Question 1

Henry decides to become a member of a limited liability company (LLC). What will happen to the company if Henry withdraws his membership and invests in other businesses?

Accepted Answer

If Henry decides to withdraw his members...

Question 2

Melissa and Claudia are considering becoming business partners and establishing a clothing boutique. They agree that they need to have a partnership agreement before they start the business. What factors should Melissa and Claudia consider when writing their partnership agreement?

Accepted Answer

Melissa and Claudia should consider the ...

Question 3

In order to expand more quickly and remain competitive, companies integrate other established businesses through the process of mergers or acquisitions.

Accepted Answer

A) True 
 B)False  True

Question 4

At a meeting to announce a merger with another company, which of the following buzzwords is a business leader MOST likely to use to justify the decision?

Accepted Answer

A)  accountability
B)  bottom line
C)  streamline
D)  synergyE) None of the above
F) A) and C)

Question 5

All mergers and acquisitions are mutually desired by both companies.

Accepted Answer

A) True 
 B)False

Question 6

Many citrus farmers and growers in the United States have direct and low-cost access to packing houses. As such, they are able to directly process their harvest through these packing houses, limiting the cost of production of packed citrus products. What attribute of a cooperative is shown in this situation?

Accepted Answer

Cooperatives provide services to members...

Question 7

Which of the following is the MOST compelling argument for incorporating a business?

Accepted Answer

A)  to hire more employees
B)  to avoid paying federal taxes
C)  to protect the owners' personal assets
D)  to complete minimal legal requirementsE) A) and B)
F) All of the above

Question 8

As a shareholder of an S corporation, Dave is entitled to a profit proportionate to his interest in the corporation. How would Dave pay his taxes for the profits from his shares in the S corporation?

Accepted Answer

As a shareholder of an S corporation, Da...

Question 9

What is a C corporation and what are the advantages of this type of business ownership?

Accepted Answer

A C corporation is a form of business or...

Question 10

A(n) ________ acquisition occurs when one company tries to take control over another company against its wishes.

Accepted Answer

A)  proxy
B)  hostile
C)  horizontal
D)  extensionE) C) and D)
F) A) and B)

Question 11

Compared to the C corporation, the limited liability company is an attractive form of business ownership because ________.

Accepted Answer

A)  a limited liability company may be more expensive to form but it has a longer life than a C corporation
B)  a limited liability company allows only one owner, whereas a C corporation requires over 100 owners
C)  a limited liability company provides owners with protection of their personal assets; whereas C corporation owner's personal assets are at risk
D)  a limited liability company does not require the firm to hold annual meetings and it can avoid double taxationE) All of the above
F) None of the above

Question 12

Lucia owns her own dog walking business and has several employees. She filed no legal paperwork and has no partners. Lucia's business is a ________.

Accepted Answer

A)  limited liability company
B)  corporation
C)  sole proprietorship
D)  separate legal entityE) All of the above
F) B) and C) C

Question 13

A proxy fight occurs when a company attempts to persuade the target company's shareholders to replace the existing management with one that is ________ the goals of the acquiring company.

Accepted Answer

A)  unaware of
B)  hostile toward
C)  familiar with
D)  sympathetic toE) A) and C)
F) A) and B)

Question 14

Companies MOST often resort to mergers and acquisitions when they want to expand their markets and product lines because ________.

Accepted Answer

A)  it minimizes conflicts that are rooted on hidden agendas and power struggles
B)  it minimizes time and investment to research and develop new products
C)  upper management prefers to concentrate on day-to-day activities
D)  employees are motivated to work harder because of the resulting stabilityE) A) and D)
F) A) and C)

Question 15

Jaden and Noel are starting a computer repair business together. Jaden insists on outlining rules for the departure of partners in the partnership agreement, although Noel does not think it is necessary. Which of the following statements might Jaden use to explain his insistence to Noel?

Accepted Answer

A)  Provisions to remove a partner's ownership interest are necessary so the business would not have to liquidate.
B)  Determining the allocation of profits to new, junior partners is important to eliminate future potential conflicts.
C)  Responsibilities must be clearly delineated to avoid the possibility of one partner overstepping his or her bounds.
D)  As the partnership matures and ages, defining how profits and losses will be distributed must be made.E) A) and B)
F) C) and D)

Question 16

A sole proprietor's income and expenses flow through ________.

