Chapter.5 Complete Test Bank Small Business Ownership - Contemporary Business 19e | Practice Test Bank by Louis E. Boone. DOCX document preview.
Package Title: Chapter 5, Testbank
Course Title: Boone, Contemporary Business, 19th Edition
Chapter Number: 5
Question type: Multiple Choice
1) A(n) _____ joins firms in the same industry that wish to diversify, increase their customer base, cut costs, or offer expanded product lines.
b) horizontal merger
c) conglomerate merger
d) vertical merger
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
2) A(n) _____ occurs when one firm purchases the property and assets and assumes the debt obligations of another firm.
a) merger
b) acquisition
c) cooperative
d) franchising
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
3) A(n) _____ combines firms operating at different levels in the production and marketing process.
a) merger
b) horizontal merger
c) conglomerate merger
d) vertical merger
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
4) A(n) _____ is a type of business ownership formed in one country but that operates in another country.
a) small business
b) corporation
c) cooperative
d) alien corporation
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
5) During a(n) _____, two or more firms combine to form one company.
a) incorporation
b) merger
c) acquisition
d) franchising
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
6) The form of business ownership that establishes the firm as a separate legal entity is the _____.
a) small business
b) corporation
c) cooperative
d) business incubators
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
7) _____ is a contractual agreement that specifies the methods by which a dealer can produce and market a supplier’s good or service.
a) Merger
b) Cooperative
c) Business plan
d) Franchising
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
8) A(n) _____ is an independent business with less than 500 employees.
a) small business
b) corporation
c) cooperative
d) franchise
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
9) A(n) _____ business consists of owners who join forces to collectively operate all or part of the functions in their industry.
a) corporation
b) conglomerate
c) cooperative
d) franchise
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
10) A merger of firms in unrelated industries is called a(n) _____.
a) acquisition
b) horizontal merger
c) conglomerate merger
d) vertical merger
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
11) Small start-up ventures looking for low-cost shared facilities can utilize _____, offered by local community agencies.
a) cooperatives
b) business incubators
c) alien corporations
d) franchises
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
12) Owners of _____ have limited voting rights, but are entitled to the earliest dividends.
a) small business
b) corporations
c) business incubators
d) preferred stock
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
13) Having a(n) _____ improves the chances of success for a new business by providing an orderly statement of a company’s goals.
a) cooperative
b) business incubators
c) business plan
d) preferred stock
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
14) Why do small-business owners want to determine whether their companies meet the standards for small-business designation? Because _____.
a) they do not have to pay taxes on their profits
b) government agencies offer benefits designed to help small businesses compete with larger firms
c) incorporation is easier for them
d) banks are more likely to grant them loans
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
15) Traditionally, small businesses tended to be concentrated in the _____ industry.
a) manufacturing
b) retailing
c) wholesaling
d) importing/exporting
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
16) Small businesses comprise ______% of all firms.
a) 50.5
b) 99.9
c) 75.8
d) 66.7
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
17) Small businesses generate over _______% of new jobs.
a) 25
b) 99
c) 75
d) 60
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
18) Almost 90% of U.S. farms are owned by _____.
a) the government
b) large corporations
c) individual farmers
d) small corporations
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
19) ______ is an advantage of a home-based business.
a) Greater visibility to customers
b) Lower costs
c) Less flexibility
d) Isolation
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
20) Which of the following statements regarding small businesses, compared to large businesses, is correct?
a) Small businesses are less likely to hire young employees.
b) Small businesses are less likely to develop new products.
c) Small businesses are more likely to be eligible for government loans or for government purchasing programs.
d) Small businesses are more likely to be franchises.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
21) How do small businesses contribute to the U.S economy?
a) By creating job opportunities
b) By refraining from market competition
c) By paying a professional tax higher than other businesses
d) By adhering to traditional methods of operation
Difficulty: Easy
Learning Objective 1: 05-02: Determine the contributions of small businesses to the economy.
