Future of Business 4th Edition Althouse Test Bank

Future of Business 4th Edition Althouse
Test Bank
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CHAPTER 8—FORMS OF BUSINESS OWNERSHIP
MULTIPLE CHOICE
1. What is the most common form of business organization?

a. a general partnership
b. a cooperative
c. a sole proprietorship
d. a corporation
ANS: C PTS: 1 REF: 216 OBJ: 1
BLM: Remember
2. Faye Adkins had a relish that her family and friends raved about. As a result of moral and financial
support from her family, Adkins began her own business and sells her relish in local supermarkets and
on the Internet. Faye Adkins is an example of which of the following?
a. a sole partnership
b. a sole proprietorship
c. an S corporation
d. a limited partnership
ANS: B PTS: 1 REF: 216 OBJ: 1
BLM: Higher order
3. Tara Bartek owns and operates the Singing Pig Food Company. Bartek makes and markets 20 different
gourmet mustards, salsas, marinades, and dip mixes using her crooning pig logo. As a sole
proprietorship, the company would have experienced which of the following?
a. It would have had limited liability.
b. It would have had no trouble finding qualified employees.
c. It would have found it easy to raise capital.
d. It would have been easy and inexpensive to form.
ANS: D PTS: 1 REF: 216 OBJ: 1
BLM: Higher order
4. Sanford Lee is planning to open a pizza parlour. He has a secret tomato sauce recipe that he does not
want to divulge to anyone. Lee also wants to have sole responsibility for all business decisions. What
sort of organization should Lee form?
a. a limited cooperative
b. a joint venture
BLM: Higher order
5. Which of the following is an advantage of sole proprietor ownership?

a. ease with which qualified employees can be found
b. ease with which capital can be raised
c. limited liability
d. less government regulation
BLM: Remember
Copyright © 2014 Nelson Education Ltd. 8-1

Chapter 8 Forms of Business Ownership
6. Which type of business organization experiences the least governmental regulation?

a. a limited partnership
b. a public corporation
c. a private corporation
d. a sole proprietorship
BLM: Remember
7. Which form of business ownership is easiest to dissolve?

a. a cooperative
b. a subsidiary
BLM: Remember
8. Which form of business ownership has the most difficulty in raising capital?
a. a sole proprietorship
b. a general partnership
c. a limited partnership
d. a corporation
ANS: A PTS: 1 REF: 217 OBJ: 1
BLM: Remember
9. In 1984, Suzanne Pogell wanted to learn to sail, but she could find no one to teach her. She finally did
convince someone to teach her to sail and, after mastering sailing, she started an all-woman sailing
school called “Womanship” as a sole proprietorship. Which of the following represents the meaning of
unlimited liability to Suzanne?
a. She usually has to put in an unlimited number of hours.
b. She is fully liable for all business debts.
c. She must have liability insurance.
d. She has unlimited access to funds.
BLM: Higher order
10. What type of liability means that business damages and/or debts can also be attached to the personal
assets of the owners?
a. informal liability
b. limited liability
c. unlimited liability
d. funding liability
BLM: Remember

11. Which of the following is a disadvantage of sole proprietor ownership?

a. ease of dissolution
b. no special taxation
c. ease of formation
d. difficulty in raising capital
BLM: Remember
12. Which of the following is a disadvantage of sole proprietor ownership?

a. all profits to the owner
b. ease and low cost of formation
c. freedom from government regulation
d. unlimited liability
BLM: Remember
13. In 1984, Suzanne Pogell wanted to learn to sail, but she could find no one to teach her. She finally did
convince someone to teach her to sail and, after mastering sailing, she started an all-woman sailing
school called “Womanship” as a sole proprietorship. When she dies, which of the following will
occur?
a. The government takes over and sells the assets.
b. The business dies with her.
c. The business continues with the employees running it.
d. The business can be continued by any blood relative.
BLM: Higher order
14. Sole proprietorships experience which of the following tax situations?

