Chapter 5 Quiz

A  the firm’s total assets.

B  the amount they have invested in the company.

C  the percentage of profits they are entitled to earn.

D  their total personal assets.

A  joint tenancy

B  merger

C  leveraged buyout

D  tenancy in common

A  stockholders 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  the company management to elect the board of directors.

A  sole proprietorship

B  cooperative

C  limited partnership

D  corporation

A  unlimited

B  associate

C  limited

D  general

A  lose their investment but nothing else.

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

C  be personally responsible for all remaining debts.

D  be entitled to full reimbursement of any investment losses.

A  cooperative.

B  corporation.

C  sole proprietorship.

D  partnership.

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

B  automatically continues under new management as a sole proprietorship.

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

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

A  closed corporation.

B  alien corporation

C  limited liability company.

D  master limited partnership.

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

B  diversify business operations and investments.

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

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

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

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

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

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

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

B  equalize the members’ standard of living.

C  allow socialism a foothold in the U.S.

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

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

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

A  premium

B  dividend

C  co-pay

D  royalty

A  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.

B  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.

C  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.

D  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.

A  S corporation.

B  general partnership.

C  sole proprietorship.

D  limited liability company.

A  hostile takeover

B  leveraged buyout

C  cooperative

D  acquisition

A  corporation.

B  limited partnership.

C  sole proprietorship.

D  general partnership.

A  Little time commitment

B  Ease of starting and ending the business

C  Shared management and pooled skills

D  Unlimited liability

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

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

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

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.