Section Reference 1: Contributions of Small Business to the Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
22) How can owners of small businesses can increase their chances of success?
a) If they become an expert in legal, financial, marketing, and other related business areas.
b) If they incorporate their business.
c) If they hire only family members or friends.
d) If they understand their customers.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
23) While nearly ____ percent of new businesses survive at least two years, about ______ percent make it to the five-year mark.
a) 75; 25
b) 66; 33
c) 80; 20
d) 70; 50
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
24) Which of the following is a reason for Krispy Kreme’s near failure?
a) Consumers felt that its employees were incompetent.
b) The company lacked funding for its development.
c) The quality of its donuts was bad.
d) Quick expansion and debt.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
25) Why do many businesses fail during the early years?
a) Niche marketers
b) Inadequate financing
c) Unmotivated owners
d) Poor planning
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
26) Who are the largest lenders to small businesses?
a) Commercial banks
b) Retail chains
c) Venture capitalists
d) Investors
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
27) A business plan for a small business typically contains all of the following EXCEPT _____.
a) a statement of the company’s goals
b) an executive summary
c) separate financial and marketing sections
d) a time frame for selling stock to investors
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
28) A(n) ___________ is a written document that provides an orderly statement of a company’s goals, the methods by which it intends to achieve these goals, and the standards by which it will measure its achievements.
a) mission statement
b) executive summary
c) business incubator
d) business plan
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
29) Yashmi wants to start an event management firm with two of her friends. She decides to create a business plan that will help her in securing financing for her firm. Which of the following should she include in the business plan?
a) A list of her previous clients
b) A list of the potential lenders
c) An introduction that includes the objectives of her business
d) A time frame for selling stock to investors
Difficulty: Medium
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
30) Which of the following is one of the criteria for borrowers to qualify for a Small Business Administration-backed loan?
a) The borrower should not be a financial service provider.
b) The borrower should not be a home-based business.
c) The borrower should be unable to secure conventional commercial financing.
d) The borrower should be a not-for-profit organization that focuses on energy conservation.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
31) Which of these uses their own capital supplemented with government loans to invest in small businesses?
a) Franchisors
b) Small Business Investment Companies (SBICs)
c) Joint ventures
d) Freemium business models
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
32) The management of Bank-of-Us Investments wants to create more job opportunities in their city. They believe that the best way to create more jobs is to help people start their own business. They invest a portion of the company’s profit, along with money received through government loans, to support people trying to start their own business. Bank-of-Us Investments is an example of _____.
a) unit investment trusts (UITs).
b) small Business Investment Companies (SBICs).
c) joint ventures.
d) business incubators.
Difficulty: Medium
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
33) Sumi is the owner of a very small technology start-up. She shares clerical staff, computers, and other business services with other small business owners. Sumi is part of a _____.
a) business incubator
b) venture capital company
c) joint venture
d) microloan company
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
34) The Small Business Administration (SBA) provides all of the following EXCEPT _____.
a) loan guarantees
b) information and advice through toll-free telephone numbers
c) loans for natural disaster recovery
d) business incubators
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
35) Adolpho requires funding for a shopping portal that he launched recently. He wants to secure a government procurement contract to ensure adequate funding. Which of the following organizations can help Adolpho avail the contract?
a) Limited-liability corporation
b) Center for Women’s Business Research
c) Small Business Administration
d) International Franchise Association
Difficulty: Medium
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
36) In exchange for an ownership share, small businesses receive financing from a group of investors known as _____.
a) microloan investors
b) franchisors
c) small business investment companies
d) venture capitalists
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
37) American Foods International, a fast food chain, offers a contractual business arrangement in various countries around the world. This fast food chain will be an example of a(n) international _____.
a) franchise
b) acquisition
c) merger
d) not-for-profit corporation
Difficulty: Medium
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
38) Which of the following is a benefit of franchising?
a) The failure of one franchise does not affect the brand.
b) It offers several opportunities for the expansion of a business.
c) It does not require any start-up cost.
d) The founder of the business has absolute control over every franchise.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
39) The two principal parties in a franchising agreement are the _____.
a) manager and worker
b) franchiser and partners
c) franchisor and franchisee
d) venture capitalist and SBA
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
40) The franchisor provides all of the following services EXCEPT _____.
a) business training
b) marketing programs
c) name recognition
d) on-site management
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
41) Which of these is a drawback of franchising?
a) It necessitates the development of new business models for every franchise.
b) It provides no opportunities for expansion.
c) It restricts the business to a single geographical location.
d) It deprives the franchisor of absolute control over his or her business.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
42) Franchising offers all of the following advantages EXCEPT _____.
a) a recognizable company name
b) prior performance record
c) training
d) guaranteed level of profitability
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
43) Which of the following statements regarding franchising is FALSE?
a) Franchises are riskier than other forms of business ownership.
b) Franchisees have the benefit of name recognition.
c) Franchisors provide a wide range of support to franchisees.
d) Benefits for the franchisor include opportunities for expansion that might not otherwise be available.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
44) Roshni owns Express FoodMart, the franchisee of a local retail shop. Which of the following will be one of Roshni’s chief concerns regarding owning the franchise?
a) The franchisor does not provide her with the required supplies.
b) The franchising agreement is too restrictive.
c) The franchise has the benefit of name recognition.
d) The franchisor can negotiate better deals on ingredients, supplies, and real estate, because of its financial strength.
