Business Chapter 5

An S corporation has the liability protections of a corporation but is taxed ______.

like a partnership or sole proprietorship

A state-chartered legal entity with authority to act and have liability separate from its owners is a ______.

corporation

In addition to the articles of incorporation, a corporation has ______, which describe how the firm is to be operated from both legal and managerial points of view.

bylaws

A form of business ownership that provides limited liability, as in a corporation, but has no special eligibility requirements is a(n) ______.

limited liability company

What type of business is a sole proprietorship?

a business owned and managed by one person

One of the most important advantages of the sole proprietor form of ownership is that a business owner ______.

finds it easier to start and end the business

Unlimited liability as it relates to sole proprietorships is the risk of ______.

losing your personal assets

The disadvantage of sole proprietorships is that any debts or losses incurred by the business are your debts because you and the business are legally one and you have ______.

unlimited liability

Select those items considered fringe benefits that people working for a company are likely to receive, but a sole proprietor has to develop on his own. (More than one answer may be correct)

paid sick or vacation time, health insurance, pension plan

Using social media, mobile pay systems, online delivery apps and web-based point-of-sale systems all serve as examples of how ______ can be used to assist franchisees and customers.

technology

Many franchises are expanding internationally because ______.

there are markets available all over the world

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) ______.

general partnership

When there is one or more general partners and one or more limited partners, the firm is a(n) ______.

limited partnership

What can be said about the survival rate of partnerships as compared to sole proprietorships?

Partnerships are more likely to succeed.

A form of business ownership that provides limited liability, as in a corporation, but has no special eligibility requirements is a(n) ______.

limited liability company

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

An advantage of the corporate form of business is that limited liability allows it to ______.

limit individual responsibility for losses

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called ______.

unlimited liability

For a business to grow, prosper, and create economic opportunity, many people have to be willing to invest money in it. An advantage of a corporation is its ability to raise money through ______.

the sale of stock

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors ______.

are not involved in daily operations

What are two of the disadvantages of a corporation?

Cost of forming a corporation and double taxation

What are three advantages of limited liability companies?

Choice of taxation, flexible ownership rules, and limited liability

The ______ form of business ownership protects the person's personal assets from the debts of the business.

LLC

In terms of operating flexibility, what are three things that LLCs are not required to do?

hold annual meetings, file written resolutions, and keep minutes

Two software companies each hold a small percentage of the market. To gain recognition and increase market share, these companies decide to join together to form one company. This move is known as ______.

merger

A form of business ownership that provides limited liability, as in a corporation, but has no special eligibility requirements is a(n) ______.

limited liability company

One company's purchase of the property and obligations of another is called a(n) ______.

acquisition

A vertical merger refers to ______.

a merger between firms operating at different stages of related businesses

Unlimited liability as it relates to sole proprietorships is the risk of ______.

losing your personal assets

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n) ______.

horizontal merger

A conglomerate merger joins companies that are in ______.

completely unrelated industries

Which items are delineated in a franchise agreement?

the right to sell a business' products in a given territory and the right to use a specific business' name

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as ______.

the coattail effect

What are two ways that franchisors are becoming more focused on recruiting franchisees?

they provide personal ownership of a business and some offer financial support to aspiring business owners

Low overhead costs are an advantage of which type of business?

home-based businesses

A business owned and controlled through pooled resources by the people who use it is a(n) ______.

cooperative

A(n) ______ is similar to an S corporation but without the special eligibility requirements.

LLC

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is ______.

an S corporation

Many franchises are expanding internationally because ______.

there are markets available all over the world

Unlimited liability as it relates to sole proprietorships is the risk of ______.

losing your personal assets

The joining of two firms in the same industry is a(n) _______ merger.

horizontal

Which items are delineated in a franchise agreement?

the right to sell a business' products in a given territory and the right to use a specific business' name

Which two statements are true regarding the process of forming a corporation?

The bylaws of the corporation describe how the firm is to be operated and the articles of incorporation are usually filed in the state in which the company will be incorporated.

Using social media, mobile pay systems, online delivery apps and web-based point-of-sale systems all serve as examples of how ______ can be used to assist franchisees and customers.

technology

Recharge Answer Mode

Multiple Choice QuestionYour Answer correct

Usually, how many individuals operate a sole proprietorship?

one

The main advantage of a sole proprietorship is ease of start up.

True

A(n) ______ is similar to an S corporation but without the special eligibility requirements.

LLC

When you own a sole proprietorship you and the business are considered one, so you have ______ for financial obligations such as debt.

unlimited liability

The owner of a sole proprietorship is responsible for developing any fringe benefits they have.

True

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) ______.

general partnership

When a soft drink company and a mineral water company merge and then are able to supply a variety of drinking products they have formed a(n) ______ merger.

horizontal

A state-chartered legal entity with authority to act and have liability separate from its owners is a ______.

corporation

An agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n) ______.

franchise

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n) ______ partner.

limited

What can be said about the survival rate of partnerships as compared to sole proprietorships?

Partnerships are more likely to succeed.

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

In the corporate form of ownership, because owners are only responsible for losses up to the amount they have invested in a corporation, limited liability is considered ______.

a major advantage

A(n) ______ is similar to an S corporation but without the special eligibility requirements.

LLC

For a business to grow, prosper, and create economic opportunity, many people have to be willing to invest money in it. An advantage of a corporation is its ability to raise money through ______.

the sale of stock

In the corporate form of ownership, what is the relationship between the owners and the management?

The owners do not get involved in the daily management of the business.

What are two of the disadvantages of a corporation?

Double taxation and cost forming a corporation

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n) ______.

horizontal merger