators?
A vertical integration
An equity carve-out
A conglomerate diversification
A divestment
A horizontal merger
26.
The difference between a horizontal merger and a vertical merger is that:
companies operating at different but related levels of an industry merge in a horizontal merger, whereas firms that make and sell similar products to the same customers merge in a vertical merger.
two firms in unrelated industries merge in a horizontal merger, whereas firms that make and sell similar products to the same customers merge in a vertical merger.
companies operating at different but related levels of an industry merge in a horizontal merger, whereas two firms in unrelated industries merge in a vertical merger.
one corporation merges with one of its customers or suppliers in a horizontal merger, whereas a firm merges with its direct competitor in a vertical merger.
firms that make and sell similar products to the same customers merge in a horizontal merger, whereas companies operating at different but related levels of an industry merge in a vertical merger.
27.
When a firm allows stockholders to buy more shares of stock at prices lower than the current market value, the firm is using a _____.
poison pill
shark repellant
white knight
tender offer
leveraged buyout
28.
Which of the following techniques does a firm use to fend off a hostile takeover attempt if the firm's management requires a large majority of stockholders to approve the takeover?
A poison pill
A shark repellant
A white knight
A class action
A leveraged buyout
29.
GL Inc., a firm facing a threat of bankruptcy, did not want to be acquired by Red Phoenix Inc. Thus, the management of GL Inc. approached Fortium Inc., which was willing to acquire GL Inc. In this scenario, Fortium Inc. is referred to as a _____.
poison pill
shark repellant
proxy investor
white knight
preemptive investor
30.
In a _____, a group of investors borrows money from banks and other institutions to acquire a company or a division of one, using the assets of the purchased company to guarantee repayment of the loan.
horizontal merger
vertical merger
leveraged buyout
conglomerate merger
poison pill
Explanation / Answer
1 Flexibility and control of the business 2 sole proprietorship 3 Sole proprietorships 4 sole proprietorship 5 A general partnership 6 They receive a larger share of profits after the limited partners have received their initial investment back. 7 corporation. 8 Unlimited liability 9 They have the right to receive, own, and transfer property 10 corporation 11 A foreign corporation does business outside the nation in which it is incorporated, whereas an alien corporation does business in the state where it is chartered. 12 initial public offering. 13 They are the voting owners of a corporation. 14 one vote 15 Ease of transfer of ownership 16 private corporation 17 quasi-public corporation 18 Securities and Exchange Commission. 19 corporation 20 Employees cannot make decisions on behalf of the owners of a business. 21 imited liability company 22 Cooperatives 23 Cooperatives 24 acquisition 25 horizontal merger 26 companies operating at different but related levels of an industry merge in a horizontal merger, whereas two firms in unrelated industries merge in a vertical merger. 27 poison pill 28 shark repellant 29 white knight 30 leveraged buyout
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