Difficulty: Medium
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
45) Which of the following is TRUE of a business with sole proprietorship?
a) It involves several owners.
b) It is difficult to form and dissolve.
c) Its owner has maximum management flexibility.
d) Its owner is exempt from corporate franchise taxes.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
46) Sole proprietorships have all of the following advantages EXCEPT _____.
a) unlimited life
b) ease of formation
c) profits subject only to a single tax
d) ease of liquidation
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
47) Adelina is the owner of an electronic repair shop. She creates the marketing strategy for her shop, pays all the required taxes, and is also the only person who enjoys the profits generated by the shop. Adelina’s business ownership in this scenario can be regarded as a _____.
a) sole proprietorship
b) partnership
c) corporation
d) franchise
Difficulty: Medium
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
48) The stocks of Novelties-R-Us, a toy store, are completely owned by the Garcias. When the family elected to move from a sole proprietorship to a corporation, the greatest concern was _____.
a) there might be family squabbles
b) how to limit liability
c) choosing work assignments
d) double taxation
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
49) One of the disadvantages of partnerships is that:
a) the partners are not covered by life insurance.
b) all partners should have expertise in every area.
c) the partners are exposed to unlimited financial liability.
d) they are difficult to form and dissolve.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
50) If business owners in a partnership wish to limit liability, they have the option to _____.
a) pledge funds
b) limit expenditure
c) set up a limited-liability partnership
d) dissolve the partnership
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
51) Rashmi and Karina opened a restaurant in partnership. Two years later, Karina left the restaurant, and Rashmi discovered that Karina had incurred numerous expenses to their account. These expenses resulted in thousands of dollars’ worth of debt for the restaurant. From the following, identify an accurate statement about this situation.
a) Rashmi doesn’t have to worry because, according to law, everyone is responsible for his/her own debts.
b) Rashmi doesn’t have to worry because business creditors will pursue Karina alone since her signature authorized payments.
c) Business creditors will expect Rashmi to pay at least half the debt since she owns 50% of the business.
d) Business creditors will expect full payment from Rashmi.
Difficulty: Medium
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
52) Although _____ are the most common type of business ownership, the greatest revenues come from _____.
a) sole proprietorships; partnerships
b) sole proprietorships; corporations
c) corporations; partnerships
d) partnerships; corporations
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
53) Corporations have all of the following advantages EXCEPT _____.
a) favorable tax treatment
b) limited liability
c) expanded financial capacity
d) limited legal risk
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
54) Alejandro is a stockholder in a software consulting firm. He gets a share of the earnings of the firm, on which he has to pay taxes. Moreover, the firm pays taxes on its earnings. As an individual, Alejandro is not legally liable to pay off the debts that might be incurred by the firm. In this scenario, the software consulting firm can be regarded as a _____.
a) sole proprietorship
b) partnership
c) corporation
d) franchise
Difficulty: Medium
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
55) The maximum number of shareholders is limited to _____ for a firm to qualify as a subchapter S corporation.
a) 25
b) 50
c) 75
d) 100
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
56) Which of the following statements is true regarding employee-owned corporations?
a) The number of employee-owned corporations is declining in the United States.
b) Employee-owned corporations may not publicly trade their stock.
c) Employees buy shares of stock in the company that employs them.
d) Stock prices in employee-owned corporations typically decrease.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
57) Three members of Santiago’s family work at BioTechno, a multi-national drug manufacturer. Each of them owns 5% shares of the company respectively. In fact, most of the employees of BioTechno, like Santiago and his family members, are stockholders of the company. BioTechno can be regarded as a _____.
a) sole proprietorship
b) employee-owned corporation
c) family-owned business
d) partnership
Difficulty: Medium
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
58) PUR Water is a company that designs and implements innovative water purification solutions using simple and inexpensive methods. All its decision-making focuses on a better environment. While the company manages to make profits, its vision is set beyond financial gains. Its adherence to its goals is verified by a third-party auditor. Which of the following types of corporations does this scenario illustrate?
a) B corporation
b) S corporation
c) Employee-owned corporation
d) Not-for-profit corporation
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
59) Brady decides to start a trust-run hospital to help the poor get expensive treatments for free. Which of the following is most likely to be true of the hospital?
a) It has a high profit margin.
b) It issues stock certificates.
c) It pays dividends to owners.
d) It is exempt from corporate taxes.
