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Exam 5: How to Form a Business

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Question 81

True/False

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A general partner takes an active role in the management of the business.

A) True
B) False

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Question 82

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Most states have legal restrictions that prevent individuals from incorporating.

A) True
B) False

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Question 83

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Which of the following people would be most interested in participating in a business organized as a cooperative?

When a group of investors take a firm private, they purchase all the company's outstanding stock.

One reason that a firm may choose to merge or acquire another company would be diversity with diversify of products or services.

The "coattail effect" refers to inevitable repercussions on your business if a fellow franchisee should fail.

The is usually the easiest form of business to start and end.

The three major types of mergers are acquisitional, joint, and connective.

By law, providers of personal services such as doctors and lawyers cannot set-up their businesses as limited liability companies.

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

In a typical franchise agreement, the franchisor pays the franchisee a fee to manage its company, and the two of them split the profits based on the percentages established in the agreement.

Connie is a general partner in a retail cookie store. Her personal assets are legally protected from the debts of the business.

A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

One advantage of a partnership is that there is a simple process for partners to terminate their business.

Two competitors: Stanley's Food Mart and Bluejay Groceries recently issued a joint announcement stating their decision to merge. The announcement claimed that the new firm would have more financial resources, which would enable it to expand services and broaden offerings to consumers. This proposed merger is an example of a horizontal merger.

Which of the following statements about farm cooperatives is most accurate? Farm cooperatives have:

Jane has always disliked the notion that the customers, managers and workers of a business are separate individuals with competing goals. She has joined with many other people in her community who share this view to become a member, and part owner, of a child care center. Jane and the other members operate the center for their own benefit, and each is expected to work at the center at least 12 hours each month. The type of organization Jane belongs to is known as a joint venture.

The reason a professional such as a lawyer or doctor would incorporate his/her business is

Many franchisors have rules that prohibit franchisees from sponsoring their own websites.

A limited partnership consists of one or more general partners and one or more limited partners.