Accepted Answer

A)  shareholders' tax returns
B)  individual partners' tax returns
C)  his or her personal tax returns
D)  corporate tax returnsE) A) and C)
F) A) and B)

Question 17

In September 2001, technology company Hewlett-Packard (HP)announced a proposal to acquire Compaq Computer Corporation for $25 billion in stock. It offered shareholders a deal whereby they could exchange one Compaq share for one HP share. At the time, HP shares were worth 18% more than Compaq shares. In March 2002, shareholders narrowly approved the takeover. What type of acquisition took place in this situation? Explain what happens in this type of an acquisition.

Accepted Answer

By offering Compaq shareholders a chance to exchange their shares for shares of a higher value, Hewlett-Packard made a tender offer, initiating a hostile takeover. Shareholders were persuaded to sell their shares, allowing HP to acquire Compaq against the company's wishes.

Question 18

An advantage of S corporations over C corporations is they avoid double taxation. Explain how this works.

Accepted Answer

In a C corporation, profits are taxed th...

Question 19

Not-for-profit organizations may NOT earn a profit.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following parts of a partnership agreement spells out the policy regarding partners entering into key financial or contractual agreements?

Accepted Answer

A)  addition of partners
B)  departure of partners
C)  responsibilities of partners
D)  decision-making processE) A) and B)
F) None of the above

Exam 6: Forms of Business Ownership

Henry decides to become a member of a limited liability company (LLC). What will happen to the company if Henry withdraws his membership and invests in other businesses?

Correct Answer
verified
If Henry decides to withdraw his members...
View Answer

Melissa and Claudia are considering becoming business partners and establishing a clothing boutique. They agree that they need to have a partnership agreement before they start the business. What factors should Melissa and Claudia consider when writing their partnership agreement?

Correct Answer
verified
Melissa and Claudia should consider the ...
View Answer

In order to expand more quickly and remain competitive, companies integrate other established businesses through the process of mergers or acquisitions.

Correct Answer
verified
True

At a meeting to announce a merger with another company, which of the following buzzwords is a business leader MOST likely to use to justify the decision?

Correct Answer
verified

All mergers and acquisitions are mutually desired by both companies.

Correct Answer
verified

Correct Answer
verified
Cooperatives provide services to members...
View Answer

Which of the following is the MOST compelling argument for incorporating a business?

Correct Answer
verified

As a shareholder of an S corporation, Dave is entitled to a profit proportionate to his interest in the corporation. How would Dave pay his taxes for the profits from his shares in the S corporation?

Correct Answer
verified
As a shareholder of an S corporation, Da...
View Answer

What is a C corporation and what are the advantages of this type of business ownership?

Correct Answer
verified
A C corporation is a form of business or...
View Answer

A(n) ________ acquisition occurs when one company tries to take control over another company against its wishes.

Correct Answer
verified

Compared to the C corporation, the limited liability company is an attractive form of business ownership because ________.

Correct Answer
verified

Lucia owns her own dog walking business and has several employees. She filed no legal paperwork and has no partners. Lucia's business is a ________.

Correct Answer
verified
C

A proxy fight occurs when a company attempts to persuade the target company's shareholders to replace the existing management with one that is ________ the goals of the acquiring company.

Correct Answer
verified

Companies MOST often resort to mergers and acquisitions when they want to expand their markets and product lines because ________.

Correct Answer
verified

Jaden and Noel are starting a computer repair business together. Jaden insists on outlining rules for the departure of partners in the partnership agreement, although Noel does not think it is necessary. Which of the following statements might Jaden use to explain his insistence to Noel?

Correct Answer
verified

A sole proprietor's income and expenses flow through ________.

Correct Answer
verified

Correct Answer
verified
By offering Compaq shareholders a chance to exchange their shares for shares of a higher value, Hewlett-Packard made a tender offer, initiating a hostile takeover. Shareholders were persuaded to sell their shares, allowing HP to acquire Compaq against the company's wishes.

An advantage of S corporations over C corporations is they avoid double taxation. Explain how this works.

