Question 1

Which of the following statements is the most accurate? A foreign corporation:

Accepted Answer

A)  Does business in one or more states,but is chartered in another state.
B)  Is 50% owned by individuals or companies from another nation.
C)  Is headquartered in another nation.
D)  Is the same thing as a multinational corporation.E) None of the above
F) A) and B)

Question 2

A ______________ merger unites firms at different stages of related businesses.

Accepted Answer

A)  vertical
B)  horizontal
C)  diagonal
D)  conglomerateE) A) and C)
F) B) and C)

Question 3

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Accepted Answer

A)  Are less risky,because each partner is responsible for only a specified fraction of the firm's debts.
B)  Are easier to terminate.
C)  Cost less to organize.
D)  Give the firm a stronger financial foundation.E) B) and D)
F) A) and C)

Question 4

Trevor and Tyler own all the stock in the Double T Corporation.The stock of this corporation is not sold to the general public.Trevor and Tyler own a(n) :

Accepted Answer

A)  Limited liability company.
B)  Master limited partnership.
C)  Alien corporation.
D)  Closed corporation.E) A) and B)
F) All of the above

Question 5

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Accepted Answer

A) True 
 B)False

Question 6

_____________ are companies that are similar to S Corporations but are not restricted with similar eligibility requirements.

Accepted Answer

A)  Regulated equity companies
B)  Corporate cooperatives
C)  Limited liability companies
D)  Private drawing companiesE) B) and D)
F) A) and B)

Question 7

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Accepted Answer

A)  U.S.-based franchises are most likely to succeed in a foreign market if they use the same strategies and procedures used by franchises in the United States.
B)  There are limited opportunities for U.S.-based franchises to open in foreign countries because,aside from Canada,Mexico,and a small number of European countries,most foreign nations do not allow American-owned franchises to operate within their borders.
C)  The operating costs for franchises in foreign countries may be fairly high,but chances for success are quite good,because competition is likely to be less intense and the customer base in many foreign countries is expanding.
D)  It is difficult for U.S.-based franchises to succeed in most foreign countries because the low incomes of most households in these countries result in weak demanD.Franchises in foreign countries can be more expensive,but this is usually counterbalanced by less competition and a rapidly expanding consumer base.E) None of the above
F) B) and C)

Question 8

Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in Cleveland,Ohio.With the franchise fee behind her,she can look forward to using her creative talents to make her print shop different and more attractive than other Fontmaster shops in the Cleveland area.

Accepted Answer

A) True 
 B)False

Question 9

The S corporation is likely to be less popular in the future because:

Accepted Answer

A)  Congress repealed the limited liability protection of S corporations and limited them to companies with earnings of less than $3 million per year.
B)  Limited liability companies,which do not have the restrictive eligibility requirements of S corporations and offer greater flexibility in the choice of tax treatment,are now legal in all 50 states.
C)  Many states significantly increased the annual fee that S corporations must pay to maintain their tax status,thus eliminating the financial advantages of this form of ownership.
D)  S corporations have been made illegal in several states as a reaction to widespread abuse of the special benefits available to this type of business.E) B) and C)
F) All of the above

Question 10

In a limited partnership,the general partners should encourage the limited partners to take a more active role in the operations of the business.After all,the limited partner has comparable liability in the business,even though he/she may not be a partner for as long a period of time as the general partners.

Accepted Answer

A) True 
 B)False

Question 11

A major objective of a leveraged buyout is to enable investors to gain control of a company by issuing new shares of ownership,thus minimizing the use of debt.

Accepted Answer

A) True 
 B)False

Question 12

A multinational corporation is a firm that operates in several countries.

Accepted Answer

A) True 
 B)False

Question 13

An alien corporation does business abroad but is chartered in the U.S.

Accepted Answer

A) True 
 B)False

Question 14

If you want to sell your ownership in a publicly traded corporation,you find someone willing to buy your shares.

Accepted Answer

A) True 
 B)False

Question 15

A company that loses its status as an S corporation may not reelect this status for at least 5 years.

Accepted Answer

A) True 
 B)False

Question 16

In a leveraged buyout,the managers of a firm,its employees,or other investors:

Accepted Answer

A)  Move the company elsewhere and start over.
B)  Obtain the assets of the company through bankruptcy proceedings.
C)  Borrow funds to buy out the firm's stockholders.
D)  Negotiate a merger with another firm to create a conglomerate.E) C) and D)
F) A) and B)

Question 17

Which of the following statements about S corporations is most accurate?

