QUESTION 1

1. A sole proprietorship is the simplest form of business ownership.
2. True
3. False

2 points

QUESTION 2

1. A sole proprietorship may never have any employees.
2. True
3. False

2 points

QUESTION 3

1. Profits earned by a sole proprietorship are taxed as the personal income of the sole proprietor.
2. True
3. False

2 points

QUESTION 4

1. A sole proprietor has limited liability for the debts of the business.
2. True
3. False

2 points

QUESTION 5

1. If a creditor has a judgment against a sole proprietorship, the creditor may enforce the judgment against the personal life savings account of the sole proprietor, even though that account was a personal account and was not involved with the business.
2. True
3. False

2 points

QUESTION 6

1. A partnership is a voluntary association of two or more persons who engage in a business and share profits and losses.
2. True
3. False

2 points

QUESTION 7

1. In a partnership, all partners must receive an equal share of the profits.
2. True
3. False

2 points

QUESTION 8

1. A general partner has unlimited personal liability for the debts of the partnership.
2. True
3. False

2 points

QUESTION 9

1. A limited partner must actively participate in the management of the business on a regular basis in order to maintain his or her limited liability protection.
2. True
3. False

2 points

QUESTION 10

1. Partners are required to have a written partnership agreement.
2. True
3. False

2 points

QUESTION 11

1. The profits of a partnership which are distributed to the partners of that partnership are subject to double taxation.
2. True
3. False

2 points

QUESTION 12

1. Generally, banks and suppliers are usually more willing to extend credit to a partnership than to a sole proprietorship.
2. True
3. False

2 points

QUESTION 13

1. In a general partnership, all of the partners are general partners.
2. True
3. False

2 points

QUESTION 14

1. In a limited partnership, all of the partners are limited partners.
2. True
3. False

2 points

QUESTION 15

1. Partnerships are terminated if any one of the general partners dies or withdraws from the partnership.
2. True
3. False

2 points

QUESTION 16

1. A corporation isnota legal entity.
2. True
3. False

2 points

QUESTION 17

1. The owners of a corporation are called members.
2. True
3. False

2 points

QUESTION 18

1. A closed corporation is a corporation whose stock is offered for sale to the general public.
2. True
3. False

2 points

QUESTION 19

1. MCZ, Inc. is a corporation that was incorporated under the laws of the State of New Jersey.MCZ, Inc. has only one office which is in Queens, New York. MCZ, Inc. has no other location. In New York, MCZ, Inc. is considered to be a domestic corporation.
2. True
3. False

2 points

QUESTION 20

1. Referring to the facts set forth in the preceding question, In New Jersey, MCZ, Inc. is considered to be a foreign corporation.
2. True
3. False

2 points

QUESTION 21

1. Generally, an owner of preferred stock has the right to vote for members of the board of directors of the corporation whose stock he orshe owns.
2. True
3. False

2 points

QUESTION 22

1. A distribution of earnings to the stockholders of a corporation is called a dividend.
2. True
3. False

2 points

QUESTION 23

1. If a corporation makes a profit, it is always required to pay the profits or part of the profits to the shareholders of the corporation.
2. True
3. False

2 points

QUESTION 24

1. The board of directors of a corporation makes overall policy for the corporation.
2. True
3. False

2 points

QUESTION 25

1. A corporation terminates upon the death of any one of its shareholders.
2. True
3. False

2 points

QUESTION 26

1. Various charities, museums and private schools are organized as not-for-profit corporations.
2. True
3. False

2 points

QUESTION 27

1. Big Corp. Inc. buys all of the stock of Small Corp. Inc.After the purchase ofthis stock, Small Corp.Inc. no longer exists as a separate corporation, but is then part of Big Corp., Inc which continues to exist as a corporation. This transaction is best described as a merger.
2. True
3. False

2 points

QUESTION 28

1. Small businesses represent only about 10% of all firms in this country that have employees.
2. True
3. False

2 points

QUESTION 29

1. Approximately 95% of all small businesses are successful after being in business for ten years.
2. True
3. False

2 points

QUESTION 30

1. Industries that tend to attract new start-up businesses usually require a low initial investment and some special skills or knowledge.
2. True
3. False

