Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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Which of the following is an advantage of a sole proprietorship?
a. | No one is responsible if it fails. | b. | It is the least-regulated form of business
organization. | c. | It is an easy way to make a lot of money. | d. | It is easy to get
financing to start one. |
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2.
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What percentage of businesses are sole proprietorships?
a. | 25 percent | c. | 60 percent | b. | 40 percent | d. | 75 percent |
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3.
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If a general partnership fails, who is responsible for the debts?
a. | anyone who works for the partnership | b. | all of the partners | c. | only the most senior
general partner | d. | no one |
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4.
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A joining of two or more businesses that are involved in different stages of
producing the same good or service is called which of the following?
a. | vertical merger | c. | cooperative | b. | horizontal merger | d. | conglomeration |
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5.
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Why is it easier for a partnership to borrow money and to hold good employees
than it is for a sole proprietorship to do so?
a. | The more limited access to a partner’s personal funds make the business more
careful. | b. | The large number of partners makes it more likely that the business will be a
success. | c. | The larger number of partners means that people are easier to get along
with. | d. | A partnership has more personal stability and access to more
money. |
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6.
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What is the major difference between a corporation and other kinds of
businesses?
a. | A corporation is much larger than other kinds of businesses. | b. | A corporation is not
responsible for its debts if it fails. | c. | A corporation has a separate entity apart from
that of the owners and workers. | d. | A corporation has officers who are responsible
for the business. |
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7.
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What are royalties?
a. | fees paid to law firms and accountants | b. | a percentage of a franchise’s earnings
paid to the parent company | c. | fees paid to celebrities for using their
names | d. | a percentage of profits paid to the government |
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8.
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Which of the following represents the percentage of all U.S. businesses that are
corporations, and the percentage of all goods that those corporations sell?
a. | 10 percent of businesses; 50 percent of goods sold | b. | 20 percent of
businesses; 90 percent of goods sold | c. | 50 percent of businesses; 75 percent of goods
sold | d. | 20 percent of businesses; 50 percent of goods sold |
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9.
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What is a fringe benefit?
a. | a cash payment for casual work | b. | a business other than sales or
marketing | c. | a payment other than wages or salaries | d. | an accounting term meaning
profits |
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10.
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Which of the following is a disadvantage of a sole proprietorship?
a. | lack of permanence | c. | legal constraints | b. | high taxes | d. | difficult to start
up |
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11.
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What are the money and other valuables that belong to a corporation or
partnership called?
a. | liabilities | c. | ownership | b. | assets | d. | liens |
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12.
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What are organizations that are in the business of benefiting society and
operate like a business called?
a. | trade associations | c. | producer cooperatives | b. | nonprofit
organizations | d. | limited
partnerships |
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13.
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Which of the following is a business organization owned by a group of people for
their mutual benefit?
a. | a cooperative | c. | a limited liability partnership | b. | a labor
union | d. | a professional
organization |
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14.
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If a general partnership fails, who is responsible for the debts?
a. | no one | b. | anyone who works for the
partnership | c. | only the most senior general partner | d. | all of the
partners |
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15.
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The family-owned Italian restaurant in your neighborhood is probably an example
of a
a. | multinational corporation. | c. | consumer
cooperative. | b. | franchise. | d. | general partnership. |
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16.
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In a publicly held corporation
a. | stockholders rarely trade their stocks. | b. | a large number of
stockholders can buy and sell stock. | c. | stocks are not usually traded at stock
exchanges. | d. | family members are excluded from holding stock. |
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17.
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Good Wireless and Better Wireless merge to form Best Wireless. The federal
government watches this merger carefully for evidence of a
a. | horizontal merger. | c. | monopoly. | b. | conglomerate. | d. | vertical
merger. |
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18.
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Dr. Ruiz shares equal responsibility and liability with her colleagues in their
medical practice. Her practice is a
a. | general partnership. | c. | limited liability partnership. | b. | limited
partnership. | d. | sole
proprietorship. |
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19.
