QUESTION In a proxy fight, an outsider seeking to take over a company directly contacts the company’s shareholders and offers to buy their stock at a price that exceeds the present market value. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: An outsider attempting to buy such stock is making […]
QUESTION Which of the following is NOT one of the four basic forms of business ownership? A) franchises B) partnerships C) cooperatives D) corporations E) sole proprietorships ANSWER Answer: A Explanation: A) The basic forms of business ownership are sole proprietorships, partnerships, corporations, and cooperatives. Franchises are a special form of business ownership in […]
QUESTION A leveraged buyout allows the purchaser to use the assets of the company being acquired as security for the loan being used to finance the purchase. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: In a leveraged buyout, one firm borrows money to buy another firm. If earnings continue […]
QUESTION Which of the following is NOT a benefit of being a sole proprietorship? A) starting up the business with ease B) making all your own decisions C) keeping all the profits D) paying no income taxes E) ending the business with ease ANSWER Answer: D Explanation: D) Sole proprietorships are taxed, but the […]
QUESTION What is the oldest, simplest, and the most common form of business ownership? A) corporation B) cooperative C) partnership D) sole proprietorship E) franchise ANSWER Answer: D Explanation: D) Representing 72 percent of businesses, sole proprietorship is the most common type of business ownership.
QUESTION Melissa runs a small medical bills collections agency. She decides what to charge her customers, whom to hire, and how to grow the business. She allows her employees to bring their children to work on occasion and doesn’t have to share financial information with anyone. Which benefit of running a sole proprietorship is described […]
QUESTION When Selena started her all-natural homemade soaps business, she made and sold the soaps from her garage. Her father gave her startup money to pay for ingredients and packaging materials, which made him a silent partner. Selena has since paid him back in full. What kind of company is Selena’s now? A) a general […]
QUESTION After Skip retired from the fire department, he decided to open a sandwich shop near the beach. He paid his startup costs—licenses, building rental, refrigeration, ingredients, and employee’s initial pay—with a loan he took out against his house. When a customer sued Skip, claiming she got sick from spoiled roast beef, Skip lost not […]
QUESTION Manuel owns and operates a tow truck company by himself. His busiest times are usually holidays and long weekends, when lots of people are traveling and lots of cars are on the road. Working these times means Manuel is experiencing which drawback of being a sole proprietorship? A) having unlimited financial liability, which means […]
QUESTION Lawrence has a small house painting business with two employees. Lawrence’s father gave his son startup money and occasionally contributes to the business financially when Lawrence is having a cash flow problem but has nothing to do with the running of the business. Lawrence always pays his father back out of business profits. What […]
