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Exam 6: Forms of Business Ownership

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Question 91

True/False

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The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

A) True
B) False

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Question 92

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A ___________________ is a federally or provincial-chartered legal entity with authority to act and to have liability separate from its owners.

A) limited partnership
B) corporation
C) general partnership
D) non-profit organization

E) A) and C)
F) C) and D)

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Question 93

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Global franchising offers:

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Franchisors sometimes pay reverse royalties to franchisees who believe the franchisor's Internet sales have hurt their brick and mortar businesses.

One reason franchises have become so popular is that this arrangement provides the franchisee with:

In a merger,two firms combine to form one company.

The form of business ownership that usually requires the most detailed record keeping is the:

Stockholders in a corporation normally exert a significant degree of control over the company's daily operations.

One reason individuals incorporate is to obtain the advantage of limited liability.

The owners of a corporation are known as general corporate partners.

In a leveraged buyout,the managers of a firm,its employees,or other investors attempt to:

Twenty-six years ago,several small vineyard owners in the Niagara region joined voluntarily to market their grapes and wine in an attempt to get better prices.Over the years they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services.The arrangement established by these vineyard owners is an example of a:

One of the major advantages of a franchise system is the franchisee often gets instant recognition from consumers.

Partnerships have the largest share of business revenue in Canada.

The largest co-operative sector is the agricultural (farm)co-op.

Most provinces have legal restrictions that prevent individuals from incorporating.

Daggie's Sandwiches,Inc.,sells the rights to use its name and sell its sandwiches in a given market area to aspiring business people who are willing to pay agreed upon fees and meet certain contractual terms.Daggie's:

A disadvantage of co-operatives is that they are subject to higher tax rates than corporations.

What is the difference between a general partner and a limited partner? Give an example of a situation in which a person would want to be a limited partner.