Future of Business 4Th Edition Althouse Test Bank Full Chapter PDF

Future of Business 4th Edition Althouse
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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.

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them from my observer, who was an old hand at the game. I
confess to a feeling of relief when I reached the point where
our bombs were to be thrown over. Having discharged this
duty I was glad to return to my starting-point with the motor
running at slow speed, and knowing that I was soon to be out
of range of the enemy’s deadly fire.
“In this bombardment my machine was made almost
entirely of steel tubing with a 140-horse-power engine,
capable of carrying a load of bombs weighing from four to
seven hundred pounds. As an arm of defense it carried a
machine gun. This is the type of machine that has made most
of the long raids on the enemy. I soon became accustomed to
the duty I had to perform and to flying with the spectacle of
shells bursting all around me, at the same time keeping on
the lookout for the ’planes of the enemy. We made seventeen
bombardments during the ensuing month of June and we got
to be old hands at this kind of warfare. It is never quite
agreeable to be shelled up in the air or elsewhere, and those
who make the boast of liking it do not tell the exact truth.
“To illustrate how well the French military aviation service is
organized and supplied with machines, let me tell you of my
experience at the front in Lorraine, where one day I had the
misfortune to break one of the wings of my machine. Instead
of stopping to have it repaired, all I had to do was to turn it
into a supply station near by where it was at once dismantled
and sent to the rear. I was then promptly supplied with a new
machine. A change of aeroplanes by an aviator in action in
France is like a cavalryman changing his horse. If there is
anything the matter with the animal, even if it is only a corn, a
new one is at once forthcoming. There is no suggestion of
parsimony or niggardliness in giving out the supplies
necessary for efficient fighting.
“On another occasion, when we were making a raid on the
railway station at Douai, which was about twenty-five
kilometres within the enemy’s lines, we started with a
squadron of some twenty machines. There happened to be
that day a great many German machines out. Somehow or
other they knew we were coming. We had four or five brisk
engagements with them. Our planes had only machine guns
with which to defend themselves, while the Germans used
regular fighting machines. This aerial engagement resulted in
four of our machines coming back riddled with bullets, my
lieutenant being hit in the leg.
“I was fortunate enough that day to escape the range of the
German flying machines by going farther north and passing
through the clouds, though I was shelled from a long distance
all the way. I succeeded in dropping my bombs on a railroad
station, one of which I saw explode in a bunch of freight cars
in the railroad yard. As I was returning within our lines the
Englishmen, by mistake, opened a brisk fire on me which
necessitated my going up into the clouds again. I proceeded
due west until I ran out of gasoline and I then descended in
the dark near the headquarters of the English. It was my good
fortune to land safely and on my arrival at my post I was
brought before the English commander, who asked me to tell
my story. Mine being one of the four machines out of twenty
that had reached Douai in the raid, I was awarded a citation
and given the right to wear a War Cross—my first decoration.
“My squadron spent a month in the east and during this
time I went farther into the enemy’s territory than I had been
before. I think the longest distance was when we made the
raid on two localities over one hundred kilometres within the
enemy’s lines in Bocherie, as we called it. During this month
General Joffre came to review our four squadrons of
bombarding machines. With him came the President of
France and the King of the Belgians. These distinguished
visitors witnessed the departure of a squadron of some ninety
of our machines on a bombarding raid loaded with bombs and
flying four abreast. They were highly complimentary in their
salutations to us Americans.
“During this month in Lorraine I experienced the hardest
knock I had received up to that time. One day six German
machines, fully equipped, bombarded Nancy and our aviation
field. To retaliate, my squadron was sent out to bombard their
field on the same afternoon. We started with thirty machines
to a designated rendezvous and fifty minutes later, after
getting grouped, we proceeded to our ultimate destination. I
had a very fast machine, and reached the German flying field
without being hit. When about to let go my bombs and while
my observer was aiming at the hangars of the Germans my
machine was attacked by them—one on the left and two on
the right. I shouted to my observer to drop his bombs, which
he did, and we immediately straightened out for home. While I
was on the bank the Germans opened fire on me with their
machine guns which were even more perilous than their
shells. My motor stopped a few moments afterwards. It had
given out and to make matters worse a fourth German
machine came directly at us in front. My observer, who was
an excellent shot, let go at him with the result that when last
seen this German aeroplane was about four hundred feet
below and quite beyond control. The other Germans behind
kept bothering us. If they had possessed ordinary courage,
they might have got us. Flying without any motive power
compelled me to stand my machine on end to keep ahead of
them. As we were nearing the French lines these Germans
left us, but immediately batteries from another direction
opened fire on us. As I was barely moving I made an
excellent target. One shell burst near enough to put shrapnel
in my machine. It is marvelous how hard we can be hit by
shrapnel and have no vital part of our equipment injured. I
knew I was now over the French lines, which I must have
crossed at a height of about four hundred metres. I finally
landed in a field covered with white crosses marking the
graves of the French and German soldiers who had fallen the
previous September at this point. This was the battle the
Kaiser himself came to witness, expecting to spend that night
in Nancy.
“Thousands fell that day, but the Kaiser did not make his
triumphal entry. Looking back on this latter experience of mine
I think myself most fortunate in having been able to return to
the French lines without a scratch. I got home safely because
the German aviators lacked either courage or skill or both.
They had me with my engine dead, four against one, and
twenty kilometres within their lines.”
Portrait as exhibited at Allied Fairs
Alluding to the occasion of the telling of this story, William Roscoe

