Supplementary exercise 1.docx

Supplementary exercise 1.docx

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Supplementaryexercise1

Lecture1

TrueorFalse

（F）1.Thelegalrequirementsforestablishingasoleproprietorshipareverydifficult.

（F）2.Oneadvantageofsoleproprietorshipsisthatthisformofownershipprovideseasyaccesstoadditionalfunds.

（F）3.Limitedpartnersareinvestorsinthepartnershipandparticipateinthemanagementofthebusiness.

（F）4.Thelimitedliabilityfeatureisanadvantageofowningasoleproprietorship.

（T）5.Whenacorporationdistributessomeofitsrecentearningstostockholders,thepaymentsarereferredtoascapitalgains.

（F）6.Iftheboardofdirectorsbecomesdispleasedwiththeperformanceofthekeyofficers,theboardhasthepowertoreplacethem.

（T）7.Publiclyheldcorporationscanobtainadditionalfundsbyissuingnewcommonstock.

（F）8.Publiclyheldcorporationsarerequiredtodisclosefinancialinformationtotheinvestingpublic.

（F）9.Toincorporateabusiness,onemustadoptacorporatecharterandfileitwiththestategovernmentwherethebusinessistobelocated.

（F）10.Theformofownershipofafirmshouldnotbechangedunlesstherearemajortaxadvantages.

（T）11.Distributorships,chain-stylebusinesses,andmanufacturingarrangementsareallcommontypesoffranchises.

MultipleChoice

12.Whenentrepreneursestablishabusiness,theymustfirstdecideontheformof:

a

a）divestiture.

b）globalexpansion.

c）jointventure.

d）ownership.

13.Thefollowingarepossibleformsofbusinessownershipexceptfor:

c

a）soleproprietorship.

b）partnership.

c）bureaucracy.

d）corporation.

14.Joewantstoformhisownbusiness.Hewantstogetstartedasquicklyandinexpensivelyaspossibleandhasastrongdesiretocontrolthebusinesshimself.Heisconfidenthewillbesuccessfulandwantstokeepalltheprofitshimself.Joe’sgoalsindicatehewouldprobablychoosetooperatehisbusinessasa（n）:

e

a）limitedpartnership.

b）limitedliabilitycompany.

c）S-corporation.

d）franchise.

e）soleproprietorship.

15.Abusinessownedbyasingleownerisreferredtoasa:

b

a）partnership.

b）soleproprietorship.

c）limitedpartnership.

d）corporation.

e）subchapterS-corporation.

16.Adisadvantageofasoleproprietorshipisthat:

b

a）soleproprietorshaveverylittlecontroloverthe

operationsofthebusiness.

b）soleproprietorshaveunlimitedliability.

c）itismoredifficultandexpensivetoestablish

thanotherformsofbusiness.

d）itsearningsaresubjecttohighertaxratesthan

otherformsofbusiness.

e）soleproprietorsarerequiredtosharethefirm’s

profitswithemployees.

17.Partnershaveunlimitedliabilityina:

a

a）generalpartnership.

b）corporation.

c）limitedpartnership.

d）cooperative.

18.Inalimitedpartnership:

c

a）allpartnershavelimitedliability.

b）thepartnershipexistsonlyforalimitedtimeperiod,

oruntilaspecifictaskisaccomplished.

c）thelimitedpartnersdonotparticipateinmanagement

ofthecompany.

d）thepartnersagreetooperateinalimitedgeographic

area.

e）nomorethan100partnersmayinvestinthe

companyatanyonetime.

19.Whentwoormorepeople,havingcomplementaryskills,agreetoco-ownabusiness,thisagreementisreferredtoasa:

a

a）partnership.

b）soleproprietorship.

c）cooperative.

d）corporation.

e）jointventure.

20.Afirmthathas100ownersorlessandalsomeetsothercriteriamaychoosetobeaso-called:

a

a）cooperative.

b）proprietorship.

c）jointventure.

d）S-corporation.

e）bureaucracy.