Correct Answer
verified
In a C corporation, profits are taxed th...
View Answer

Not-for-profit organizations may NOT earn a profit.

Correct Answer
verified

Which of the following parts of a partnership agreement spells out the policy regarding partners entering into key financial or contractual agreements?

Correct Answer
verified

Exam 6: Forms of Business Ownership

Henry decides to become a member of a limited liability company (LLC). What will happen to the company if Henry withdraws his membership and invests in other businesses?

Correct AnswerverifiedIf Henry decides to withdraw his members...View AnswerShow Answer

Melissa and Claudia are considering becoming business partners and establishing a clothing boutique. They agree that they need to have a partnership agreement before they start the business. What factors should Melissa and Claudia consider when writing their partnership agreement?

Correct AnswerverifiedMelissa and Claudia should consider the ...View AnswerShow Answer

In order to expand more quickly and remain competitive, companies integrate other established businesses through the process of mergers or acquisitions.

Correct AnswerverifiedTrue

At a meeting to announce a merger with another company, which of the following buzzwords is a business leader MOST likely to use to justify the decision?

Correct AnswerverifiedShow Answer

All mergers and acquisitions are mutually desired by both companies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCooperatives provide services to members...View AnswerShow Answer

Which of the following is the MOST compelling argument for incorporating a business?

Correct AnswerverifiedShow Answer

As a shareholder of an S corporation, Dave is entitled to a profit proportionate to his interest in the corporation. How would Dave pay his taxes for the profits from his shares in the S corporation?

Correct AnswerverifiedAs a shareholder of an S corporation, Da...View AnswerShow Answer

What is a C corporation and what are the advantages of this type of business ownership?

Correct AnswerverifiedA C corporation is a form of business or...View AnswerShow Answer

A(n) ________ acquisition occurs when one company tries to take control over another company against its wishes.

Correct AnswerverifiedShow Answer

Compared to the C corporation, the limited liability company is an attractive form of business ownership because ________.

Correct AnswerverifiedShow Answer

Lucia owns her own dog walking business and has several employees. She filed no legal paperwork and has no partners. Lucia's business is a ________.

Correct AnswerverifiedC

A proxy fight occurs when a company attempts to persuade the target company's shareholders to replace the existing management with one that is ________ the goals of the acquiring company.

Correct AnswerverifiedShow Answer

Companies MOST often resort to mergers and acquisitions when they want to expand their markets and product lines because ________.

Correct AnswerverifiedShow Answer

Jaden and Noel are starting a computer repair business together. Jaden insists on outlining rules for the departure of partners in the partnership agreement, although Noel does not think it is necessary. Which of the following statements might Jaden use to explain his insistence to Noel?

Correct AnswerverifiedShow Answer

A sole proprietor's income and expenses flow through ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedBy offering Compaq shareholders a chance to exchange their shares for shares of a higher value, Hewlett-Packard made a tender offer, initiating a hostile takeover. Shareholders were persuaded to sell their shares, allowing HP to acquire Compaq against the company's wishes.

An advantage of S corporations over C corporations is they avoid double taxation. Explain how this works.

Correct AnswerverifiedIn a C corporation, profits are taxed th...View AnswerShow Answer

Not-for-profit organizations may NOT earn a profit.

Correct AnswerverifiedShow Answer

Which of the following parts of a partnership agreement spells out the policy regarding partners entering into key financial or contractual agreements?

Correct AnswerverifiedShow Answer

Correct Answer
verified
If Henry decides to withdraw his members...
View Answer

Correct Answer
verified
Melissa and Claudia should consider the ...
View Answer

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Cooperatives provide services to members...
View Answer

Correct Answer
verified

Correct Answer
verified
As a shareholder of an S corporation, Da...
View Answer

Correct Answer
verified
A C corporation is a form of business or...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
By offering Compaq shareholders a chance to exchange their shares for shares of a higher value, Hewlett-Packard made a tender offer, initiating a hostile takeover. Shareholders were persuaded to sell their shares, allowing HP to acquire Compaq against the company's wishes.

Correct Answer
verified
In a C corporation, profits are taxed th...
View Answer

Correct Answer
verified

Correct Answer
verified