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					                 In the U.S., which form of business ownership
1   CORRECT      represents about 20% of all businesses and
                 accounts for about 80% of all business receipts?

                        A)corporation

                        B)partnership

                        C)sole proprietorship

                        D)limited liability partnership

                 Feedback: The almost 3.9 million
                 corporations in the United States comprise
                 only 19 percent of all businesses, but they
                 earn 89 percent of the total receipts.




2   INCORRECT Compared to sole proprietorships, partnerships:

                        A)require less red tape to organize

                        B)must have a board of directors

                        C)pay income tax according to the
                          partnership tax structure

                        D)enjoy more financial resources

                 Feedback: When two or more people pool
                 their money and credit, it’s easier to pay the
                 rent, utilities, and other bills incurred by a
                 business.



              Art and James decided to pool their talents and
3   INCORRECT form a partnership. In forming their new
              partnership, Art and James:

                        A)are required by law to obtain a permit
                          from the state government.
                       B)would do well to consult an attorney
                         and put their agreement in writing.

                       C)must pay both individual and
                         partnership taxes on any income they
                         earn.

                       D)must divide their profits and losses
                         equally.

                Feedback: One problem with a partnership is
                the potential for disagreements and
                misunderstandings among the partners.
                Consulting an attorney and getting the
                agreement in writing helps minimize the risk
                of such problems.



                Juanitra recently invested $4000 that her aunt
                had left her in stock in the Micky Dee
4   CORRECT
                Development Corporation. Juanitra has become
                a(n)_____________ of Micky Dee Corporation.

                       A)owner

                       B)manager

                       C)creditor

                       D)partner

                Feedback: Stock represents shares of
                ownership in a corporation.



                The result of two firms combining to form one
5   INCORRECT
                company is called a:

                       A)joint tenancy.

                       B)tenancy in common.
                        C)merger.

                        D)marriage.

                 Feedback: A merger is the result of two
                 firms forming one company.



                 A merger involving a major candy company and a
6   INCORRECT
                 steel producer would be an example of a:

                        A)vertical merger.

                        B)horizontal merger.

                        C)strategic merger.

                        D)conglomerate merger.

                 Feedback: A conglomerate merger involves
                 two firms from different industries.



              Regarding the relationship between the basic
              forms of business ownership and a franchise, a
7   INCORRECT
              franchise can not be formed as a
              ______________.

                        A)sole proprietorship

                        B)partnership

                        C)corporation

                        D)LLT

                 Feedback: A franchise can be formed as a
                 sole proprietorship, partnership, or
                 corporation.
              CarX is an organization that sells franchises to
              prospective businesspersons. In a franchise
8   INCORRECT arrangement, CarX would be the_____________,
              and the buyer of the franchise is the
              _____________________.

                        A)franchisee; franchisor.

                        B)franchisor; franchisee.

                        C)co-signer; co-signee.

                        D)distributor; retailer.

                 Feedback: In a franchising arrangement, the
                 person or company that sells the right to use
                 the name and product is the franchisor, and
                 the person who buys the rights is known as
                 the franchisee.



              Twenty-six years ago, several small apple
              growers in Illinois joined voluntarily to market
              their apples in an attempt to get better prices.
              Over the years they expanded the organization to
9   INCORRECT include other services such as buying and selling
              farm supplies and equipment and providing
              financial and technical services. The arrangement
              established by these apple growers is an example
              of a(n):

                        A)limited liability corporation.

                        B)joint venture.

                        C)limited partnership.

                        D)cooperative.

                 Feedback: A farm cooperative is an
                 organization of farmers who have joined to
                 gain more economic power than they would
                 have as individuals. These organizations
                 often buy and sell supplies and equipment,
                 provide warehouses, offer insurance and
                 financial and technical services, and even
                 operate manufacturing facilities.



                 All of the following are advantages of franchises
10   INCORRECT
                 except:

                         A)management and marketing assistance

                         B)financial advise and assistance

                         C)complete freedom from rules,
                           regulations, and restrictions

                         D)historically lower failure rate than
                           independent businesses

                 Feedback: Management has a way of
                 becoming managerial orders, directives, and
                 limitations. Franchisees may feel burdened
                 by the franchisor's rules and regulations.

				
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posted:8/13/2011
language:English
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