Question 1

Transferability of interest for a closely held corporation may be a problem for which of the following reasons?

Accepted Answer

A)   In Canada, no restrictions may be placed on the selling of shares in corporations.
B)   There may be difficulty in finding someone who wants to purchase the shares, knowing that they would have little input in running the company.
C)   In Canada, there are laws in place to prevent excessive concentration of ownership within corporations.
D)   Selling shares in this form of corporation requires the consent of all other majority shareholders.
E)   All of the answers are correct.

Question 2

Closely held corporations are much more common than __________.

Accepted Answer

A)   public corporation
B)   proprietary corporation
C)   sole partnership
D)   corporate governance
E)   None of the answers apply.

Question 3

The proprietorship form of business has a single owner who has __________.

Accepted Answer

A)   unlimited liability
B)   controls all the decisions
C)   receives all the profits
D)   All of the answers are correct.

Question 4

Discuss the challenges associated with the death of an entrepreneur who operates as a sole proprietor.

Accepted Answer

One of the main concerns of a new ventur...

Question 5

The sole proprietorship: In most provinces, the law requires that if business is carried on under a name other than the actual name of the owner, the name must be registered.

Accepted Answer

A) True 
 B)False

Question 6

As discussed in the text, the best advice to an entrepreneur when starting their venture is to__________.

Accepted Answer

A)   get financing in place before the business plan is finished, it will speed things up considerably
B)   complete the marketing plan first to see if the venture is viable
C)   get legal advice before you start the business, not when a problem develops after the fact
D)   keep your plans confidential until you know the venture is ready to go
E)   None of the answers apply.

Question 7

With regards to transferability of interest, a sole proprietor may __________.

Accepted Answer

A)   choose to sell or transfer the assets of the business, but not the business itself
B)   sell the business as a going concern for whatever someone is willing to pay
C)   pass the business only to their children or spouse
D)   avoid tax liabilities by lending another proprietor the money to purchase the assets of the business
E)   None of the answers apply.

Question 8

A partnership consists of two or more people combining resources to start a company. Most partnerships are __________.

Accepted Answer

A)   will vary according to how much resources are committed to the project
B)   will change once the business moves from the planning phase to the operations phase
C)   general partnerships where the owners have unlimited liability
D)   of relatively minor consequence
E)   None of the answers apply.

Question 9

As discussed in the text, a strong board of directors should provide entrepreneurs with which of the following?

Accepted Answer

A)   access to people and capital
B)   credibility
C)   strategic thinking
D)   education and mentoring
E)   All of the answers are correct.

Question 10

From strictly a taxation perspective, the most favourable form of business structure in Canada would be a__________.

Accepted Answer

A)   proprietorship
B)   partnership
C)   corporation
D)   limited partnership
E)   None of the answers apply.

Question 11

There are three basic legal forms of business formation,

Accepted Answer

A)   (1)  proprietorship, (2)  general partnership, and (3)  special partnership.
B)   (1)  proprietorship, (2)  partnership, and (3)  corporation.
C)   (1)  proprietorship, (2)  private corporation, and (3)  public corporation.
D)   (1)  proprietorship, (2)  sole partnership, and (3)  proprietary corporation.
E)   None of the answers apply.

Question 12

Which of the following forms of business has the advantages of not being subject to double taxation when profits are distributed to the owner and business losses may be used to offset other income?

Accepted Answer

A)   proprietorship
B)   partnership
C)   corporation
D)   Proprietorship and partnership
E)   All of the answers are correct.

Question 13

When evaluating the different organizational structures, an entrepreneur will use which of the following criteria?

Accepted Answer

A)   liability of owner(s) 
B)   costs of starting the business
C)   continuity of the business
D)   transferability of interests
E)   All of the answers are correct.

Question 14

The purpose of the board of directors or advisers is important and they provide important leadership and direction for the new venture - participants should be carefully chosen.

Accepted Answer

A) True 
 B)False

Question 15

Incorporated companies are considered to be separate legal entities, run by shareholders who have limited liability.

Accepted Answer

A) True 
 B)False

Question 16

As discussed in the text, both partnerships and proprietorships are organizational forms that__________.

