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Exam 6: Forms of Business Ownership

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Question 31

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Stockholders in a corporation must accept unlimited liability for the corporation's debts.

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Question 32

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The form of business ownership that is best suited to raising large amounts of money for expansion is the:

A) sole proprietorship.
B) partnership.
C) corporation.
D) co-operative.

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Question 33

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A limited partnership refers to a partnership set up for a temporary purpose,such as a real estate development project.

An advantage of forming a sole proprietorship is that it allows the owner to have more time for leisure activities.

A co-operative consists of people with similar needs who pool their resources for mutual gain.

One disadvantage of _________ is the initial cost of starting this form of business organization.

A horizontal merger refers to a merger between two companies that are in entirely different markets.

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Starting a new business as a sole proprietorship:

Franchisees must follow more rules,regulations,and procedures than if they operated independently owned businesses.

A ____________ is the share of profits or percentage of sales a franchisee pays to a franchisor.

Dann is convinced that he has a great idea for a new business.Unfortunately,the type of business he wants to start would require a fairly high initial investment and Dann has a poor credit rating and very little personal wealth.Dann would be unlikely to find success if he organized his business as a sole proprietorship.

A ___________ is an organization that is owned and controlled by the people who use it-producers,consumers and workers with similar needs who pool their resources for mutual gain.

Franchised businesses in Canada account for 10% of all retail sales,and employ about 200,000 people.

Hair's to You,a nationwide network of hair styling salons,recently approached Flair All,Inc.,a maker of hair care products,about the potential for a merger.Many of Flair All's products are used by professional hair stylists,and Hair's to You believes that such a merger would ensure a supply of good quality products for use in its salons.If the firms do merge,it would be an example of a:

Sandy is a talented fashion designer who wants to start her own women's sportswear company.However,she is concerned about some problems she might face.She knows little about actual production methods or the financial aspects of running a business,and has little personal wealth to put into the company.In order to overcome these problems,Sandy should start her business as a sole proprietorship.

To many businesspeople,one of the major attractions of a sole proprietorship is:

The group farthest removed from the daily operations of a corporation are:

A significant disadvantage of owning a sole proprietorship is the:

The ___________ is the most common form of business ownership.