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Business: A Changing World, 4/e
O.C. Ferrell, Colorado State University
Geoffrey Hirt, DePaul University

Options for Organizing Business

Multiple Choice Quiz

Please answer all questions.



1

Which of the following is a disadvantage of the sole proprietorship?
A)limited sources of funds
B)t shared
C)limited liability
D)limited government regulation
E)secrecy
2

Which of the following is a disadvantage of a corporation?
A)perpetual life of organization
B)limited liability
C)external funding sources
D)transfer of ownership
E)double taxation
3

Which of the following requires owners to be generalist managers with many diverse skills?
A)sole proprietorship
B)partnership
C)corporation
D)holding company
E)cooperative
4

Which of the following is an advantage of the sole proprietorship form of business organization?
A)ease of formation
B)secrecy
C)limited government regulation
D)control of business
E)all of these
5

Cooperatives are formed to
A)develop new products.
B)eliminate advertising.
C)allow individuals or small businesses to join together to gain the benefits
D)of belonging to a larger organization.
E)distribute profits to stockholders.
F)avoid lawsuits.
6

Which of the following is a partnership established for a specific project or for a limited time?
A)general partnership
B)limited partnership
C)joint venture
D)preemptive partnership
E)cooperative partnership
7

All profits from a sole proprietorship belong exclusively to
A)stockholders.
B)partners.
C)employees.
D)the owner.
E)the government.
8

When two companies combine to form a new company, it is a(n)
A)white knight.
B)leveraged buyout.
C)tender offer.
D)acquisition.
E)merger.
9

Which of the following is an advantage of a partnership?
A)availability of capital and credit
B)ease of organizing business
C)specialization of partners
D)relatively fast decision-making
E)all of these are advantages
10

The type of ownership form which is subject to double taxation is a(n)
A)corporation.
B)entrepreneurship.
C)sole proprietorship.
D)general partnership.
E)limited partnership.
11

A public corporation is one that
A)is owned by only a few people, and not traded on the open market.
B)pays triple-taxes on its income.
C)does not hire employees.
D)cannot be purchased on the New York Stock Exchange.
E)none of the above.
12

When a group of investors borrows money to buy a company or division, using the purchased company's assets to guarantee the loan, it is a(n)
A)acquisition.
B)leveraged buyout.
C)merger.
D)poison pill.
E)tender offer.
13

Partnerships do not directly pay taxes on business profits. For this reason, they are referred to as what type of organization?
A)tax-free
B)quasi-taxable
C)totally taxable
D)tax-exempt
E)non-taxable
14

A corporation is a separate legal entity created by the state. The corporation
A)has many of the same rights and duties of a person.
B)cannot be sued.
C)may not own property.
D)has no liability.
E)all of the above.
15

Which of the following is a disadvantage of a partnership?
A)unlimited liability
B)life of partnership
C)distribution of profits
D)limited funding sources
E)all of these are disadvantages
16

Which form of business ownership provides limited liability but is taxed like a partnership?
A)cooperative
B)sole proprietorship
C)joint venture
D)limited liability company
E)corporation
17

Ace Hardware is an example of a
A)cooperative.
B)joint venture.
C)merger.
D)limited partnership.
E)sole proprietorship.
18

Debbie has been asked to join a new partnership that is opening several yogurt stands on a nearby college campus. She does not want to be liable for the firm's debts if the project should fail. She could still participate as a
A)working partner.
B)silent partner.
C)limited partner.
D)general partner.
E)contributor.
19

Which of the following is a characteristic of the sole proprietorship form of business organization?
A)It is taxed more than other forms.
B)The owner does not have direct control.
C)It is easy to form.
D)It is heavily regulated by the government.
E)It is hard to dissolve.
20

Shareholder is another name for a
A)unitholder.
B)percentageholder.
C)stockholder.
D)voteholder.
E)valueholder.




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