Chapter 5 Quiz

A  their total personal assets.

B  the percentage of profits they are entitled to earn.

C  the firm’s total assets.

D  the amount they have invested in the company.

A  leveraged buyout

B  joint tenancy

C  tenancy in common

D  merger

A  stockholders to elect the board of directors.

B  the company management to elect the board of directors.

C  stockholders to elect the officers and management team.

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

A  sole proprietorship

B  corporation

C  limited partnership

D  cooperative

A  associate

B  unlimited

C  limited

D  general

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

B  be entitled to full reimbursement of any investment losses.

C  lose their investment but nothing else.

D  be personally responsible for all remaining debts.

A  cooperative.

B  partnership.

C  sole proprietorship.

D  corporation.

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

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

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

D  automatically continues under new management as a sole proprietorship.

A  closed corporation.

B  limited liability company.

C  alien corporation

D  master limited partnership.

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

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

C  diversify business operations and investments.

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

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

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

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

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

A  allow socialism a foothold in the U.S.

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

C  equalize the members’ standard of living.

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

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

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

C  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.

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

A  royalty

B  premium

C  dividend

D  co-pay

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  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.

C  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.

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  sole proprietorship.

B  general partnership.

C  limited liability company.

D  S corporation.

A  cooperative

B  leveraged buyout

C  hostile takeover

D  acquisition

A  limited partnership.

B  general partnership.

C  corporation.

D  sole proprietorship.

A  Shared management and pooled skills

B  Unlimited liability

C  Little time commitment

D  Ease of starting and ending the business

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

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

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

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