Difficulty: Medium
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
60) Which of the following statements regarding family-owned businesses is true?
a) Only a small percentage of family-owned businesses survive into the second or third generation.
b) Family-owned companies must submit a written agreement to the state in which it organizes.
c) All family-owned companies must be closed corporations.
d) Family-owned companies are an example of a not-for-profit corporation.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
61) The arrangement, when a government unit owns and operates an organization, is known as _____.
a) private ownership
b) a cooperative
c) public ownership
d) employee ownership
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
62) An example of public ownership is:
a) A movie theater
b) The city sewer system
c) A trucking company
d) A television company
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
63) Alternatives to private ownership include _____.
a) public ownership and collective ownership
b) employee ownership and foreign corporations
c) foreign corporations and public ownership
d) employee ownership and collective ownership
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
64) Mateo is the owner of a small mushroom farm in Pennsylvania. He would like to join hands with other growers to create an organization that will promote and distribute mushrooms. The form of ownership that would be most suited for Mateo and other growers will be a(n) _____.
a) joint venture
b) open corporation
c) government-owned collective
d) cooperative
Difficulty: Medium
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
65) Sushma established a corporation in Nebraska, but she recently moved to Colorado where she now conducts her business. What type of corporation does Sushma own?
a) Alien corporation
b) Domestic corporation
c) Foreign corporation
d) National corporation
Difficulty: Medium
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
66) Who elects the board of directors of a corporation?
a) Corporation’s employees
b) Bondholders and other creditors
c) Corporate officers
d) Stockholders
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
67) Bianca owns a company that provides laundry services. She ensures that only her family members are the stockholders of her company. She also allows them to control and manage all of the company’s activities. In this scenario, Bianca owns a _____.
a) public corporation
b) closed corporation
c) not-for-profit corporation
d) limited-liability corporation
Difficulty: Medium
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
68) Isabella owns 100 _____ stock of NxtGen Solutions, a software firm. It means that she has voting rights on company decisions at NxtGen Solutions, but only residual claims on the company’s assets.
a) preferred
b) principal
c) management
d) common
Difficulty: Medium
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
69) Which of the following is a function of the board of directors of a corporation?
a) Evaluating the performance of employees
b) Hiring the chief executive officer
c) Assigning specific tasks to employees
d) Maintaining personnel records
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
70) The board of directors usually includes some individuals who are not employed by the corporation. These people are referred to as _____.
a) priority directors
b) outside directors
c) stockholders
d) members of top management
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
71) Luciana is a chief financial officer in a large corporation. She has the full financial authority to make appropriations and authorize expenditures. Luciana is likely to be a member of _____ management.
a) Middle
b) advisory
c) supervisory
d) Top
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
72) _____ must verify in writing the accuracy of their corporation’s financial statements.
a) Board members
b) Stockholders
c) Chief executive officers and chief financial officers
d) Governmental officials
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
73) An acquisition occurs when _____.
a) one company purchases the property and assumes the obligations of another company
b) one corporation owns 8% of the stock of another corporation
c) owners of small companies band together to operate their businesses collectively
d) two or more firms combine to form a single company
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
74) Nova Airlines’ purchase of Emu Airlines combines the resources and capabilities of both firms to create the world’s largest airline. The newly formed company is an example of a _____.
a) vertical merger
b) joint venture
c) horizontal merger
d) conglomerate company
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
75) If ABC steel buys NextGen Iron Ore to assure itself of a constant flow of ore, it will be an example of a _____.
a) conglomerate company
b) domestic company
c) vertical merger
d) subsidiary corporation
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
76) The joining of two computer manufacturing companies will be an example of a _____.
a) conglomerate company
b) horizontal merger
c) vertical merger
d) joint venture
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
77) News 24/7, a newspaper group, merged with Alfalah Finance, an investment firm. The two companies merged together to diversify their business and to generate more revenue. This merger will be an example of a _____.