Thayer, who presided at the dinner, said when the tidings of
Norman’s death came from France: “I shall never forget that
Christmas night at the Tavern Club when Norman sat next to me and
told me many details of his service and then arose and gave that
wonderfully simple, impressive story. To have had such a service
and to die fighting for the cause which means the defense of
civilization—what nobler career could he have had? I can think of no
one who more thoroughly enjoyed the life of continuous peril which
he led. The honors which it brought him showed that France
recognized as heroism that which he took as a matter of course.”
III
LETTERS
The following letters of Norman Prince, although chiefly of an

intimate and personal character, are here published as a part of the
record of his experiences in the service of France and as further
testimony to his tenderly affectionate nature and his constant
thoughtfulness and solicitude for those he left at home.
With his Superior Officer Lieutenant de Laage de Mœux
Havre, Jan. le 29, 1915.

Dear Mamma,—I have just put foot ashore in France after a
disagreeable crossing, 2nd class. Here in Havre there are
troops and troops always passing. French troops, chiefly of
the reserve; thousands of English troops in khaki, Belgian
troops without uniform. They all say, not at all in a boastful
way, that they will be back home again by the end of the year.
Will they?
Dear Mamma, I hope you are well and that papa has not
taken too much at heart my leaving home at this time. I
believe I can find a place to do some efficient and useful work
for the cause to which I am so deeply devoted. My love to you
all. I shall write often.
Affectionately your son,
Norman.
Esc N. 124, Secteur 24, May 15, 1915.

Dear Governor,—Arrived en escadrille par la voie des airs
to replace a disabled pilot until the Escadrille Américaine is
formed.
I saw the battle lines and heard for the first time the never-
ending boom of guns. This is war in dead earnest and right at
hand. Will write more fully later.
Affectionately,
Norman.
V. B. 108-B. 103, May 20, 1915.

Dear Freddy,—Arrived here at the Front last Tuesday
piloting two Voisins appareils de bombardement. On the way
we bombarded observation balloons, railway centers,
poudrières, aviation camps and other locations of Boche
activity—but not towns or cities or other localities where the
lives of helpless women and children might be endangered.
We are in the section where all the French advances have
lately been made. The vertical guns of the Boches are
particularly annoying to us. They have got two out of six of the
pilots of our Escadrille since our arrival. One got down within
our own lines; the other fell within the lines of the Boches—
whether he was killed or not we do not know.
(Eight miles from the German trenches.)
Been here a week and have become quite accustomed to
being shot at. We go out every day and the salutations we get
from the Boches are rapid and continuous when we are over
their lines. The Boches here have more vertical guns to aim at
us—more to the mile of front than anywhere else. There are
hundreds of French aeroplanes grouped here because it is in
the twenty miles north of Arras and south of the English
where all the recent French advances have taken place.
Attacks and counter attacks by day and night, and the bang of
artillery in the near distance never ceases. We often go out at
the same time as the infantry attack behind the artillery fire,
the artillery of both sides banging away at the trenches,
batteries and at us,—the avions in the air. It is a wonderful
spectacle and something frightful as well—until we get used
to it!
N. P.
Paris, September 6, 1915.