a. They are double taxed.
b. They are neither a legal nor a taxable entity.
c. They are exempt from taxation.
d. They are usually taxed higher than individuals.
BLM: Remember
15. Pete Yankin and Ken Lowery established a company that markets fishing expeditions. Yankin and
Lowery share responsibilities for booking the trips, gathering supplies, and guiding groups into
locations where they can fish for salmon. Since the two share any profit equally, what sort of business
do they have?
a. a sole partnership
c. a limited cooperative
d. a general cooperative
BLM: Higher order

16. Al Tomlin and Wilson Nkata recently closed their frame shop because they could not pay the
outstanding business debts. Since Tomlin and Nkata are both liable for the debts, what sort of business
do they have?
b. a private corporation
c. an open corporation
BLM: Higher order
17. Which of the following statements best describes a general partnership?

a. General partnerships are usually double-taxed.
b. A general partnership is an entity separate from its owners.
c. Partners in a general partnership co-own the company’s assets.
d. A general partnership is the most popular form of business ownership.
BLM: Remember
18. Oscar Patel and Jon O’Keefe own and operate a janitorial cleaning service. Patel bought a new
computer, which he plans for the company to use to track its customers, its suppliers, and for making
business forecasts. Patel plans on using an installment plan to pay for the computer. O’Keefe was not
asked if he thought the company needed a computer and was unhappy when he learned that he and
Patel are both liable for the payments for the computer. Patel and O’Keefe have which of the following
type of business?
b. a private corporation
c. a joint partnership
BLM: Remember
19. Thom Georges wants to open a store to sell antique architectural features that he can salvage from old
houses being torn down. He has an eye for the kind of doors, windows, mantels, and so forth that
decorators want, but he does not have all the funding he needs. He has invited his parents to invest
$40,000 in the enterprise. He has told them that if they do invest, they would have liabilities in the
company equal to but no greater than their investment. Georges is trying to get them to form which of
the following?
a. a limited partnership
b. a joint venture
c. a cooperative
d. a general partnership
BLM: Higher order

20. Karl Metzger plans to invest $5,000 in a partnership with his brother to produce and sell handcrafted
violins, zithers, and other string instruments. Metzger does not plan to work in the business and wants
no more liability than his investment. What should he be?
a. a limited partner
b. a general partner
c. a joint partner
d. a temporary partner
BLM: Higher order
21. Sam Beauvois has invested $10,000 in his son’s pizza restaurant, but takes no part in its management.
What is Beauvois?
a. a limited partner
b. a general partner
c. a nonworking partner
d. an entrepreneur
BLM: Higher order
22. What do partnership agreements generally specify?

a. the methods of taxation of each partner
b. the contributions of each partner
c. the percentage of revenue to be generated by each partner
d. the provisions for spouses and family to work in the partnership
BLM: Higher order
23. Rama Singh and Allie Jordan are opening a business where they will create and sell packaged
assortments of flavoured vinegars with recipe booklets. Since they are planning to operate as a
partnership, which of the following represents the best course of action for them?
a. Hire a manager to operate the business.
b. Seek government assistance.
c. Borrow as much as possible.
d. Agree to share the business’s profits and losses.
BLM: Higher order
24. If Alonzo Bajalia were to become a limited partner in a landscaping company, which of the following
would occur?
a. He will agree not to participate in day-to-day management of the company.
b. He will be limited in the number of hours he can work each month.
c. He will limited in the amount he can invest.
d. He will qualify for a limited income tax rate.
BLM: Higher order

25. Which of the following statements best describes the partnership as a form of business ownership?
a. Disagreements between partners are rare.
b. Termination of the partnership is simple.
c. Formation of the partnership is simple.
d. Liability for the partners is limited.
BLM: Remember
26. Ease of formation, flexibility, and diversity of management are advantages of which of the following
forms of business ownership?
a. a cooperative
b. a partnership
c. a conglomerate
d. a joint venture
BLM: Remember
27. Which of the following is a disadvantage associated with a partnership?

