Chapter 5 Quiz

A  their total personal assets.

B  the firm’s total assets.

C  the percentage of profits they are entitled to earn.

D  the amount they have invested in the company.

A  joint tenancy

B  tenancy in common

C  leveraged buyout

D  merger

A  the company management to elect the board of directors.

B  employees (by committee) to elect the officers of the company.

C  stockholders to elect the officers and management team.

D  stockholders to elect the board of directors.

A  cooperative

B  limited partnership

C  sole proprietorship

D  corporation

A  limited

B  unlimited

C  associate

D  general

A  be personally responsible for all remaining debts.

B  automatically qualify for federal reimbursement for any losses suffered by the firm.

C  lose their investment but nothing else.

D  be entitled to full reimbursement of any investment losses.

A  cooperative.

B  partnership.

C  corporation.

D  sole proprietorship.

A  becomes the property of the most senior employee who wishes to continue operating the firm.

B  automatically converts into a public corporation with stock sold to interested investors.

C  ceases to exist unless sold or taken over by Yoshi’s heirs.

D  automatically continues under new management as a sole proprietorship.

A  closed corporation.

B  master limited partnership.

C  alien corporation

D  limited liability company.

A  enable the firm to enjoy a higher degree of specialization.

B  allow the firm to have a less dominant position in its market.

C  give the firm a more secure access to needed materials and components and better control over quality.

D  diversify business operations and investments.

A  has a much higher risk of failure than independent companies.

B  appeals to people who want to own a business, but are not comfortable starting a company from scratch.

C  has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages.

D  has little chance of success outside the United States because many foreign countries do not allow such arrangements.

A  equalize the members’ standard of living.

B  give each farm an equal share in the running of the cooperative.

C  allow socialism a foothold in the U.S.

D  give members more economic power as a group than they would have as individuals.

A  Family businesses never take on outside partners, so no discussion of this need take place.

B  Due to the fact that they are all under 40 years old and expect to work until they are 65, there is no need to decide what will happen to the partnership if one decides to leave the business or retire, or dies.

C  The business should be actively operating for an extended period before the partners decide who is responsible for what business functions.

D  There should be discussion and well-understood ways that the partners will handle disagreements.

A  co-pay

B  dividend

C  royalty

D  premium

A  If Game Guys, Inc. distributes 20% of its net profit after taxes to its stockholders, these funds will be taxed again, when each individual stockholder claims his/her portion as earnings.

B  If Game Guys, Inc. fails to pay its taxes on time during any given year, it must pay the current year and the delinquent year, in order to stay in business, similar to being taxed two times.

C  Due to the fact that it is a corporation, the accountants of Game Guys, Inc. calculate 35% of the company’s earnings, multiply it by 2, and then distribute that amount to the federal government each year for taxes.

D  By law, Game Guys, Inc. is permitted to tax its executive employees twice on their earnings, and then pass those funds on to its stockholders in the form of dividends.

A  general partnership.

B  limited liability company.

C  S corporation.

D  sole proprietorship.

A  hostile takeover

B  leveraged buyout

C  cooperative

D  acquisition

A  sole proprietorship.

B  limited partnership.

C  general partnership.

D  corporation.

A  Little time commitment

B  Ease of starting and ending the business

C  Unlimited liability

D  Shared management and pooled skills

A  if stockholders decide to sell their shares, they are subject to paying twice the amount of taxes on any capital gains.

B  as the owner of the company, you pay twice the amount in employment taxes on yourself, as you do on your employees.

C  corporations pay taxes on their profits. If they distribute after-tax profits to the stockholders, the stockholders also pay taxes on the distribution.

D  if the corporation doubles its profits from the previous year, the firm’s tax rate (the percentage it pays in taxes) will also double.