21.Ageneralpartnershipthatprotectsapartner’spersonalassetsfromthenegligenceofotherpartnersiscalleda:

d

a）limitedliabilitycompany.

b）cooperative.

c）privatecorporation.

d）masterlimitedpartnership.

e）protectedpartnership.

22.Acorporationis:

d

a）easiertoformthanothertypesofbusinesses.

b）astate-charteredentitythatislegallydistinct

fromitsowners.

c）abusinessthatisownedandoperatedbya

governmentagency.

d）aformofbusinessthatislegallyexemptfrom

payingtaxesonearnings.

e）simplyanothertermforalargesole

proprietorship.

23.The___hasthemostpotentialforraisingalargeamountoffunds:

b

a）proprietorship.

b）corporation.

c）limitedpartnership.

d）unlimitedpartnership.

e）S-corporation.

24.Importantaspectsofacorporation,suchasthenameofthefirm,informationaboutthestockissued,andadescriptionofthefirm’soperations,arecontainedina:

c

a）mission.

b）policy.

c）charter.

d）plan.

e）venture.

25.Themembersoftheboardofdirectorsofacorporationarechosenbythecorporation’s:

d

a）presidentandchiefexecutiveofficer.

b）creditors.

c）generalpartners.

d）stockholders.

e）chartermembers.

26.Whenownershipofasmallcorporationisrestrictedtoasmallgroupofinvestors,itis:

d

a）publiclyheld.

b）governmentowned.

c）bureaucratic.

d）privatelyheld.

e）perfectlycompetitive.

27.Whenacorporation’ssharescanbeeasilypurchasedorsoldbyinvestors,itis:

e

a）publiclyheld.

b）privatelyheld.

c）institutionalized.

d）monopolized.

e）franchised.

28.Peoplebecomeownersofacorporationbypurchasing:

b

a）sharesofstock.

b）corporatebonds.

c）retainedearnings.

d）inventory.

e）accountsreceivable.

29.Agencyproblemsareleastlikelyin:

d

a）soleproprietorships.

b）limitedliabilitycompanies.

c）generalpartnerships.

d）publiclyheldcorporations.

e）privatelyheldcorporations.

30.Whenstockholdersofacorporationsellsharesofstockformorethantheypaidforthem,theyreceivea:

a

a）dividend.

b）premium.

c）capitalgain.

d）discount.

e）stockoption.

31.Thereturnoninvestmentinafirmisderivedfromthefirm’sabilitytoearn:

c

a）assets.

b）liabilities.

c）profits.

d）expenses.

32.Thetotalamountinvestedinacompanybyitsownersiscalled:

c

a）thecorporatemargin.

b）equity.

c）workingcapital.

d）thestockpremium.

e）treasurystock.

33.Thedegreeofuncertaintyaboutfutureearnings,whichreflectsanuncertainreturntotheowners,isknownas:

c

a）certainty.

b）profits.

c）risk.

d）equity.

e）dividends.

34.Anarrangementwherebybusinessownersallowotherstousetheirtrademark,tradename,orcopyrightunderspecifiedconditionsisa:

e

a）franchise.

b）laborunion.

c）bureau.

d）jointventure.

e）cartel.

35.Abusinessthatisallowedtousethetradenameofacompanyandfollowsguidelinesrelatedtothepricingandsalesoftheproductsisa:

c

a）jointventure.

b）monopoly.

c）chain-stylebusiness.

d）soleproprietorship.

36.Allofthefollowingarecommontypesoffranchisearrangementsexcept:

a

a）businessagencies.

b）chain-stylebusinesses.

c）manufacturingarrangements.

d）distributorships.

37.Sharingprofitsandlesscontrolofthebusinessownershiparetwocommondisadvantagesof:

c

a）soleproprietorships.

b）downsizing.

c）divestiture.

d）franchising.

38.Advantagesofbusiness-to-businessfranchisesincludeallofthefollowingexcept:

b

a）taxadvantages.

b）smallerinitialinvestment.

c）abilityforhome-basedwork.

d）substitutionofcomputertechnologyforemployees.