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Homework answers / question archive / Los Angeles Trade Technical College - MGMT 013 Test Chapter 4, Due Monday by 11:59pm Available Jun 23 at 12am - Jun 27 at 11:59pm 5 days  Chapter 4--Choosing a Form of Business Ownership MULTIPLE CHOICE Samantha's Dilemma  Samantha graduated from college and needed to decide where she wanted to work

Los Angeles Trade Technical College - MGMT 013 Test Chapter 4, Due Monday by 11:59pm Available Jun 23 at 12am - Jun 27 at 11:59pm 5 days  Chapter 4--Choosing a Form of Business Ownership MULTIPLE CHOICE Samantha's Dilemma  Samantha graduated from college and needed to decide where she wanted to work

Management

Los Angeles Trade Technical College - MGMT 013

Test Chapter 4,

  • Due Monday by 11:59pm
  • Available Jun 23 at 12am - Jun 27 at 11:59pm 5 days

 Chapter 4--Choosing a Form of Business Ownership

MULTIPLE CHOICE

Samantha's Dilemma

 Samantha graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual owner of her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States.

 After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hard-working she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.

01)Refer to Samantha's Dilemma. What type of company does Samantha's friend operate?

a.

Incorporation

b.

Partnership

c.

Franchise

d.

Corporation

e.

Sole proprietorship

 

02.   Refer to Samantha's Dilemma. What wouldnotbe an advantage of Samantha's aunt's business?

a.

Pride of ownership

b.

Retention of profits

c.

No special taxes

d.

Ability to be your own boss

e.

Unlimited liability

 

03.   Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

a.

corporation.

b.

partnership.

c.

sole proprietorship.

d.

limited partnership.

e.

limited-liability corporation.

 

04.   Local residents have always thought the mom-and-pop store on the corner of Locust and Congress was a partnership between Mr. and Mrs. Jones. But Mr. Jones is the real owner. This probably means that the store is a

a.

limited partnership.

b.

sole proprietorship.

c.

corporation.

d.

cooperative.

e.

joint venture.

 

05.   Which of the following is necessary for starting a sole proprietorship?

a.

A contract

b.

An agreement

c.

An application to the secretary of state

d.

Articles of proprietorship

e.

No specific legal documents

 

06.   Thomas wants to make money, so he starts his own business as a sole proprietor. He likes this form of business because

a.

he will get to keep all of the profits the business makes.

b.

profit is guaranteed since he will be the only owner.

c.

it will provide a steady income for him.

d.

he has to split the profits with only one other person.

e.

he has to pay small dividends to the other owners.

 

 

  07.   Stephen decides his business will begin staying open until 7 p.m. instead of 6 p.m. The next day, the shop stays open until 7 p.m. This environment of flexibility to quickly change is characteristic of what form of business organization?

a.

Corporation

b.

Partnership

c.

S-corporation

d.

Flexible partnership

e.

Sole proprietorship

 

08.   Unlimited liability means

a.

there is no limit on the amount an owner can borrow.

b.

creditors will absorb any loss from nonpayment of debt.

c.

the business can borrow money for any type of purchase.

d.

the owner is responsible for all business debts.

e.

stockholders can borrow money from the business.

 

 

 

09.   When the owner of a sole proprietorship dies, what becomes of the business?

a.

The employees take over the business.

b.

It ceases to exist unless the heirs take it over or sell it.

c.

It is automatically auctioned to the highest bidder.

d.

It ceases to exist, and no one may legally take it over.

e.

It may continue existing but only under a new name.

 

10.   A voluntary association of two or more people acting as co-owners of a business is known as a

a.

partnership.

b.

corporation.

c.

sole proprietorship.

d.

conglomerate.

e.

syndicate.

 


 

11.   The partner who can lose only what he or she has invested in a business is the

a.

general partner.

b.

sole proprietor.

c.

manager.

d.

employee.

e.

limited partner.

 

12.   With respect to combined business skills and knowledge, which of the following partnerships isbest?

a.

Joe, Louis, and Raul own a bakery. They are able bakers by trade. Each wants to spend all of his time baking items.

b.