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Your running shoes were designed in the United States but assembled in Asia by a
company called RunnerPro. RunnerPro is a
a. | general partnership. | c. | multinational corporation. | b. | trade
association. | d. | producer
cooperative. |
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20.
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You are looking for a job with many fringe benefits. You therefore probably want
to work for a
a. | sole proprietorship. | c. | general partnership. | b. | corporation. | d. | nonprofit
organization. |
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21.
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Your family’s house needs a new roof. In order to find out which roofers
are reliable and charge fair prices, your family should call your local
a. | business franchise. | c. | Better Business Bureau. | b. | service
cooperative. | d. | labor
union. |
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22.
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Your uncle owns a convenience store that has branches nationwide. His store is
an example of a
a. | business franchise. | c. | multinational. | b. | professional organization. | d. | consumer
cooperative. |
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23.
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Ellen started a catering business, but soon decided that catering was too
stressful for her. She could close her business relatively easily and return to school because the
business was a
a. | producer cooperative. | c. | sole proprietorship. | b. | general partnership. | d. | closely held
corporation. |
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24.
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Corporations are defined as “entities” because they
a. | sell about 90 percent of the products sold in the United States. | b. | require a
certificate of corporation. | c. | may merge in various ways. | d. | have a legal
identity separate from those of their owners. |
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25.
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The government usually allows conglomerates because they
a. | do not result in decreased competition. | b. | lead to larger, more
efficient firms. | c. | join two or more firms that compete in the same market. | d. | combine firms that
are involved in different stages of producing the same good or
service. |
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26.
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You own a successful bicycle repair business. You are considering incorporating
in order to
a. | avoid double taxation. | b. | raise money more easily. | c. | avoid government
regulations. | d. | acquire greater control in managing the business. |
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27.
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You are part-owner of NewBrands corporation because you
a. | own the company’s stock. | b. | have created a corporate charter for the
company. | c. | have purchased company bonds. | d. | attend the company’s annual
meetings. |
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28.
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Every day on your way to basketball practice you wave to Mr. Martin, who owns
the neighborhood flower stand. Mr. Martin’s store is probably a
a. | limited partnership. | c. | small corporation. | b. | sole proprietorship. | d. | parent company. |
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29.
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You decide to go to a consumer cooperative to buy supplies for your class party.
Prices are cheaper there mainly because consumer cooperatives
a. | make large purchases. | b. | charge annual membership
fees. | c. | require members to work 20 hours a month. | d. | help members sell
their products. |
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Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | assets | f. | professional
association | b. | business organization | g. | business license | c. | trade association | h. | corporation | d. | limited
partnership | i. | cooperative | e. | sole proprietorship | j. | bond |
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30.
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an establishment owned by two or more persons in which only one person has
unlimited personal liability for the business
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31.
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nonprofit association that promotes the interests of a particular
industry
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32.
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money and other valuables belonging to an individual or business
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33.
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a business owned and managed by a single individual
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34.
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a business organization owned and operated by a group of individuals for their
mutual benefit
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35.
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a legal entity owned by individual stockholders
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36.
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a certificate issued by a corporation promising to repay a loan with interest
to the buyer
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37.
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an establishment formed to carry on commercial enterprise
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Identifying Key Terms
Match each term with the correct
statement below. a. | general partnership | f. | royalties | b. | dividend | g. | producer cooperative | c. | zoning law | h. | liability | d. | stock | i. | business license | e. | horizontal merger | j. | nonprofit
organization |
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38.
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the legally bound obligation to pay debts
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39.
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a share representing a portion of ownership in a corporation
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40.
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authorization to start a business issued by the local government
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41.
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the portion of corporate profits paid out to stockholders
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42.
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regulation in a city or town that designates separate areas for residency and
business
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43.
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an institution that functions like a business but does not operate in order to
generate profits
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44.
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the joining of two or more firms competing in the same market with the same
good or service
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45.
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a business in which the owners share equally in both responsibility and
liability
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