Chapters 5 and 6 BA2020
Business Ownership Quiz: Chapters 5 and 6 BA2020
Test your knowledge of business ownership and structures with our engaging quiz based on Chapters 5 and 6 of BA2020. This quiz will challenge your understanding of various forms of business, their regulations, and the implications of different ownership structures.
- 16 thought-provoking questions
- Multiple choice format
- Perfect for students, entrepreneurs, and anyone interested in business!
Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, the company is a chartered C corporation, but the owners are interested in switching to be an S corporation. After consulting a lawyer, they learned that Zorn Enterprises does not qualify to be designated as an S corporation. Which of the following characteristics of Zorn Enterprises would prevent it from becoming an S corporation?
The firm receives more than 70 percent of its income from rents and other passive sources.
The firm has only one class of stock, all owned by U.S. citizens.
The firm has fewer than 75 stockholders.
The firm is chartered in one state, but owns property in another.
Travis has agreed to invest $16,000 in a partnership with his sister and brother-in-law. He does not intend to actively work in the partnership, nor does he wish to risk any of his own assets other than the $16,000 he initially invests. The partnership has agreed to permit him to share in the profits. As an expert on forms of business ownership, you know that Travis is a ______________ in this partnership.
limited partner
Preferred stockholder
Secondary partner
General partner
In countries where businesses are government owned:
Profits tend to be higher
The right amount of each good is produced
There is less incentive to work hard
The quality of goods is high but profits are low
Blake owns a business that installs hardwood flooring. The business employs one other full-time employee and several part-time employees who are deployed to various job sites on an "as needed" basis. The earnings from his company are added to other family earnings for tax purposes, and Blake assumes unlimited liability for the business's bills and debt. Blake's form of business ownership is a
Sole proprietorship
Limited partnership
Corporation
Cooperative
Jim and Sherry own Lawns for Less Inc., a commercial lawn cutting service. The couple supplements their income with the rentals from a few apartment buildings that they own. They incorporated the lawn care business in order to keep it separate from their other income. As a C-corporation, if the business should fail, the couple would _______.
Lose their personal assets as the result of their company's financial problems
Lose only the funds they originally invested in their company
Lose only the potential profits
More than likely lose business assets, including the apartments
One reason limited liability companies have become so popular is that they _____.
Can be taxed either as a corporation or as a partnership--owners can choose the tax treatment that is most advantageous for their situation
Allow owners to sell their interests in the company without requiring approval from other owners
Have unlimited life
Allows owners to avoid paying self-employment taxes on company's profits
In a leveraged buyout, the managers of a firm, its employees, or other investors _______.
Move the company elsewhere and start over
Obtain the assets of the company throughout bankruptcy proceedings
Use borrowed funds to buy out the firms stockholders
Negotiate a merger with another firm to create a conglomerate
Trans Globe Airlines recently merged with Royal Blue Airlines, a financially troubled rival. The firms' management believes the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations. This proposed merger is an example of a _______.
Conglomerate merger
Leveraged buyout
Horizontal merger
Joint venture
Mega Bank's latest acquisition is Windfall Bank Shares, a bank with a strong presence in online financial services. Companies will acquire other businesses in order to ______________.
Change their culture
Deactivate their board of directors
Enter new markets
Adopt the new and eventually sell-off the old
An evaluation of franchising would conclude that this type of arrangement ____.
Has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages
Appeals to people who want to own a business, but are not comfortable starting a company from scratch
Has much higher risk of failure than independent companies
Has little chance of success outside of the united states because many foreign countries do not allow such arrangements
Midas Muffler sells franchises to prospective business persons who want to use the Midas name and offer Midas products. In a franchise agreement, Midas would be the __________, and the buyer of the franchise is the ___________.
Owner; limited partner
Co-signer; co-signee
Franchisor; franchisee
Whosesaler; retailer
A ___________ is an organization that is owned and controlled by the people who use it---- producers, consumers, and workers with similar needs who pool their resources for mutual gain
Corporation
Limited partnership
Mutual fund
Cooperative
An entrepreneur _______________.
Manages a business for someone else
Owns controlling interest in the stock of a major corporation
Manages a business that operates in more than one country
Accepts the risk of starting and running a business
When looking at the advantages and disadvantages of starting various types of businesses, it appears that ________.
Businesses that are easy to start often offer the greatest potential for long-term growth and profits
The greatest security is available in the manufacturing sector
Businesses that offer a chance for high profits tend to be difficult to start and hard to keep going
The reason the service sector is growing so rapidly is that service firms are easy to start, easy to keep going, and offer both growth opportunities and plenty of security
Research about people who start their own businesses reveals that ______.
Many small business owners got their entrepreneurial idea from a previous job they held
It is rare for managers with experience working within big corporations to start their own business
People who start their own businesses right after graduating from high school or college are generally more successful than those who first work for someone else
Most small business owners have a great deal of personal wealth
When seeking a loan from a bank, an entrepreneur hoping to start a new business should realize that bankers will ________.
Expect to receive a share of ownership in the business in exchange for their loan
Expect the entrepreneur to have a well-prepared business plan
Generally make loans to only small businesses in computer-related industries
Offer only very short term financing
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