My dear Grandmamma,—I am in Paris on a few days’ leave
and just had luncheon with a friend who is leaving to-night for
Rome and I have asked him to mail this letter to you on his
arrival.
For the last four months I have been at the front—two
months in the North near Arras during the attacks of May and
June. After that we were stationed for a month near Nancy in
the East. Now we have returned to the north again where
there is increasing activity. I am happy and in the best of
health. I sleep under canvas on a stretcher bed and eat in the
shed of an old farm house near by. I have nothing to complain
of. I like it. There are ten American pilots with us in the French
service and twelve others in training with their number
constantly increasing. Some day soon we will all be united in
one escadrille—an Escadrille Américaine—that is my fondest
ambition. I am devoting all my spare energies to organizing it
and all the American pilots here are giving me every
encouragement and assistance in the work of preliminary
organization. As I have had so much to do in originating and
pushing the plan along, perhaps I shall be second in
command.
I would enjoy tremendously a letter. My address now is
Sergeant-Pilote Prince
Escadrille d’Avions Canon
3me Groupe de Bombardement
Secteur Postal 102.
I hope you are in Rome, not in Treviso, which must be dans
la Zone des Armées.
Your affectionate grandson,
Norman.
Application to ride a Breguet de Chasse
Cⁱᵉ Gˡᵉ Transatlantique, À bord, January 4, 1916.

My dear Mamma,—Just a line before the pilot leaves us to
tell you that Freddy and I appreciate your sorrow in having
your two boys go to the war. However, the greater the sorrow,
the greater the joy will be when they return!
Nothing was forgotten. Freddy and I have the same
stateroom and I shall immediately start to make him fit. I tell
him that in order to join the Flying Corps, one cannot weigh
more than 75 kilos.
Your most affectionate son,
Norman.
G. D. E. Div. Nieuport Secteur 92A, February 19, 1916.

Dear Governor,—Enclosed is a letter from Freddy. Notice
that he says the discipline at Pau is very strict.
I am a schoolboy again. I am training to fly the very fastest
appareil de chasse—quite a different instrument from the
avion canon which weighs three times more than these small
chasing appareils.
I am busy pushing matters, in regard to the formation of the
Escadrille Américaine. There is a possibility that St.-Saveur,
now a captain in the aviation, may command us. Although but
a short time on the front he has done finely as a pilot. We are
all disponible to go to the front and are only waiting for a
captain, the personnel—(chauffeurs, secretary, cook, etc.) our
avions and the motor cars. Orders for our formation will be
issued, I hope, next week. The weather has been very rainy
and windy here for a week, which is to be expected, during
the month of February. We are losing no time, however.
Those Lewis guns, if there is any way of getting hold of a
dozen, would be much appreciated by us here. The more you
can get for us the better, but I realize that it may be
impossible even for you to get hold of any.
How are the horses? Don’t overdo the schooling!
I hope you and Mamma are enjoying Aiken. The main thing
is to care for your health.
With love to Mamma, who, I trust, is not too anxious about
Freddy and me.
Your affectionate son,
Norman.
Esc. N. 124. Secteur 24, June 26, 1916.

Dear Mamma,—Oliver Wolcott, who has been cantoned
near by with the American Ambulance, is going home to serve
with the militia and is to take this letter with him.
No news of Freddy this past week. The training is so
thorough at these aviation schools that he risks but little while
there. Probably he won’t get to the front for another month.
Poor Victor Chapman! He had been missing for a week and
we knew there was only a very remote chance that he was a
prisoner. He was of tremendous assistance to me in getting
together the Escadrille. His heart was in it to make ours as
good as any on the front. Victor was as brave as a lion and
sometimes he was almost too courageous,—attacking
German machines whenever and wherever he saw them,
regardless of the chances against him. I have written to Mr.
Chapman—a rather difficult letter to write to a heart-broken
father. Victor was killed while attacking an aeroplane that was
coming against Lufberry and me. Another unaccounted for
German came up and brought Victor down while he was
endeavoring to protect us. A glorious death—face à l’ennemi
and for a great cause and to save a friend!
Norman.
Escadrille N. 124, Secteur 24, June 29, 1916.

