FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: How to Form a Business

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In the Legal Briefcase box,"Vermont Wants to be the Home of Your New Virtual Company,"

A) The box discusses the Vermont Teddy Bear Company and their difficulty in going from an S-Corporation to a C-Corporation.
B) The box talks about a newly created LLC in Vermont called the Virtual Company,where all members contribute their skills through electronic communication.
C) The box discusses how the state of Vermont wants to attract business,yet refuses to permit the electronic submission of filing for any form of business ownership.
D) The box talks about the Vermont maple syrup industry and how due to the fact that it is a seasonal business,it cannot exist virtually.The labor intensive business requires the expertise of experienced tree tappers.

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

A person who buys the right to use a business name and sell a product within a given territory is called a:

A) Stockholder.
B) Franchisee.
C) Limited franchisor.
D) Venture capitalist.

E) A) and B)
F) All of the above

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

The following companies: Blue Diamond,Ocean Spray,and Land O'Lakes are well known cooperatives.

With respect to taxes,the sole proprietorship:

The S corporation form of business would be particularly attractive to fast growing companies that want to attract thousands of new stockholders.

The "coattail effect" refers to the burden of corporate rules and regulations on franchisees.

Which of the following is an advantage of a partnership?

Compared to sole proprietorships,partnerships offer the advantage of shared management and pooled knowledge.

If a corporation has after-tax profits of $360,000,and elects to distribute this amount in the form of dividends to its stockholders,these distributions are free and clear of taxes because the corporation paid taxes on this amount prior to distribution.

Starting a new business as a sole proprietorship:

The franchisee pays the franchisor a share of profits or a percentage commission on sales,known as a royalty.

A leveraged buyout is an attempt by top management to gain control of a company by issuing a large amount of new stock.

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

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.

Hole In One Golf Company announced plans to purchase the property and assume the obligations of Champion Golf,Inc. ,one of its major competitors.Hole In One Golf Company's plans are an example of a merger.

Jamie and Maria invested all their savings in a small pizzeria they opened outside the University of Western Kentucky.They operated the business as a general partnership.After 11 months,the business went broke and Jamie and Maria were left with outstanding bills of $37,500,which was more than their initial investment in the company.Jamie and Maria can:

One reason that a firm would choose to merge or acquire another company would be to gain market share.

Joe Jackson operates a sole proprietorship,but he is in poor health and may be unable to continue running the business.If Joe becomes incapacitated,his business:

A merger is a mutual agreement where a firm joins together with another firm,whereas an acquisition is when one firm purchases the assets and obligations of another firm.

One of the major disadvantages of a partnership is that profits must be divided equally.