QUESTION PyraTex’s chief financial officer is concerned that opening a plant in Vietnam to sell its products there might not be profitable. He argues this point on the basis of his belief that emerging markets are not worth selling to and that more-established markets are always preferable ones in which to do business. Which of […]
QUESTION One of the disadvantages of being a sole proprietor is difficulty in selling or passing along the business. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Although some sole proprietors are able to sell the business to someone or pass it along to their heirs as part of their […]
QUESTION In a master limited partnership, the partnership sells stock on a stock exchange, but pays a lesser rate than the corporate income tax. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: In a master limited partnership, the partnership acts like a corporation, selling stock, but is taxed at a […]
QUESTION Marilyn and her sister Sharon opened a business that sold homemade bath products in decorative baskets. After many successful years, Marilyn wanted to hand down her part of the business to her daughter, Louise. But Sharon did not want to partner with Louise. Sharon insisted that Marilyn sell her Marilyn’s share of the business. […]
QUESTION A drawback of a cooperative (a co-op) is that members can squabble and take too long to make decisions. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: A cooperative is a corporation owned by its user members, who have pooled their resources for mutual benefit. A drawback of having […]
QUESTION Miguel and Ricardo have partnered in running a one-shop auto repair business for several years. Lately they have had to turn away many customers for lack of time, mechanics, and space to work on so many cars. They want to open another shop, and think it is time to incorporate. A limited liability company […]
QUESTION A franchisee is the business owner that gives others the rights to sell its products or services. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The business owner that gives others the rights to sell its products or services is a franchisor. A franchisee is the buyer of a […]
QUESTION In order to establish a partnership, you must have a lawyer draw up a legal agreement in the form of articles of partnership. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: A legal agreement is a good idea but not required by law; if you don’t have articles of […]
QUESTION All franchises must be established as sole proprietorships. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: You can set up a franchise as a sole proprietorship, partnership, or corporation.
QUESTION Sam purchased a popular fast-food franchise but did not make a profit in his first quarter of operation. Still, Sam was probably required to pay royalties to his franchisor. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Franchisors collect royalties—a percentage of sales before taxes and other expenses—on all […]