a. unlimited liability
b. flexibility
c. diversity of management
d. possibility of more available credit
BLM: Remember
28. Which of the following statements best describes the taxation of partnerships?
a. Partnerships are limited in taxes depending on number of partners.
b. Both the partnership and the individuals are taxed for any profits earned.
c. Partnerships file tax returns but pass profits and losses on to partners who report them on
their tax returns.
d. Partnerships use corporate tax rates in filing returns.
BLM: Remember
29. A corporation can best be described by which of the following statements?

a. It cannot be sued.
b. It is subject to federal laws only.
c. It is a taxable entity.
d. It cannot own land but can own buildings.
BLM: Remember

30. A corporation can best be described by which of the following statements?

a. It cannot sue or be sued.
b. It ends when the owner of the corporation charter dies.
c. It does not have a life separate from its owners.
d. It does not have a size limitation.
BLM: Remember
31. What is the first step in incorporating a company?

a. Write the articles of incorporation.
b. Hold an organizational meeting.
c. Select the company’s name.
d. Buy necessary licences and pay required taxes.
BLM: Remember
32. Tara Brtek owns and operates the Singing Pig Food Company. Brtek makes and markets 20 different
gourmet mustards, salsas, marinades, and dip mixes using her crooning pig logo. If Tara decides to
incorporate her business to make it easier to find investors, what would be her first step?
a. Elect a board of directors.
b. Sell stock to her customers.
c. Write the articles of incorporation.
d. Hold an organizational meeting with shareholders.
BLM: Higher order
33. Which of the following provides the legal and managerial guidelines for operating the company?
a. the constitution
b. the articles of incorporation
c. the corporate structure
d. the bylaws
BLM: Remember
34. Who owns a corporation?

a. its employees
b. its board of directors and major shareholders
c. everyone who owns a share of stock in the corporation
d. its board of directors
BLM: Remember

35. What do a company’s shareholders have the right to do?

a. Elect the board of directors.
b. Help recruit top management.
c. Get discounts on the company’s product or service.
d. Offer suggestions and expect to have them accepted.
BLM: Remember
36. How is a corporation’s board of directors formed?

a. It is appointed by the company executive.
b. It is elected by the shareholders.
c. It is selected by the agency that chartered the corporation.
d. It is appointed by the Toronto Stock Exchange.
BLM: Remember
37. Why do most large companies have outside directors on their boards?
a. to meet federal government requirements
b. to provide independent benchmarks
c. to provide technology leadership
d. to bring a fresh view to all of the corporation’s activities
BLM: Remember
38. Aaron Medford has invested $600 in the corporate stock of a manufacturer of offshore oil drilling
equipment. If the company goes bankrupt, what is the most Medford could lose?
a. half of his investment
b. the par value of his stock
c. $600
d. $600 plus foreclosure costs
BLM: Higher order
39. Ralston Smythe owns Heritage Inn with four other people. All of the owners have limited financial
risk. Smythe’s inn is which of the following business structures?
b. a corporation
c. a cooperative
BLM: Higher order

40. What does the fact that a corporation has limited liability mean?
a. Owners’ liabilities are limited to the amount invested.
b. It can earn a limited amount.
c. Some of the owners are limited in earnings.
d. The life of the corporation is limited.
BLM: Remember
41. A corporation has which of the following characteristics?

a. continuity of life
b. difficulty attracting financing
d. difficulty transferring ownership
BLM: Remember
42. Tara Brtek owns and operates the Singing Pig Food Company. Brtek makes and markets 20 different
gourmet mustards, salsas, marinades, and dip mixes using her crooning pig logo. Brtek has been
thinking about changing her sole proprietorship to a corporation so she can take advantage of which of
the following?
a. Corporations have an enhanced ability to attract financing.
b. Corporations have fewer government restrictions and regulations.
c. Corporations pay lower and fewer taxes.
d. Corporations have guaranteed loans for expansion.
BLM: Higher order
43. A corporation’s earnings are taxed as corporate earnings and as dividends to the shareholders. What is
this known as?
a. double jeopardy
b. double indemnity
c. double taxation
d. primary and secondary taxation
BLM: Remember
44. Double taxation in a corporation is best described by which of the following?

