T/F
Questions 1
Annie owns 100 shares of stock in the Samson Electricals Corporation, but as a stockholder she does not
have the right to vote in stockholders’ meetings. Annie owns common stock.
Question 2 (1 point)
Owners of limited liability companies are known as stockholders.
Question 3 (1 point)
Due to low participation among minorities in franchised businesses, initiatives such as the National
Minority Franchising Initiative are addressing this concern.
Question 4 (1 point)
In terms of total net income,sole proprietorships are the largest forms of business ownership.
Question 5 (1 point)
In a general partnership, each partner incurs unlimited liability only for claims resulting from his or her
own negligence.
Question 6 (1 point)
The vast majority of LLCs elect to be taxed as corporations.
Question 7 (1 point)
In an acquisition, the firm that makes the purchase is called the target firm.
Question 8 (1 point)
Some states do not permit certain types of businesses, such as banks, insurance companies, and
nonprofit organizations to operate as LLCs.
Question 9 (1 point)
Examples of institutional investors are mutual funds, insurance companies, and pension funds.
Question 10 (1 point)
When a general partnership is sued, the lawsuits often go after the more wealthy partners.
Question 11
As a result of decreased competition and less saturated markets, McDonald’s foreign franchise outlets in
2014 were greater than in the United States.
Question 12 (1 point)
Choice of ownership determines the degree to which each owner has personal liability for the firm’s
debts and the sources of funds available to the firm to finance future expansion.
Question 13 (1 point)
A major advantage of limited liability partnerships (LLP) is that they offer all partners “full-shield”
protection in every state.
Question 14 (1 point)
A sole proprietorship is subject to double taxation in that any earnings are taxed both as income to the
business and as income to the owner of the business.
Question 15 (1 point)
In terms of total number of businesses by form of ownership, corporations are more common than sole
proprietorships.
____________________________________________________________________________________
Multiple Choice
Compared to a sole proprietorship, a general partnership:
Question 16 options:
A.has certainty regarding how long a business will last.
B. is likely to have a stronger financial base.
C. has limited ability to attract and maintain employees.
D. is likely to have limited liability.
Question 17 (1 point)
Which of the following is a disadvantage of a general partnership?
Question 17 options:
A. A partner who withdraws from a general partnership cannot be held liable for any debts the firm
had at the time ofwithdrawal.
B. Compared to the other forms of ownership, the paperwork and costs involved in forming a
general partnership are the most extensive.
C. The partners in a general partnership are exposed to double taxation.
D. If a current partner withdraws from a general partnership, the relationships among the
participants will clearly change.
Question 18 (1 point)
Unlike S corporations, limited liability companies (LLCs):
Question 18 options:
A.
B.
C.
D.
are required to hold regular board meetings.
can have any number of owners.
have no reporting requirements
cannot include owners who are foreign investors.
Question 19 (1 point)
A _____ merger is the combination of firms in the same industry.
Question 19 options:
A.
B.
C.
D.
hostile
conglomerate
vertical
horizontal
Question 20 (1 point)
Rob is an engineer who works in nuclear power plants. He is considering starting his own engineering
company. Due to the nature of work at his new company, Rob wants to avoid unlimited liability. Which of
the following forms of business ownership is most suitable for Rob?
Question 20 options:
A.
B.
C.
D.
A sole proprietorship
A partnership
A corporation
A sole trader
Question 26 (1 point)
A limited liability partnership (LLP) is attractive to partners because:
Question 26 options:
A.
B.
C.
D.
all states offer "full-shield" protection.
there is no distinction between limited and general partners.
only the partner who provides the capital has limited liability.
all professional businesses can form a LLP in any state.
Question 27 (1 point
Tina is the owner of a piano tuning business. As a sole proprietor, any profit she earns is:
Question 27 options:
A.
B.
C.
D.
taxed twice, once as a business and then again as Tina’s income.
treated as personal income of Tina.
not subjected to any tax.
taxed only when she withdraws the money from a bank.
Question 28 (1 point)
Stockholders are the _____ of a corporation.
Question 28 options:
A.
B.
C.
D.
creditors
employees
marketers
owners
Question 29 (1 point)
Suzanne was recently elected to the board of directors at Alliance Bank Corp. As a board member, she is
expected to represent the interests of the bank’s:
Question 29 options:
A.
B.
C.
D.
senior managers.
shareholders.
creditors.
customers.
Question 30 (1 point)
_____ are by far the most common type of business organizations in the United States.
Question 30 options:
A.
B.
C.
D.
General partnerships
Sole proprietorships
Limited liability companies
Corporations
