Supplementary exercise 1.docx

1、Supplementary exercise 1Lecture 1 True or False( F)1. The legal requirements for establishing a sole proprietorship are very difficult.( F )2. One advantage of sole proprietorships is that this form of ownership provides easy access to additional funds.( F )3. Limited partners are investors in the p

2、artnership and participate in the management of the business.( F )4. The limited liability feature is an advantage of owning a sole proprietorship.( T )5. When a corporation distributes some of its recent earnings to stockholders, the payments are referred to as capital gains.( F )6. If the board of

3、 directors becomes displeased with the performance of the key officers, the board has the power to replace them.( T )7. Publicly held corporations can obtain additional funds by issuing new common stock.( F )8. Publicly held corporations are required to disclose financial information to the investin

4、g public.( F )9. To incorporate a business, one must adopt a corporate charter and file it with the state government where the business is to be located.( F )10. The form of ownership of a firm should not be changed unless there are major tax advantages.( T )11. Distributorships, chain-style busines

5、ses, and manufacturing arrangements are all common types of franchises.Multiple Choice12. When entrepreneurs establish a business, they must first decide on the form of:aa) divestiture.b) global expansion.c) joint venture.d) ownership.13. The following are possible forms of business ownership except

6、 for :ca) sole proprietorship.b) partnership.c) bureaucracy.d) corporation.14. Joe wants to form his own business. He wants to get started as quickly and inexpensively as possible and has a strong desire to control the business himself. He is confident he will be successful and wants to keep all the

7、 profits himself. Joes goals indicate he would probably choose to operate his business as a(n):ea) limited partnership.b) limited liability company.c) S-corporation.d) franchise.e) sole proprietorship.15. A business owned by a single owner is referred to as a:ba) partnership.b) sole proprietorship.c

8、) limited partnership.d) corporation.e) subchapter S-corporation.16. A disadvantage of a sole proprietorship is that:ba) sole proprietors have very little control over theoperations of the business.b) sole proprietors have unlimited liability.c) it is more difficult and expensive to establishthan ot

9、her forms of business.d) its earnings are subject to higher tax rates thanother forms of business.e) sole proprietors are required to share the firmsprofits with employees.17. Partners have unlimited liability in a:aa) general partnership.b) corporation.c) limited partnership.d) cooperative.18. In a

10、 limited partnership:ca) all partners have limited liability.b) the partnership exists only for a limited time period,or until a specific task is accomplished.c) the limited partners do not participate in managementof the company.d) the partners agree to operate in a limited geographicarea.e) no mor

11、e than 100 partners may invest in thecompany at any one time.19. When two or more people, having complementary skills, agree to co-own a business, this agreement is referred to as a:aa) partnership.b) sole proprietorship.c) cooperative.d) corporation.e) joint venture.20. A firm that has 100 owners o

12、r less and also meets other criteria may choose to be a so-called:aa) cooperative.b) proprietorship.c) joint venture.d) S-corporation.e) bureaucracy.21. A general partnership that protects a partners personal assets from the negligence of other partners is called a:da) limited liability company.b) c

13、ooperative.c) private corporation.d) master limited partnership.e) protected partnership.22. A corporation is:da) easier to form than other types of businesses.b) a state-chartered entity that is legally distinctfrom its owners.c) a business that is owned and operated by agovernment agency.d) a form

14、 of business that is legally exempt frompaying taxes on earnings.e) simply another term for a large soleproprietorship.23. The _ has the most potential for raising a large amount of funds:ba) proprietorship.b) corporation.c) limited partnership.d) unlimited partnership.e) S-corporation.24. Important

15、 aspects of a corporation, such as the name of the firm, information about the stock issued, and a description of the firms operations, are contained in a:ca) mission.b) policy.c) charter.d) plan.e) venture.25. The members of the board of directors of a corporation are chosen by the corporations:da)

16、 president and chief executive officer.b) creditors.c) general partners.d) stockholders.e) charter members.26. When ownership of a small corporation is restricted to a small group of investors, it is:da) publicly held.b) government owned.c) bureaucratic.d) privately held.e) perfectly competitive.27.

17、 When a corporations shares can be easily purchased or sold by investors, it is:ea) publicly held.b) privately held.c) institutionalized.d) monopolized.e) franchised.28. People become owners of a corporation by purchasing:ba) shares of stock.b) corporate bonds.c) retained earnings.d) inventory.e) ac

18、counts receivable.29. Agency problems are least likely in:da) sole proprietorships.b) limited liability companies.c) general partnerships.d) publicly held corporations.e) privately held corporations.30. When stockholders of a corporation sell shares of stock for more than they paid for them, they re

19、ceive a:aa) dividend.b) premium.c) capital gain.d) discount.e) stock option.31. The return on investment in a firm is derived from the firms ability to earn:ca) assets.b) liabilities.c) profits.d) expenses.32. The total amount invested in a company by its owners is called:ca) the corporate margin.b)

20、 equity.c) working capital.d) the stock premium.e) treasury stock.33. The degree of uncertainty about future earnings, which reflects an uncertain return to the owners, is known as:ca) certainty.b) profits.c) risk.d) equity.e) dividends.34. An arrangement whereby business owners allow others to use

21、their trademark, trade name, or copyright under specified conditions is a:ea) franchise.b) labor union.c) bureau.d) joint venture.e) cartel.35. A business that is allowed to use the trade name of a company and follows guidelines related to the pricing and sales of the products is a:ca) joint venture

22、.b) monopoly.c) chain-style business.d) sole proprietorship.36. All of the following are common types of franchise arrangements except:aa) business agencies.b) chain-style businesses.c) manufacturing arrangements.d) distributorships.37. Sharing profits and less control of the business ownership are

23、two common disadvantages of:ca) sole proprietorships.b) downsizing.c) divestiture.d) franchising.38. Advantages of business-to-business franchises include all of the following except:ba) tax advantages.b) smaller initial investment.c) ability for home-based work.d) substitution of computer technology for employees.