Accepted Answer

A)   serve as nontaxable conduits of income and deductions
B)   have limited liability
C)   have separate legal identities used only for accounting purposes
D)   serve as nontaxable conduits of income and deductions and have separate legal identities used only for accounting purposes
E)   None of the answers apply.

Question 17

For a proprietorship, home office expenses are treated differently from other business expenses in which of the following ways?

Accepted Answer

A)   home office expenses are more stringently controlled than other business expenses
B)   home office expenses may only be used to offset business income
C)   home office expenses are subject to audit if claims are deemed to be excessive
D)   losses created by home office expenses may not be carried forward to offset future income
E)   None of the answers apply.

Question 18

As discussed in the text, stage 1 of an organization's development is characterized by which of the following?

Accepted Answer

A)   The business is essentially operated by one person, usually the entrepreneur.
B)   The business is managed by the entrepreneur, with decision making authority delegated to managers.
C)   The business is managed by professional managers, with a formal chain of command with decision making authority.
D)   The business is overseen by a board of directors, with professional managers responsible for the day to day operations.
E)   None of the answers apply.

Question 19

As discussed in the text, limited partnerships are not common in Canada for which of the following reasons?

Accepted Answer

A)   Closely held corporations offer most of the same benefits with fewer restrictions.
B)   The disclosure regulations are too complex and demanding.
C)   Canadians tend to distrust complex legal structures such as limited partnerships.
D)   Canadian taxation policies are heavily weighted against them.
E)   None of the answers apply.

Question 20

The board of directors of a corporation __________.

Accepted Answer

A)   lacks voting authority
B)   have a responsibility to represent all shareholders
C)   tend to be less objective than the entrepreneur
D)   are normally senior managers of the company
E)   All of the answers are correct.

Exam 6: Protecting the Idea and Other Legal Issues for the Entrepreneur

When evaluating the different organizational structures, an entrepreneur will use which of the following criteria?

Correct AnswerverifiedShow Answer

The proprietorship form of business has a single owner who has __________.

Correct AnswerverifiedShow Answer

The sole proprietorship: In most provinces, the law requires that if business is carried on under a name other than the actual name of the owner, the name must be registered.

Correct AnswerverifiedShow Answer

For a proprietorship, home office expenses are treated differently from other business expenses in which of the following ways?

Correct AnswerverifiedShow Answer

As discussed in the text, stage 1 of an organization's development is characterized by which of the following?

Correct AnswerverifiedShow Answer

As discussed in the text, a strong board of directors should provide entrepreneurs with which of the following?

Correct AnswerverifiedShow Answer

Discuss the challenges associated with the death of an entrepreneur who operates as a sole proprietor.

Correct AnswerverifiedOne of the main concerns of a new ventur...View AnswerShow Answer

Which of the following forms of business has the advantages of not being subject to double taxation when profits are distributed to the owner and business losses may be used to offset other income?

Correct AnswerverifiedShow Answer

The board of directors of a corporation __________.

Correct AnswerverifiedShow Answer

From strictly a taxation perspective, the most favourable form of business structure in Canada would be a__________.

Correct AnswerverifiedShow Answer

There are three basic legal forms of business formation,

Correct AnswerverifiedShow Answer

Closely held corporations are much more common than __________.

Correct AnswerverifiedShow Answer

As discussed in the text, limited partnerships are not common in Canada for which of the following reasons?

Correct AnswerverifiedShow Answer

Incorporated companies are considered to be separate legal entities, run by shareholders who have limited liability.

Correct AnswerverifiedShow Answer

As discussed in the text, both partnerships and proprietorships are organizational forms that__________.

Correct AnswerverifiedShow Answer

A partnership consists of two or more people combining resources to start a company. Most partnerships are __________.

Correct AnswerverifiedShow Answer

Transferability of interest for a closely held corporation may be a problem for which of the following reasons?

Correct AnswerverifiedShow Answer

As discussed in the text, the best advice to an entrepreneur when starting their venture is to__________.

Correct AnswerverifiedShow Answer

With regards to transferability of interest, a sole proprietor may __________.

Correct AnswerverifiedShow Answer

The purpose of the board of directors or advisers is important and they provide important leadership and direction for the new venture - participants should be carefully chosen.

Correct AnswerverifiedShow Answer

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One of the main concerns of a new ventur...
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