Carolyn, Melvin, and Cindy own a boutique. Carolyn has marketing expertise. Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit. Cindy is a CPA. Each has agreed to use his or her experience and expertise for the success of the business.

c.

Mary and Robert, both young pharmacists, own a pharmacy. Neither has taken a business course, but they are willing to learn.

d.

Carter and Renée own a video store. Renée is most experienced as a homemaker and mother. Carter has worked as an auto mechanic for ten years.

e.

Vince and Linda own a vacuum cleaner store. Vince knows everything possible about store operations. Linda is wealthy and can provide investment capital.

 

13.   Jack has been saving his excess funds for several years and has contemplated entering a partnership with a friend from college. Jack hesitates because he knows that it is ____ to invest money in a partnership and ____ to get the money back out.

a.

difficult; difficult

b.

easy; difficult

c.

easy; impossible

d.

easy; easy

e.

difficult; easy

 

 

 

 

14.   Kayla purchases shares of ownership in General Electric. These shares are referred to as

a.

ownership documents.

b.

stock.

c.

articles of ownership.

d.

incorporation.

e.

corporate certificates.

 

15.   When incorporating, a business

a.

may incorporate in any state it chooses.

b.

must incorporate in the state in which its headquarters are located.

c.

must incorporate in the state in which it does the most business.

d.

must receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located.

e.

must do none of the above.

 

16.   What is the significance of the namepreferred stock?

a.

It is the type of stock that most investors would rather have.

b.

Its claims on dividends are paid before those of common stock.

c.

The overall return on preferred stock is higher than that on common stock.

d.

This stock is available only to select individuals associated with the company.

e.

This stock provides the most powerful voting rights.

 

17.   A distribution of earnings to the stockholders of a corporation is a

a.

par distribution.

b.

dividend.

c.

earnings per share.

d.

distributed payment.

e.

common payment.

 

18.   The top governing body of a corporation is known as the

a.

incorporators.

b.

stockholders.

c.

management.

d.

officers.

e.

board of directors.

 

19.   What does double taxation mean?

a.

Companies must pay taxes on their income, and then employees must pay taxes on their salaries and wages.

b.

Companies have to pay both sales taxes and income taxes.

c.

Companies must pay taxes on their earnings, and then stockholders pay taxes on their dividends.

d.

Suppliers tax their customers, and in turn these businesses tax the ultimate consumer.

e.

Companies must pay taxes on corporate income and then additional taxes on distributions to profit stockholders.

 

20.   A partnership formed to operate for a specific time period or to accomplish a specific purpose is known as a

a.

conglomerate.

b.

cooperative.

c.

joint venture.

d.

corporation.

e.

joint merger.

 

21.     A hostile takeover is a situation in which

a.

the management and board of directors of the targeted firm disapprove of the proposed merger.

b.

stockholders are paid a golden parachute.

c.

the targeted firm is dismantled to avoid the merger.

d.

the government makes the decision that the corporate raider can purchase the targeted firm.

e.

the corporate raider receives a sum of money to leave the targeted firm alone.

 

22.   A technique used to gather enough stockholder votes to control a targeted company is a

a.

tender offer.

b.

stockholder fight.

c.

proxy fight.

d.

porcupine fight.

e.

poison pill.

 

 23.   Which of the following is an example of a horizontal merger?

a.

The purchase of a catering firm by Delta Airlines

b.

The purchase of Marathon Oil Company by U.S. Steel

c.

The purchase of Kentucky Fried Chicken by PepsiCo

d.

The purchase of Sam's Meat Packing Company by the Kroger supermarket chain

e.

The purchase of Mobil Oil by Exxon

 

24.   Which of the following is an example of a vertical merger?

a.

The purchase of TWA by American Airlines

b.

The purchase of Marathon Oil Company by U.S. Steel

c.

The purchase of Kentucky Fried Chicken by PepsiCo

d.

The purchase of Malone's Cost-Plus Supermarkets by the Kroger supermarket chain

e.

The purchase of Gulf Oil by Standard Oil Company of California

 

25.   A merger between firms in completely unrelated industries is known as a

a.

conglomerate merger.

b.

cooperative.

c.

joint venture.

d.

vertical merger.

e.

horizontal merger.

 

  

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