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Exam 5: How to Form a Business

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Question 101

Multiple Choice

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Intercontinental Provisions, a specialty grocery store, is considering a conglomerate merger with a company that makes storage solutions. A likely reason is

A) to expand its market share.
B) to develop spin-off companies.
C) diversification.
D) to meet the requirements to convert to a limited liability company.

E) B) and D)
F) C) and D)

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Question 102

True/False

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A major objective of limited liability partnerships (LLPs) is to limit each partner's personal liability to the consequences of their own acts and those of people under their supervision.

A) True
B) False

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Question 103

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A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business.

If an established franchisor agrees to provide you the opportunity to become a franchisee in its franchise system, the franchisor may also be willing to serve as a source of financing for your operation.

States may levy special taxes on corporations that are not imposed on other businesses.

In today's economy, only large business enterprises should operate as corporations.

Global franchising offers

Finnegan is a limited partner in Gettout & Associates, a local financial consulting company. Heywood U. Gettout is one of the general partners in the company and is needing to temporarily leave the company to attend to some personal matters. Heywood has asked Finnegan to perform his managerial duties while he is gone. As a limited partner, Finnegan

If a franchisee decides he wants out of the business, he is free to close up shop or sell the business, just as if he were a sole proprietor or partnership outside of a franchise arrangement.

Some ________ ask members/customers to work at the organization for a number of hours a month as part of their duties.

At one time there were many farm cooperatives, but more recently other forms of business ownership have replaced them.

Compared to a sole proprietorship, which of the following is considered an advantage of a general partnership?

In recent years, foreign firms were reluctant to merge with or acquire American corporations.

One way to eliminate some of the risk of your partners making costly mistakes that could jeopardize your personal assets is to set up a

When a group of investors take a firm private, they purchase all the company's outstanding stock.

One reason limited liability companies have become so popular is that they

One reason that companies participate in mergers and acquisitions is

Harper has always disliked the concept that the customers, managers, and workers of a business are separate individuals with competing goals. She joined with many other people in her community who share this view to become a member, and part owner, of a childcare center. Harper and the other members operate the center for their own benefit, and each is expected to work at the center at least 12 hours each month. The type of organization Harper belongs to is known as a joint venture.

Due to several years of poor performance, Stanley's Metal Manufacturers, Inc., is closing. Through the use of debt financing, Stanley's workers plan to purchase the company's stock from current shareholders in order to buy the company, improve performance, and save jobs.

The limited liability company requires a minimum of 10 members.