a. Corporations must pay both provincial and federal taxes.
b. Corporations can double their earnings without higher taxes.
c. The corporation must pay taxes twice a year.
d. Earnings of the corporation and dividends of the shareholders are both taxed.
BLM: Remember

45. Which of the following is a disadvantage associated with a corporation?

a. taxation rates compared to those of a sole proprietorship
b. cost of formation compared to a partnership
d. limited life
BLM: Remember
46. Which of the following are organizations formed by individuals or businesses with similar interests to
achieve greater economies of scale and economic power through collective ownership?
a. franchises
b. joint ventures
c. limited partnerships
d. cooperatives
BLM: Remember
47. Which of the following statements best describes cooperatives?

a. Cooperatives have the same liabilities as partnerships.
b. Cooperatives have a limited life span.
c. Cooperatives cannot legally compete with taxable entities.
d. Cooperatives increase their members’ buying power.
BLM: Remember
48. Which of the following is created when two or more companies form a special entity to undertake a
specific project, usually for a specific period of time?
a. a cooperative
b. a limited-time partnership
c. a general partnership
d. a joint venture
BLM: Remember
49. The development of new drugs is very expensive. For this reason Genentech, a large biotechnical
company, has entered into a business arrangement with Swiss-owned Roche to develop a vaccine for
tuberculosis. When the vaccine is developed or when the two biotechnical companies determine the
vaccine cannot be developed using their current methodology, this relationship will dissolve. What
type of relationship is it?
a. a joint venture
c. a cooperative
d. a limited-time partnership
BLM: Higher order

50. AT&T and British Telecom, two of the largest communications companies in the world, allied to
create a company called Concerts to investigate the profitability of providing telecommunications
services for multinational companies. Concerts is an example of which of the following?
b. a cooperative
c. a limited-time partnership
d. a joint venture
BLM: Higher order
51. What is the combination of two companies that join to form one company called?
a. a merger
b. a joint venture
c. a cartel
d. a conglomerate
BLM: Remember
52. The purchase and subsequent takeover of Marks Work Warehouse by Canadian Tire is an example of
which of the following?
a. a merger
b. an acquisition
c. a voluntary union
d. a joint venture
BLM: Higher order
53. EMC, a data storage company, took over a company called Documentation, which makes software
designed to help companies organize data such as e-mails, medical records, and spreadsheets. This is
an example of which of the following for EMC?
a. a joint venture
b. a merger
c. an acquisition
d. a voluntary union
BLM: Higher order
54. North American Van Lines and Allied Van Lines merged to create the world’s largest moving
company. Prior to the merger, North American was the leading company in moving high-end
merchandise such as computer and hospital equipment, while Allied specialized in households. What
type of merger is this?
a. a vertical merger
b. a combination
c. a conglomerate
d. a horizontal merger
BLM: Higher order

55. The merger of McKesson, a leading drug wholesaler, and HBOC, a producer of health-care inventory
software, is an example of which of the following type of merger?
a. a vertical merger
b. a horizontal merger
c. a functional merger
d. an acquired merger
BLM: Higher order
56. Which type of merger brings together companies in unrelated businesses to reduce risk?
a. a diagonal merger
b. a horizontal merger
c. a vertical merger
d. a conglomerate
BLM: Remember
57. A local lumber company’s purchase of a window and door manufacturer is an example of which of the
following types of merger?
a. a combination
b. a conglomerate
c. a horizontal merger
d. a vertical merger
BLM: Higher order
58. Miniature Precision Corporation, a microprocessor manufacturer, recently acquired Cameron-Price, a

plastics mould manufacturer. Miniature Precision financed the transaction with 90 percent borrowed
money and used Cameron-Price’s assets as collateral. What is this type of merger commonly known
as?
a. greenmail
b. a leveraged buyout
c. an institutional takeover
d. a hostile takeover
BLM: Higher order
59. Which of the following are corporate takeovers financed by large amounts of borrowed money?
a. liquidity corporations
b. financed mergers
c. debt acquisitions
d. leveraged buyouts
BLM: Remember