a) conglomerate merger
b) horizontal merger
c) vertical merger
d) joint venture
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
78) Top Gear Comp, a tech firm decides to invest some of its excess cash by acquiring a coffeehouse chain. This would be a _____.
a) conglomerate company
b) vertical merger
c) horizontal merger
d) joint venture
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
79) Which type of merger is done to increase customer bases?
a) Vertical merger
b) Conglomerate company
c) Joint venture
d) Horizontal merger
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
80) Walmart, an American retail chain, started doing business in India by forming a _____ with one of India’s leading retail business groups.
a) joint venture
b) subsidiary
c) horizontal merger
d) vertical merger
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
Question type: True/False
81) The vast majority of firms have fewer than 500 employees.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
82) Over 50% of new jobs are generated by small businesses.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
83) Four out of five businesses without paid employees are home-based.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
84) Approximately 50 percent of all small businesses are minority-owned.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
85) Any firm with fewer than 1,000 employees is considered a small business.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
86) Government agencies offer benefits designed to help small businesses compete with larger firms.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
87) Most managers of home-based businesses struggle to establish business hours that correspond with customer availability.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
88) Because of technology and online resources, many small-business start-ups are more competitive.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
89) Small businesses are more likely to employ older workers than younger, teenage workers.
Difficulty: Easy
Learning Objective 1: 05-02: Determine the contributions of small businesses to the economy.
Section Reference 1: Contributions of Small Business to the Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
90) One reason small businesses are so successful is also the reason they might fail—their founders are willing to take a risk.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
91) Direct SBA loans are available in only a few special situations, such as natural disaster recovery and energy conservation.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
92) Interestingly, research finds that larger firms prove more successful than smaller firms in offering innovative products to consumers.
Difficulty: Easy
Learning Objective 1: 05-02: Determine the contributions of small businesses to the economy.
Section Reference 1: Contributions of Small Business to the Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
93) 20th century innovations developed by small businesses include the personal computer and the zipper.
Difficulty: Easy
Learning Objective 1: 05-02: Determine the contributions of small businesses to the economy.
Section Reference 1: Contributions of Small Business to the Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
94) Unfortunately, more than half of all small businesses fail within the first year.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
95) Nearly 7 out of every 10 new businesses survive at least two years and about 50% make it to the five-year mark.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
96) A major problem for most small businesses is securing adequate financing.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
97) First-time business owners often overestimate the funds their firms will generate from initial sales to allow for operations to continue.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
98) Most owners of small businesses rely on loans from financial institutions for their start-up funds.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
99) Taxes and government regulations are more significant issues for small businesses than for large businesses.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
100) With less money to spend on employees, marketing, inventory, and other business costs, successful small companies need to be creative.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
101) Fortunately, small businesses are not required to pay workers’ compensation or Social Security.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
102) One of the most important tasks for an entrepreneur is to create a business plan.
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
103) The firm’s mission and goals are identified in its business plans.
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
104) A mission statement is a written document that provides an orderly statement of a company’s goals, the methods by which it intends to achieve these goals, and the standards by which it will measure its achievements.
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
105) A business plan should include résumés of the company’s principal owners.
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
106) The major lending source for small businesses needing additional funds is the Small Business Administration (SBA).
