Chapter 8

Question 1

A new business typically adopts one of four main organizational forms. They​ are:
A.
​debt, equity, venture​ capital, or gifted.
B.
​franchise, sole​ proprietorship, partnership, or corporation.
C.
​franchise, partnership,​ corporation, or​ co-operative.
D.
sole​ proprietorship, partnership,​ corporation, or​ co-operative.
.E.
sole​ proprietorship, franchise,​ corporation, or​ co-operative.

Answer 1

sole​ proprietorship, partnership,​ corporation, or​ co-operative.

Question 2

A major disadvantage of sole proprietorship is​ \_\_\_\_\_\_.
A.
high startup costs
B.
lack of control
C.
limited liability
D.
lack of government support
E.
unlimited liability

Answer 2

unlimited liability

Question 3

Two architects are considering forming a partnership. Both want a partnership agreement. All of the following should be part of their agreement​ except:
A.
how new employees will be hired.
B.
how the company will be dissolved.
C.
the amount of the individual investment.
D.
the formal reporting relationship between the two partners.
E.
how the profits will be shared.

Answer 3

how new employees will be hired.

Question 4

Which of the following statements about partnerships is​ false?
A.
It is easier to borrow money than a sole proprietorship
B.
General partnerships are limited to ten partners.
C.
A partner cannot retire without the other​ partners’ consent
D.
The partnership terminates upon the death of a partner.
E.
A partner cannot sell their interest without the other​ partners’ consent

Answer 4

General partnerships are limited to ten partners.

Question 5

What is the most important advantage of general​ partnerships?
A.
The need for minority partners
B.
The increased role of luck
C.
The ease of implementing an effective control system
D.
The unlimited liability of the partnership
E.
The ability to grow with the addition of new talent and money

Answer 5

The ability to grow with the addition of new talent and money

Question 6

Low​ start-up costs, simplicity in​ formation, and freedom are advantages in establishing a
A.
sole proprietorship.
B.
joint venture.
C.
​co-operative.
D.
partnership.
E.
corporation.

Answer 6

sole proprietorship.

Question 7

There are two basic types of​ partners: \_\_\_\_\_\_\_\_ and​ \_\_\_\_\_\_\_\_.
A.
​dormant; active
B.
​primary; secondary
C.
​general; limited
D.
​secret; open
E.
​key; secondary

Answer 7

​general; limited

Question 8

Low​ start-up costs and simplicity of operations are among the main advantages​ of:
A.
incorporating.
B.
a sole proprietorship.
C.
a​ co-operative.
D.
selling shares.
E.
none of these.

Answer 8

a sole proprietorship.

Question 9

The features of a sole proprietorship include all the following​ except:
A.
limited resources.
B.
simple to form.
C.
unlimited liabilities.
D.
a lot of government paperwork.
E.
easy to dissolve.

Answer 9

a lot of government paperwork.

Question 10

Shirley is opening a flower shop and has decided to operate as a sole proprietorship. Which of the following is not an advantage Shirley will have in operating her​ business?
A.
Low​ start-up costs
B.
Simplicity of operation
C.
Choice of location
D.
Limited liability
E.
Freedom