60. David Dworkin is the founder of Swoozie’s stores. The stores carry diverse lines of wrapping paper,
stationery, invitations, and gifts for affluent women. Dworkin supplied the product concept to other
individuals who wanted to own and operate their own business without starting from scratch. Which of
the following types of a business organization is Swoozie’s?
a. a brand cooperative
b. a joint venture
c. a strategic alliance
d. a franchise
BLM: Higher order
61. What is the purchaser of a franchise called?

a. a franchisee
b. a franchisor
c. a sole proprietor
d. a contractor
BLM: Remember
62. The headquarters, seller, and supplier of the service or method of operation of a franchise is called
which of the following?
a. a franchisor
b. a contractee
c. a direct seller
d. a franchisee
BLM: Remember
63. The franchise agreement is best described by which of the following?

a. It guarantees that the franchisor will make a profit.
b. It must be approved by the Toronto Stock Exchange.
c. It guarantees that the franchisee will make a profit.
d. It is the contract that details the terms of the franchise.
BLM: Remember
64. The franchisor generally does NOT provide the franchisee with which of the following?
a. assistance in site selection
b. wholesale prices on supplies
c. use of company name and logo
d. help in employee selection
BLM: Remember

65. Isadore Alfonse is considering the purchase of a Bonus Building Care franchise. Alfonse is NOT
likely to get assistance from the commercial cleaning franchisor in which of the following areas?
a. start-up costs
b. accounting procedures
c. permission to use company logo in advertising
d. site selection
BLM: Higher order
66. Tiffany Worth is buying a Dairy Queen franchise. Which of the following is not normally expected of
the franchisor?
a. assistance in personal income tax preparation
b. set operating procedures
c. a proven track record
d. standard goods and services
BLM: Higher order
67. Which of the following is a disadvantage for the fast-food franchisee?

a. ongoing management training programs
b. short-term credit for buying supplies
c. a peer group for support
d. royalty fees
BLM: Higher order
68. Jayson Tully is contemplating the purchase of a Subway restaurant franchise. Tully has made a list of
the disadvantages that he faces. Which of the following is actually an advantage?
a. assistance in building plans
b. defined territory
c. royalty fees
d. conformity to operating procedures
BLM: Higher order
69. What is a disadvantage of franchising to the franchisee?

a. national name recognition
b. restricted operating freedom
c. assistance in site location
d. ongoing management training program
BLM: Remember

70. Restricted operating freedom in franchising means that the franchisee must conform to which of the
following?
a. obtaining permission before changing the product
b. hiring employees from select groups
c. operating in a specific, defined territory
d. advertising only online
BLM: Remember
71. Which of the following is an innovation in franchising?

a. a leveraged franchise buyout
b. niche marketing
c. cross-border mergers
d. multiple-concept franchises
BLM: Remember
72. Scott Abrams was driving to Calgary from Edmonton, when he got off Highway 2 to have some lunch.
Abrams was surprised to find a fast-food outlet that contained both a Tim Horton’s and a Wendy’s
franchise. What is this new trend in franchising called?
a. a multiple franchise offering
b. a dual-franchise structure
c. cross-branding
d. a complete coverage franchise
BLM: Higher order
TRUE/FALSE
1. If the sole proprietorship acquires a legal business name, the owner then has limited liability.
ANS: F PTS: 1 REF: 217 OBJ: 1

BLM: Remember
2. One of the disadvantages of the sole proprietorship is that the owner has unlimited liability.
ANS: T PTS: 1 REF: 217 OBJ: 1

BLM: Remember
3. The sole proprietorship is considered a legal entity; therefore, it is taxed separately from the owner.

BLM: Remember
4. For partnerships to be legal, they must be established in writing.