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
107) Direct Small Business Administration (SBA) loans are rewarded to owners of small businesses 90% of the time.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
108) Small Business Investment Company (SBIC) loans are actually government loans funneled through a private organization.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
109) The average amount rewarded to owners of small businesses through Small Business Administration (SBA) microloans is $13,000.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
110) The set-aside program designates that a percentage of government contracts must be awarded to qualifying small businesses.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
111) Not-for-profit organizations focused on economic development operate most business incubators.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
112) Most of the small businesses today are run by Caucasian males.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
113) The Small Business Administration has programs targeted to minority-owned small businesses.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
114) Successful franchises often minimize the amount of expansion opportunities.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
115) Franchisors typically experience a greater return on investment than if the firm were run entirely as a company-owned chain.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
116) The franchisor is a small business owner who sells the goods or services of the supplier
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
117) A successful franchisor can usually negotiate better pricing for ingredients, supplies, even real estate, because of its financial strength and large volume purchases.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
118) Franchising combines the freedom of business ownership with the support of a large company.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
119) Strict franchise agreements help to maintain the integrity of the brand.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
120) The most common form of business ownership is sole proprietorship.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
121) Partnerships, out of all forms of business, are the most challenging to establish.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
122) A sole proprietor is easy to dissolve.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
123) Dissolving a sole proprietorship is more complicated than breaking up a partnership.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
124) In a partnership, each partner is liable for the business-related debts of the other partner.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
125) According to the legal requirements, large businesses must be organized as corporations.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
126) Sole proprietorships are concentrated mainly in corporations.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
127) Owners of corporations may owe personal income taxes on dividends, which are paid from after-tax corporate profits. This is an example of double taxation.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
128) A company that has embraced employee ownership is Publix Super Markets.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
129) Not-for-profit corporations do not issue stock certificates and are exempt from paying income taxes.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
130) A corporation operating outside its state of incorporation is known as a domestic corporation.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
131) A state that is considered to be “business friendly” based on tax incentives is Delaware.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
132) Preferred shareholders typically have voting rights.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
133) Owners of preferred stock receive dividends after owners of common stock.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
134) The CEO of a corporation is automatically the chair of the board of directors.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
135) In order to cut costs and promote diversification, a vertical merger joins firms in the same industry.
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
136) CVS Caremark, a healthcare company, recently purchased another firm’s Medicaid prescription business. It is an example of a horizontal merger.
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
137) An example of a conglomerate merger is when a computer manufacturer purchases a laptop brand.
Difficulty: Medium
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
138) A merger of unrelated firms is called a conglomerate merger.
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
139) Joint ventures rarely occur between not-for-profit organizations and for-profit companies.
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
140) Joint ventures are not common when a company wants to enter business in a foreign market.
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
141) In public ownership, a unit or agency of government owns and operates an organization.
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
142) Unfortunately, cooperatives rarely exist in the field of agriculture.
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
143) An example of financial cooperatives are commercial banks.
Difficulty: Medium
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
Question type: Essay
144) List the advantages of home-based businesses.
Difficulty: Easy
Learning Objective 1: 05-01: Discuss why most businesses are small businesses.
Section Reference 1: Most Businesses Are Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
145) Why are small businesses especially important to women and minorities?
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Diversity
Standard 2: Bloom’s || Knowledge
146) Explain how small businesses help create new jobs.
Difficulty: Easy
Learning Objective 1: 05-02: Determine the contributions of small businesses to the economy.
Section Reference 1: Contributions of Small Business to the Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
147) Discuss the reasons for the failure of small businesses.
Difficulty: Easy
Learning Objective 1: 05-03: Discuss why small businesses fail.
Section Reference 1: Why Small Businesses Fail
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
148) What are the elements contained in a business plan?
Difficulty: Easy
Learning Objective 1: 05-04: Describe the features of a successful business plan.
Section Reference 1: The Business Plan: A Foundation for Success
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
149) Describe ways in which the Small Business Administration (SBA) provide financial assistance. What are the sources of microloans?
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
150) Explain how Turning Technologies was formed and how it has benefited the society.
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
151) Describe the specialized services offered by the Small Business Administration (SBA).
Difficulty: Easy
Learning Objective 1: 05-05: Identify the available assistance for small businesses.
Section Reference 1: Assistance for Small Businesses
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
152) Describe the complexity of franchise agreements.
Difficulty: Easy
Learning Objective 1: 05-06: Explain franchising.
Section Reference 1: Franchising
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
153) Compare and contrast the three forms of business ownership.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
154) What are the steps required when incorporating a business? Regarding incorporation, what might make a state “business-friendly”?
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
155) List and describe the categories of corporations.
Difficulty: Easy
Learning Objective 1: 05-09: Discuss organizing a corporation.
Section Reference 1: Organizing a Corporation
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
156) Compare mergers and acquisitions.
Difficulty: Easy
Learning Objective 1: 05-10: Explain what happens when businesses join forces.
Section Reference 1: When Businesses Join Forces
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
157) Identify and describe two alternatives to private ownership and give an example of each.
Difficulty: Easy
Learning Objective 1: 05-08: Describe public and collective ownership of business.
Section Reference 1: Public and Collective Ownership of Business
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
158) What are the benefits of a limited-liability corporation? Explain.
Difficulty: Easy
Learning Objective 1: 05-07: Outline the forms of private business ownership.
Section Reference 1: Forms of Private Business Ownership
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
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