Dear Mamma,—Enclosed is a photograph of Victor
Chapman and myself, taken two days before his death. It is a
print of what is probably the last photograph taken of him. I
have sent one to Mr. Chapman.
We are too busy and short of pilots at our Escadrille to think
of taking a permission at present. Tout va bien. Bonnes
nouvelles de Freddy.
Norman.
July 2, 1916.
Dear Mamma,—A few lines to tell you that tout va bien.
This letter will be taken over and mailed in New York by an
American Ambulance driver who dined with us last night.
To-day I am de garde all the morning—that is to say, from
dawn to noon. I must be by my avion ready to start as soon
as any Boches are signaled. None have been so far this
morning—worse luck!
Norman.
Esc. 124, Secteur 24.
Esc. N. 124, Secteur 24, July 6, 1916.
Dear Governor,—Enclosed is a letter which speaks of
Freddy. The Escadrille is running well. St.-Saveur lunched at
our popole last week and wished to be remembered to you
and Mamma; de R⸺, who was on our team at Bagatille,
was here for lunch to-day with R⸺; both wish to be
remembered; de P⸺ came last week looking very fit and
will write to you shortly.
The aviaphone for my helmet arrived in good shape and I
have lent it to my captain, as I am riding at present a single-
seated aeroplane.
Norman.
Memorandum of the bringing-down of his first German machine
Deauville, Sept. 2, 1916.

Dear Mamma,—I am down here with friends, passing part
of my permission. It is very pleasant and refreshing, the
change. One soon gets enough of Paris in summer and in
wartime. Here no one pays the slightest attention to the war.
There are few militaires—mostly civiles from Paris and their
amies. Good bathing,—golf in the afternoon—many good-
lookers, making the plage rather good fun.
Freddy is nearly through at Pau. He is now at the acrobacy
school learning to do stunts in the air. It is a part of the
training of a chasse pilot. I gave him some pointers before he
left and told him to do the least possible with the old machines
which are quite out of date and clumsy.
Monday I return to Paris and Tuesday back to the Front, my
eight days permission expiring on that day.
I was fortunate enough to run across a German the other
day who didn’t see me approaching. If you read the
communiqué aérien of the 23d or 24th you will find mention of
my Boche,—“un avion désemparé est tombé dans la forêt de
Spencourt.” Undoubtedly they will give me this time the
Médaille Militaire,—the chicest decoration in France. The
chief pleasure of having it will be the satisfaction of having
earned it many times and that my receiving it may please the
governor and you.
A bientôt, dear Mamma. Thanks for the socks and the
handkerchiefs.
Most affectionately,
Norman.
Escadrille Américaine, par Luxeuil-les-Bains,

