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Sole Proprietorship

The ___ is the most common form of business ownership.

Sole Proprietorship

A ___ is a form of business that is owned, and usually managed, by onw person.

The chance to be their own boss

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

Sole proprietorship

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

Unlimited liability the owner has for the debts of the firm

One of the major disadvantages of a sole proprietorship is the:

Simpler and less expensive than starting other forms of ownership.

Starting a new business as a sole proprietorship:

The property of the owner, except for taxes owed to the government

In a sole proprietorship, the profits earned by the business are:

Overwhelming time commitment often required of the owner

A significant disadvantage of owning a sole proprietorship is the:

When you own your own business you are responsible for all the business debts.

Unlimited liability means?

The responsibility of the owner

Any debts or damages incurred by a firm organized as a sole proprietorship are:

Ceases to exist unless sold or taken over by Joe's heirs.

Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe becomes incapacitated, his business:

Meet her first goal since sole proprietorships are easy and inexpensive to form. However, she would expose herself to personal risk because owners of sole proprietorships have unlimited liablity.

Halle wants to start a business. She has two goals. First, given her limited personal wealth and eagerness to get started, she wants to get her business up and running with the least possible hassle and expense. Second, she wants to minimize her personal risk in the event that her company experiences difficulties. If Halle chooses a sole proprietorship, she would:


In a partnership, a(n)___partner (owner) actively manages the company and has unlimited liability for claims against the firm.

Limited Partner

A partner (owner) who invests money in a business, does not take an active role in managing the operation, and is only subject to losing the funds he/she invested.

Ability to pool financial resources

Compared to a sole proprietorship, which of the following is considered an advatnage of a general partnership?

Shared management and pooled skill

Which of the following is an advantage of a partnership?

A written agreement will help reduce misunderstandings and disagreements among the partners

A good reason why partners should spell-out the details of their partnership arrangements in writing is:

Obtain a strong financial base for the firm while maintaining personal control over the firm's management.

Maya plans to open a shop specializing in foods and cultural items from the middle East. She wants to be the firm's only general partner, but she is trying to get several friends to participate as limited partners. Apparently Maya wants to:

General Partnership

Zach and Mac own an auto repair business which they operate as co-owners. Both take an active role in the management of the business, and each accepts unlimited liability. Zach and Mac operate as a?

Lose their personal assests as the result of their companys financial problems

Jamie and Maria invested all their saving in a small pizzeria they opened outside the Univeristy of Western Kentucky. They operated the business as a general partnership. After 11 months, the business went broke and Jamie and Maria were left with outstanding bills of $37,500 which was more than their initial investment in the company. Jamie and Maria can:

Conventional Corporation

A(n)____is a state-charted legal entity with authority to act and to have liability separate from its owners.


An owner of a corporation is known as a(n):

Limited Liability of owners

What is an advantage of the corporate form of business when compared to sole proprietorships and partnerships?

Has the ability to raise more money.

Compared to partnerships and sole proprietorships, a major advantage of the C (conventional) corporation as a form of business ownership is that it:

Double taxation of earnings

What is normally considered a disadvantage of the corporate form of business?


The board of directors for a corporation is elected by its?


A separation between ownership and management is most likely to occur in a?

Taxed twice if they are distributed as dividends to stockholders.

Earnings of C (conventional) corporations can be:

Corporations can attract employees by offering stock options

Which of the following is an attractive benefit of a corporation?

Corporations pay taxes on their profits. If they distribute after tax profits to the stockholders, the stockholders also pay taxes on the distribution.

"Double taxation" means:


Maria recently purchased 100 shares of stock in Idle Time Gaming, Inc. Maria is a(n) ____ of this company.

Lose their investment but nothing else.

Dane is a stockholder in SmallWorld, Inc., a C-corporation that manufactures amusement park rides. The company recently lose a major court decision and will probably be forced into bankruptcy. In fact, the damages awarded are so great that, even if all company assets are sold and the proceeds are used to pay its debts, SmallWorld is likely to still owe money to its creditors. If SmallWorld goes bankrupt, Dane and the other stockholders will:

To expand within their own field or enter new markets.

One reason that companies participate in mergers and acquisitions is:

Merging with other companies or acquiring new companies.

In recent years, firms found it easier to grow market share by:


A ___ is two firms combining to form one company.


A(n) ___ occurs when one company buys the property and obligations of another company.

Vertical, horizontal, and conglomerate

Three types of corporate mergers are:


A ___ merger unites firms at different stages of related businesses.

Horizontal Merger

When two companies in the same industry agree to become one firm, the result called a:

Conglomerate Merger

When two companies in completely unrelated industries agree to become one firm, the result is called a:

Diversify business operations and investments

A Conglomerate merger will:

Vertical Merger

A merger involving a commercial bakery and a grocery retailer would be an example of a:

Conglomerate Merger

A merger involving a software producer and a clothing manufacturer is an example of a:


Modern Screen Entertanment, Inc., recently bought Star Power Pictures, Inc., for an undisclosed amount of money. It now owns all of Star Power Picture's properties and obligations. This is an example of a(n):

Horizontal Merger

Trans Globe Airlines is in talks with Royal Blue Airlines, a financially troubled rival. The firms believe the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations. This proposed merger is an example of a:

Franchise Agreement

A ___ is an arrangement whereby someone with proven idea for a business sells the rights to use the business model, to sell a product or service to others in a given territory.


A(n) ___ is a company that has proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.


A person who buys the right to use a business name and sell a product within a given territory is called a:


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

Management and marketing assistance

What is an advantage of franchises?

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