BLM: Remember

5. In a limited partnership, all of the partners have limited liability.

BLM: Remember
6. A disadvantage of a partnership is that any partner may have to pay all of the debts of the company
regardless of who incurred the debts.

BLM: Remember
7. Dissolving a partnership is easier than dissolving a sole proprietorship.

BLM: Remember
8. Articles of incorporation usually specify the life of a corporation as a certain number of predetermined
years.

BLM: Remember
9. The corporation’s board of directors hire the corporate officers.

BLM: Remember
10. Double taxation is a distinct advantage that corporations have over other forms of ownership.

BLM: Remember
11. Corporations face fewer government restrictions and regulations than sole proprietorships and
partnerships.

BLM: Remember
12. The two types of cooperatives are wholesale and retail.

BLM: Remember
13. When Ashland Plastics and Melamine Chemicals formed a joint venture to develop flame-resistant
plastic sheeting, the relationship most likely ended as soon as the project was completed.

BLM: Higher order

14. When Markum Corp., a manufacturer of cardboard printing equipment, purchased Pretak Ltd., a
manufacturer of printers for printing on plastic, it was an example of an acquisition.

BLM: Higher order
15. When companies in the same industry merge to achieve economies of scale and to expand their
product lines, it is called a horizontal merger.

BLM: Remember
16. When Sara Lee, a company known for its baked goods, purchased Dim S.A., a French hosiery
manufacturer, it was an example of a conglomerate merger.

BLM: Higher order
17. Leveraged buyouts (LBO) are inefficient and do not generate enough cash to service the debt that was
created by the merger.

BLM: Remember
18. When Addison Wilcox buys an H&R Block franchise, he becomes a franchisee.

BLM: Higher order
19. A person who buys a franchise has the same level of control as an entrepreneur who opens his or her
own sole proprietorship.

BLM: Higher order
20. Buying a franchise is not as important a growth strategy today as it was in the 1960s.

BLM: Remember
21. Mergers create an advantage when competing in the global marketplace.

BLM: Remember
22. The most likely strategies for companies in the future is to continue to seek out large merger
opportunities.

BLM: Remember

23. Locating a Baskin-Robbins and a Burger King franchise under the same roof is an example of
tandem-franchising.

BLM: Higher order
SHORT ANSWER
1. List the three major categories of business ownership.
ANS:
sole proprietorship, partnership, and corporation
PTS: 1 REF: 216–220 OBJ: 1 BLM: Remember
2. Which form of business ownership is an ideal way to test new business ideas?
ANS:
sole proprietorship
PTS: 1 REF: 216 OBJ: 1 BLM: Remember
3. Which forms of business ownership have to deal with the disadvantage of unlimited liability?
ANS:
sole proprietorship and partnership
PTS: 1 REF: 217 OBJ: 1 | 2 BLM: Remember
4. List the two basic types of partnership.
ANS:
limited and general
5. What is the first step in incorporating a company?
ANS:
to select the corporation’s name
6. Who are the owners of a corporation?
ANS:
the shareholders

7. How is the board of directors for a corporation created?
ANS:
It is elected by the corporation’s shareholders.
8. What is double taxation?
ANS:
Corporations must pay federal and provincial taxes on their profits, and any profits paid to
shareholders as dividends are also taxed.
9. Discuss the following statement: “Joint ventures have unlimited life.”
ANS:
Joint ventures are typically created to pursue some specific project, and when that project is concluded,
they are dissolved.
PTS: 1 REF: 227 OBJ: 4 BLM: Higher order
10. Distinguish between a merger and an acquisition.
ANS:
A merger is a combination of two or more companies to form a new company, which often takes on a
new corporate identity. An acquisition is the purchase of another corporation, and the purchased
corporation ceases to exist as a separate entity.
11. List the three major types of mergers.
ANS:
vertical, horizontal, and conglomerate
12. Discuss the following statement: “The franchisee has just as much control over his or her business as
the sole proprietor.”
ANS:
That statement is false. One of the disadvantages of franchising is the fact that the franchisee sacrifices
some control over his or her business in order to gather the other advantages of franchising.