Haute-Saône, September 24, 1916.
Dear little Mamma,—I am so afraid you will worry more
than ever when you hear of poor Kiffen Rockwell’s death. I
know how anxious you must be with the two of us over here.
Keep very busy, ride a lot, go out to dinners and get as many
other distractions as possible so that you will not have too
much time to think of us. As far as danger to us goes, we are
trying to take as few chances as possibly consistent with
playing the game.
Everybody tells me that Freddy is showing himself to be an
excellent pilot. Unfortunately he has not yet fully decided to
come with our Escadrille. He would prefer to go to another
which is commanded by St.-Saveur. I dare say he might be
happier if he did not come with us, but à point de vue of safety
it seems to me he would be better off with us. I could be a lot
of assistance to him, telling him all I have learned this spring
hunting Germans, and he would have an excellent mechanic
in Michel, who by the way, has been Rockwell’s mechanic
while waiting for Freddy’s arrival; and further, he could have
my machine to ride, which is the dernier cri in appareils de
chasse, with two machine guns. He would otherwise get one
as safe, but not so good for knocking down Boches. He would
have only one gun.
Did I write you that I had knocked down another Boche two
days before leaving the Verdun district? I enclose a clipping
giving the communiqué officiel, with mention also of my
Boche who fell at Dieppe.
Dear Mamma, I must stop writing now. We are going out to
try to avenge Rockwell. Don’t worry! I am doing my duty as
safely as I know how. With much love to you both,
Most affectionately,
Norman.
To his Mécanicien
Cher Michel,—En cas qu’un accident m’arrive—c’est à dire
que je suis tué, blessé ou que je reste chez les Boches—je
vous prie d’écrire quelques lignes à ces dames, les adresses
desquelles sont écrites sur les enveloppes (ci-incluses).
Dis leur que je t’avais dis d’écrire préférant qu’elles sachent
ce qu’il m’est arrivé plutôt que de rester dans l’angoisse au
sujet de mon sort.
Signe ton nom en mettant que tu avais été mon mécanicien
dévoué depuis mon arrivée sur le front.
Mes effets, papiers, lettres, etc., le tout, il faut mettre de
suite dans mes valises et les remettre personnellement à mon
frère.
Ci-inclus deux chèques comme cadeau en récompense du
boullot que vous et André ont fait si soigneusement sur les
appareils de Bibi et qui m’ont permis à gagner la Médaille
Militaire.
Ces chèques sont payables, à ma mort ou dans le cas que
je reste chez les Boches, à défaut de ce que cela m’arrive—
(espérons-le) à la démobilisation de vous deux.
En cas qu’un de vous devient civil avant l’autre, celui
devenu civil prends son chèque et le présente à la Banque—
où il sera payé.
Bonne poignée de main!
Norman Prince.
Esc. N 124, par Luxeuil-les-Bains, le 6 Septembre, 1916.
From his Mécanicien

Secteur 16, le 25 Octobre, 1916.
Monsieur et Madame Prince:—
Excusez-moi si je suis un peu en retard pour vous donner
quelques détails sur le malheur qui nous frappe en la perte de
Monsieur Norman.
Il m’avait laissé, juste huit jours avant sa chute fatale,
quelques enveloppes avec adresses écrites par sa main pour
que je vous écrive quelques mots ainsi qu’à quelques amis si
quelque chose lui arrivait. Je vous joins du reste la lettre qui
est un véritable souvenir.
Pauvre Monsieur Norman, les boches n’ont pas pu avoir
raison de lui et n’ont pas eu ce plaisir là.
Il a trouvé la mort après tant de combats affrontés, tant de
dangers, et il en est sorti avec les honneurs à son avantage.
Son dernier départ a été le 12 Octobre, avec son avion de
chasse Nieuport monté avec deux mitrailleuses et avec lequel
il avait abattu un boche le 10, deux jours avant: il est parti à 2
heures faire la protection d’un groupe d’avions de
bombardement très en avant dans les lignes ennemies. Il a
abattu un avion de chasse ennemi à 3 hrs. qui venait attaquer
le groupe et lui barrer la route. Comme toujours, faisant son
devoir avec conscience, il a attendu que tous les avions ont
repassé les lignes avant de rentrer lui-même et à la dernière
minute il pense à atterrir dans le champ d’aviation le plus près
vu que la nuit commençait à tomber.
Il était prêt à faire un atterrissage des plus normal, malgré
l’obscurité, quand le malheur a voulu qu’il touche un cable qui
était au bordure du champ, et dont il ne pouvait soupçonner la
présence et son avion est venu s’écraser sur le sol.
Il a été relevé et aussitôt transporté dans un Hôpital sans
une plainte et sans perdre un instant ses sens, causant avec
un de ses camarades d’escadrille.
Il avait deux jambes fracturées, la droite à la cuisse et la
gauche au-dessus la cheville. Il a été opéré aussitôt, non
sans recommander aux docteurs de bien s’assurer de ne pas
faire une jambe plus courte l’une que l’autre, car il faisait
beaucoup de sport.
On lui a arrangé ses deux jambes et tout était fini à minuit.

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

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

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

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

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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?

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

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22. What do partnership agreements generally specify?

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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?

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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?

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

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

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41. A corporation has which of the following characteristics?

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

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

47. Which of the following statements best describes cooperatives?

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

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61. What is the purchaser of a franchise called?

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

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

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

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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

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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

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

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