Question 1

Sole proprietorships have all of the following advantages EXCEPT _____.

Accepted Answer

A) unlimited life 
B) ease of formation 
C) profits subject only to a single tax 
D) ease of liquidation

Question 2

Which of the following statements regarding franchising is FALSE?

Accepted Answer

A) Franchises are riskier than other forms of business ownership. 
B) Franchisees have the benefit of name recognition. 
C) Franchisors provide a wide range of support to franchisees. 
D) Benefits for the franchisor include opportunities for expansion that might not otherwise be available.

Question 3

Small Business Investment Company (SBIC)loans are actually government loans funneled through a private organization.

Accepted Answer

A) True 
 B)False

Question 4

With less money to spend on employees,marketing,inventory,and other business costs,successful small companies need to be creative.

Accepted Answer

A) True 
 B)False

Question 5

Interestingly,research finds that larger firms prove more successful than smaller firms in offering innovative products to consumers.

Accepted Answer

A) True 
 B)False

Question 6

Due to logistics and conflicting business laws,joint ventures are not ideal for international companies.

Accepted Answer

A) True 
 B)False

Question 7

According to the legal requirements,large businesses must be organized as corporations.

Accepted Answer

A) True 
 B)False

Question 8

Who elects the board of directors of a corporation?

Accepted Answer

A) Corporation's employees 
B) Bondholders and other creditors 
C) Corporate officers 
D) Stockholders

Question 9

News 24/7,a newspaper group,merged with Alfalah Finance,an investment firm.The two companies merged together to diversify their business and to generate more revenue.This merger will be an example of a _____.

Accepted Answer

A) conglomerate merger 
B) horizontal merger 
C) vertical merger 
D) joint venture

Question 10

Bianca owns a company that provides laundry services.She ensures that only her family members are the stockholders of her company.She also allows them to control and manage all of the company's activities.In this scenario,Bianca owns a _____.

Accepted Answer

A) public corporation 
B) closed corporation 
C) not-for-profit corporation 
D) limited-liability corporation

Exam 5: Forms of Business Ownership and Organization

Sole proprietorships have all of the following advantages EXCEPT _____.

Which of the following statements regarding franchising is FALSE?

Small Business Investment Company (SBIC)loans are actually government loans funneled through a private organization.

With less money to spend on employees,marketing,inventory,and other business costs,successful small companies need to be creative.

Interestingly,research finds that larger firms prove more successful than smaller firms in offering innovative products to consumers.

Due to logistics and conflicting business laws,joint ventures are not ideal for international companies.

According to the legal requirements,large businesses must be organized as corporations.

Who elects the board of directors of a corporation?

News 24/7,a newspaper group,merged with Alfalah Finance,an investment firm.The two companies merged together to diversify their business and to generate more revenue.This merger will be an example of a _____.

Bianca owns a company that provides laundry services.She ensures that only her family members are the stockholders of her company.She also allows them to control and manage all of the company's activities.In this scenario,Bianca owns a _____.