Question 1
Ellen loves to cook and receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Ellen decides to open a small neighborhood restaurant. Since she plans to maintain complete control of the business, she will most likely organize it as a
Correct!
- limited partnership
- corporation
- general partnership
- Selected: sole proprietorship
Question 2
A voluntary association of two or more people acting as co-owners of a business is known as a
Correct!
- Selected: partnership
- corporation
- sole proprietorship
- syndicate
Question 3
Najib Razak wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because
Correct!
- Selected: he will get to keep all of the profits the business makes.
- profit is guaranteed since he will be the only owner.
- it will provide a steady income for him.
- he has to split the profits with only one other person
Question 4
Which of the following is an advantage of a sole proprietorship?
Correct!
- The owner has unlimited liability.
- The business ceases to exist when the owner dies.
- There is a limit to the amount one person can borrow.
- Selected: Profits are taxed as individual income.
Question 5
The form of business organization that experiences double taxation is the
Correct!
- partnership.
- Selected: corporation.
- venture company.
- sole proprietorship.
Question 6
Unlimited liability means
Correct!
- there is no limit on the amount an owner can borrow.
- creditors will absorb any loss from nonpayment of debt.
- the business can borrow money for any type of purchase.
- Selected: the owner is responsible for all business debts.
Question 7
When the owner of a sole proprietorship dies, what becomes of the business?
Correct!
- The employees take over the business.
- Selected: It ceases to exist unless the heirs take it over or sell it.
- It is automatically auctioned to the highest bidder.
- It may continue existing but only under a new name.
Question 8
All of the following are advantages of the partnership form of organization except
Correct!
- Selected: unlimited liability.
- retention of profits.
- combined skills and knowledge.
- better access to capital and credit.
Question 9
All of the following are disadvantages that Obama should consider before entering a partnership agreement with his cousin except
Incorrect
- lack of continuity.
- Selected: effects of disagreements with his cousin.
- double taxation.
- unlimited liability.
Question 10
Katy Perry purchases shares of ownership in Facebook. These shares are referred to as
Correct!
- ownership documents.
- Selected: stock.
- articles of ownership.
- incorporation.
Question 11
Shares of Burger Kong stock cannot be purchased on any stock exchange or by just any individual. This means that Burger Kong is a(n)
Correct!
- Selected: closed corporation.
- partnership.
- open corporation.
- family corporation.
Question 12
The top governing body of a corporation is known as the
Correct!
- incorporators.
- stockholders.
- management.
- officers.
- Selected: board of directors.
Question 13
Which of the following is a disadvantage of the corporate form of organization?
Correct!
- Selected: Both the corporation and its stockholders are taxed on profits retained and distributed.
- Ownership of stock is easy to transfer.
- More capital can be raised by the corporate form.
- Corporations can hire better managers.
Result:
12/13