Future of Business 4th Edition Althouse Test Bank

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Future of Business 4th Edition Althouse Test Bank

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Future of Business 4th Edition Althouse

1. What is the most common form of business organization?

5. Which of the following is an advantage of sole proprietor ownership?

Copyright © 2014 Nelson Education Ltd. 8-1

6. Which type of business organization experiences the least governmental regulation?

7. Which form of business ownership is easiest to dissolve?

Copyright © 2014 Nelson Education Ltd. 8-2

11. Which of the following is a disadvantage of sole proprietor ownership?

12. Which of the following is a disadvantage of sole proprietor ownership?

14. Sole proprietorships experience which of the following tax situations?

Copyright © 2014 Nelson Education Ltd. 8-3

17. Which of the following statements best describes a general partnership?

Copyright © 2014 Nelson Education Ltd. 8-4

22. What do partnership agreements generally specify?

Copyright © 2014 Nelson Education Ltd. 8-5

27. Which of the following is a disadvantage associated with a partnership?

29. A corporation can best be described by which of the following statements?

Copyright © 2014 Nelson Education Ltd. 8-6

30. A corporation can best be described by which of the following statements?

31. What is the first step in incorporating a company?

34. Who owns a corporation?

Copyright © 2014 Nelson Education Ltd. 8-7

35. What do a company’s shareholders have the right to do?

36. How is a corporation’s board of directors formed?

Copyright © 2014 Nelson Education Ltd. 8-8

41. A corporation has which of the following characteristics?

44. Double taxation in a corporation is best described by which of the following?

Copyright © 2014 Nelson Education Ltd. 8-9

45. Which of the following is a disadvantage associated with a corporation?

47. Which of the following statements best describes cooperatives?

Copyright © 2014 Nelson Education Ltd. 8-10

Copyright © 2014 Nelson Education Ltd. 8-11

58. Miniature Precision Corporation, a microprocessor manufacturer, recently acquired Cameron-Price, a

Copyright © 2014 Nelson Education Ltd. 8-12

61. What is the purchaser of a franchise called?

63. The franchise agreement is best described by which of the following?

Copyright © 2014 Nelson Education Ltd. 8-13

67. Which of the following is a disadvantage for the fast-food franchisee?

69. What is a disadvantage of franchising to the franchisee?

Copyright © 2014 Nelson Education Ltd. 8-14

71. Which of the following is an innovation in franchising?

ANS: F PTS: 1 REF: 217 OBJ: 1

ANS: T PTS: 1 REF: 217 OBJ: 1

ANS: F PTS: 1 REF: 217 OBJ: 1

4. For partnerships to be legal, they must be established in writing.

ANS: F PTS: 1 REF: 218 OBJ: 2

Copyright © 2014 Nelson Education Ltd. 8-15

5. In a limited partnership, all of the partners have limited liability.

ANS: F PTS: 1 REF: 218 OBJ: 2

ANS: T PTS: 1 REF: 219 OBJ: 2

7. Dissolving a partnership is easier than dissolving a sole proprietorship.

ANS: F PTS: 1 REF: 219 OBJ: 2

ANS: F PTS: 1 REF: 221 OBJ: 3

9. The corporation’s board of directors hire the corporate officers.

ANS: T PTS: 1 REF: 222 OBJ: 3

ANS: F PTS: 1 REF: 224 OBJ: 3

ANS: F PTS: 1 REF: 224 OBJ: 3

12. The two types of cooperatives are wholesale and retail.

ANS: F PTS: 1 REF: 226 OBJ: 4

ANS: T PTS: 1 REF: 227 OBJ: 4

Copyright © 2014 Nelson Education Ltd. 8-16

ANS: T PTS: 1 REF: 228 OBJ: 5

ANS: T PTS: 1 REF: 229 OBJ: 5

ANS: T PTS: 1 REF: 229 OBJ: 5