Question 1

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Accepted Answer

A)  The responsibility of the owner.
B)  Limited to the amount the owner has invested in the firm.
C)  Paid for out of a reserve contingency fund that sole proprietors are required by law to set up.
D)  Normally covered by liability insurance.E) A) and D)
F) A) and C)

Question 2

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Accepted Answer

A) True 
 B)False

Question 3

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

Accepted Answer

A) True 
 B)False

Question 4

Public utilities are examples of quasi-public corporations.

Accepted Answer

A) True 
 B)False

Question 5

Sandy Beech,a talented fashion designer who wants to start her own women's swimwear and beach towel line,is trying to decide which form of business ownership is right for her.As a young mother who aspires to send her children to college some day,she does not want to jeopardize her savings account in any way.In order to overcome these risks,Sandy should start her business as a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 6

The purpose of corporate by-laws is to maintain a legal structure and also to stipulate how the firm will be managed.

Accepted Answer

A) True 
 B)False

Question 7

One of the major disadvantages of a sole proprietorship is the:

Accepted Answer

A)  Possibility of disagreements between owners.
B)  Unlimited liability the owner has for the debts of the firm.
C)  Fact that any income earned by this type of business is taxed twice.
D)  High cost of starting or ending the company.E) All of the above
F) A) and D)

Question 8

Sierra is interested in becoming a franchise owner,by opening and operating one of 50 Cactus Katie's Grills,a very successful fast food chain specializing in food dishes from the American southwest.Which of the following problems is Sierra most likely to encounter if she agrees to become a franchisee?

Accepted Answer

A)  High initial costs and fees
B)  Poor name recognition and visibility
C)  Lack of financing
D)  Lack of managerial assistanceE) A) and D)
F) B) and C)

Question 9

Chad recently invented Wave-Aerobics,a next generation watercraft that can safely perform water stunts similar to an amusement park ride.As the founder of a fast growing business,you think his goal of incorporating,"to remain in steadfast control of the firm's operations for an indefinite number of years" is good strategy.

Accepted Answer

A) True 
 B)False

Question 10

The strategy of investors who are attempting a leveraged buyout is to:

Accepted Answer

A)  Shape up the company for quick resale.
B)  Use debt to finance the buyout of the firm's stockholders and gain control of the firm themselves.
C)  Secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock.
D)  Use investment tax credits from the government to acquire all of the physical assets owned by the firm.E) C) and D)
F) B) and C)

Question 11

In the Thinking Green box titled,"Play Ball but Play Green",The Washington Nationals baseball team is featured as a franchised business that demonstrates environmental stewardship by:

Accepted Answer

A)  Replacing all sod in the stadium with astro-turf to conserve water.
B)  Building a LEED certified building and initiating recycling programs.
C)  Joining several other baseball franchises and only washing uniforms in phosphate-free detergents because the run-off eventually ends up in our drinking water supply.
D)  Painting the steel beams and seats in the stadium "green" and continuously flashing the words "green" on the display monitors to remind everyone to use the waste cans and to clean around their seats before departing the stadium.E) B) and C)
F) A) and D)

Question 12

The stockholders in a corporation elect a board of directors to oversee the company's major policy issues.

Accepted Answer

A) True 
 B)False

Exam 5: How to Form a Business

Correct Answer
verified

Correct Answer
verified

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Correct Answer
verified

The purpose of corporate by-laws is to maintain a legal structure and also to stipulate how the firm will be managed.

Correct Answer
verified

Public utilities are examples of quasi-public corporations.

Correct Answer
verified

The strategy of investors who are attempting a leveraged buyout is to:

Correct Answer
verified

In the Thinking Green box titled,"Play Ball but Play Green",The Washington Nationals baseball team is featured as a franchised business that demonstrates environmental stewardship by:

Correct Answer
verified

The stockholders in a corporation elect a board of directors to oversee the company's major policy issues.

Correct Answer
verified

One of the major disadvantages of a sole proprietorship is the:

Correct Answer
verified

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

Correct Answer
verified

Correct Answer
verified

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct Answer
verified

Exam 5: How to Form a Business

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Correct AnswerverifiedShow Answer

The purpose of corporate by-laws is to maintain a legal structure and also to stipulate how the firm will be managed.

Correct AnswerverifiedShow Answer

Public utilities are examples of quasi-public corporations.

Correct AnswerverifiedShow Answer

The strategy of investors who are attempting a leveraged buyout is to:

Correct AnswerverifiedShow Answer

In the Thinking Green box titled,"Play Ball but Play Green",The Washington Nationals baseball team is featured as a franchised business that demonstrates environmental stewardship by:

Correct AnswerverifiedShow Answer

The stockholders in a corporation elect a board of directors to oversee the company's major policy issues.

Correct AnswerverifiedShow Answer

One of the major disadvantages of a sole proprietorship is the:

Correct AnswerverifiedShow Answer

Franchisees must follow more rules,regulations,and procedures than if they operated independently-owned businesses.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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