Accepted Answer

A)  The major attraction of S corporations is that they avoid the problem of double taxation.
B)  S Corporations are similar to C corporations,except that the majority of owners are foreign investors.
C)  Any corporation willing to pay the necessary fees and fill out the required paperwork can become an S Corporation.
D)  Only large corporations with operations in more than one state can qualify to be classified as S corporations.E) C) and D)
F) A) and D)

Question 18

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Accepted Answer

A) True 
 B)False

Question 19

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Accepted Answer

A limited liability company (LLC)is a re...

Question 20

The "coattail effect" refers to inevitable repercussions on your business if a fellow franchisee should fail.

Accepted Answer

A) True 
 B)False

Exam 5: How to Form a Business

The S corporation is likely to be less popular in the future because:

Correct Answer
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Which of the following statements about S corporations is most accurate?

Correct Answer
verified

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Correct Answer
verified

A multinational corporation is a firm that operates in several countries.

Correct Answer
verified

The "coattail effect" refers to inevitable repercussions on your business if a fellow franchisee should fail.

Correct Answer
verified

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Correct Answer
verified

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct Answer
verified

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Correct Answer
verified
A limited liability company (LLC)is a re...
View Answer

A ______________ merger unites firms at different stages of related businesses.

Correct Answer
verified

Correct Answer
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Which of the following statements is the most accurate? A foreign corporation:

Correct Answer
verified

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Correct Answer
verified

_____________ are companies that are similar to S Corporations but are not restricted with similar eligibility requirements.

Correct Answer
verified

In a leveraged buyout,the managers of a firm,its employees,or other investors:

Correct Answer
verified

A major objective of a leveraged buyout is to enable investors to gain control of a company by issuing new shares of ownership,thus minimizing the use of debt.

Correct Answer
verified

If you want to sell your ownership in a publicly traded corporation,you find someone willing to buy your shares.

Correct Answer
verified

Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in Cleveland,Ohio.With the franchise fee behind her,she can look forward to using her creative talents to make her print shop different and more attractive than other Fontmaster shops in the Cleveland area.

Correct Answer
verified

An alien corporation does business abroad but is chartered in the U.S.

Correct Answer
verified

A company that loses its status as an S corporation may not reelect this status for at least 5 years.

Correct Answer
verified

Trevor and Tyler own all the stock in the Double T Corporation.The stock of this corporation is not sold to the general public.Trevor and Tyler own a(n) :

Correct Answer
verified

Exam 5: How to Form a Business

The S corporation is likely to be less popular in the future because:

Correct AnswerverifiedShow Answer

Which of the following statements about S corporations is most accurate?

Correct AnswerverifiedShow Answer

If the business is designated a sole proprietorship,profits are passed along to the owner.For tax purposes,these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

Correct AnswerverifiedShow Answer

A multinational corporation is a firm that operates in several countries.

Correct AnswerverifiedShow Answer

The "coattail effect" refers to inevitable repercussions on your business if a fellow franchisee should fail.

Correct AnswerverifiedShow Answer

When comparing general partnerships to sole proprietorships,an advantage of partnerships is that they:

Correct AnswerverifiedShow Answer

Which of the following statements about operating a U.S.-based franchise in a foreign country is most accurate?

Correct AnswerverifiedShow Answer

What is a limited liability company (LLC)? How does it compare to an S corporation? What are the major advantages and disadvantages of an LLC?

Correct AnswerverifiedA limited liability company (LLC)is a re...View AnswerShow Answer

A ______________ merger unites firms at different stages of related businesses.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is the most accurate? A foreign corporation:

Correct AnswerverifiedShow Answer

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Correct AnswerverifiedShow Answer

_____________ are companies that are similar to S Corporations but are not restricted with similar eligibility requirements.

Correct AnswerverifiedShow Answer

In a leveraged buyout,the managers of a firm,its employees,or other investors:

Correct AnswerverifiedShow Answer

A major objective of a leveraged buyout is to enable investors to gain control of a company by issuing new shares of ownership,thus minimizing the use of debt.

Correct AnswerverifiedShow Answer

If you want to sell your ownership in a publicly traded corporation,you find someone willing to buy your shares.

Correct AnswerverifiedShow Answer

Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in Cleveland,Ohio.With the franchise fee behind her,she can look forward to using her creative talents to make her print shop different and more attractive than other Fontmaster shops in the Cleveland area.

Correct AnswerverifiedShow Answer

An alien corporation does business abroad but is chartered in the U.S.

Correct AnswerverifiedShow Answer

A company that loses its status as an S corporation may not reelect this status for at least 5 years.

Correct AnswerverifiedShow Answer

Trevor and Tyler own all the stock in the Double T Corporation.The stock of this corporation is not sold to the general public.Trevor and Tyler own a(n) :

Correct AnswerverifiedShow Answer

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A limited liability company (LLC)is a re...
View Answer

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