Chapter 5 Quiz

A  the amount they have invested in the company.

B  the percentage of profits they are entitled to earn.

C  the firm’s total assets.

D  their total personal assets.

A  joint tenancy

B  merger

C  tenancy in common

D  leveraged buyout

A  stockholders to elect the board of directors.

B  stockholders to elect the officers and management team.

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

D  the company management to elect the board of directors.

A  corporation

B  cooperative

C  sole proprietorship

D  limited partnership

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 entitled to full reimbursement of any investment losses.

D  be personally responsible for all remaining debts.

A  sole proprietorship.

B  cooperative.

C  partnership.

D  corporation.

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

B  automatically continues under new management as a sole proprietorship.

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

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

A  master limited partnership.

B  limited liability company.

C  alien corporation

D  closed corporation.

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

D  diversify business operations and investments.

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

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

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

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

A  allow socialism a foothold in the U.S.

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

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

D  equalize the members’ standard of living.

A  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.

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

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

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  co-pay

D  dividend

A  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.

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  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  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  limited liability company.

D  sole proprietorship.

A  hostile takeover

B  acquisition

C  leveraged buyout

D  cooperative

A  sole proprietorship.

B  general partnership.

C  limited partnership.

D  corporation.

A  Little time commitment

B  Shared management and pooled skills

C  Ease of starting and ending the business

D  Unlimited liability

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

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