2 points

QUESTION 31

1. Personal characteristics of individuals who start their own business include: independence; a desire to determine their own destiny; and a willingness to find and to accept a challenge.
2. True
3. False

2 points

QUESTION 32

1. A small business is one that is dependent, operated as a not-for-profit organization and is dominant in its field.
2. True
3. False

2 points

QUESTION 33

1. The Small Business Administration ("SBA") was created by a New York State law in 1993.
2. True
3. False

2 points

QUESTION 34

1. The Small Business Administration ("SBA") provides training, technical assistance and education to small businesses.
2. True
3. False

2 points

QUESTION 35

1. One of the leading causes of failures in small business is poor management by those who manage small businesses.
2. True
3. False

2 points

QUESTION 36

1. The Small Business Association ("SBA") makes a special effort to assist members of minority groups who want to start a small business or who want to expand an existing small business.
2. True
3. False

2 points

QUESTION 37

1. Venture capital is money that is invested in small and sometimes struggling firms that have the potential to become very successful.
2. True
3. False

2 points

QUESTION 38

1. A franchisee is an individual or an organization whichgrantsa franchise.
2. True
3. False

2 points

QUESTION 39

1. The franchisor benefits from the fact that the franchisee is likely to be very motivated to succeed and the success of the franchisee's business means more sales, which means higher royalties for the franchisor.
2. True
3. False

2 points

QUESTION 40

1. In franchising, contract disputes between franchisors and franchisees are the cause of many lawsuits between franchisors and franchisees.
2. True
3. False

2 points

QUESTION 41

1. A corporation whose stock is bought and sold in the stock market and can be purchased by any individual who has sufficient money is
2. A.a domestic corporation
3. B.a foreign corporation.
4. C.a closed corporation
5. D.a public corporation.

2 points

QUESTION 42

1. Which of the following type of corporate stock generally has voting rights?
2. Preferred stock.
3. Treasury stock.
4. Common stock.
5. None of the above.

2 points

QUESTION 43

1. Of the forms of business organization that are listed below, which is the most effective for raising capital for the business?
2. A.The sole proprietorship.
3. B.The partneship.
4. C.The corporation.
5. D.All of the three forms of business organization that are listed above are equally effective for raising capital for the business.

2 points

QUESTION 44

1. The type(s) of business organization that may be formed and owned by one person is (are) a
2. A.sole proprietorship.
3. B.corporation
4. C.partnership.
5. D.Both A and B above.

2 points

QUESTION 45

1. Which of the following is an advantage of a corporation?
2. A.Shareholders of the corporation have unlimited personal liability.
3. B.Shareholders of the corporation have limited personal liability.
4. C.The profits of the corporation are subject to double taxation.
5. D.There is a lack of continuity of the corporation if one of the shareholders sells his or her stock.

2 points

QUESTION 46

1. One advantage of a small business is
2. A.there is no risk that the business will fail.
3. B.that the business will have limited ability to raise capital.
4. C.in a small business it is more likely that there will be personal relationships between the customers and the employees than is likely to happen in a large business.
5. D.there are much greater opportunities for advancement for employees in a small business than in a large business.

2 points

QUESTION 47

1. The main disadvantages of franchising generally affect
2. A.the consumer.
3. B.the franchisor.
4. C.the franchisee.
5. D.both A and B above.

2 points

QUESTION 48

1. Most of the SBA's business loans are
2. A.actually made by private lenders such as banks.
3. B.usually partially guaranteed by the SBA.
5. C.Both A and B above.
6. D.None of the above.

2 points

QUESTION 49

1. A hostile takeover
2. A.occurs when borrowed money is used to pay for the company that is being taken over.
3. B.is a situation when the management and the board of directors of a firm targeted for acquisition disapprove, and are not in favor, ofthe attempted takeover.
4. C.is a merger between firms that make and sell similar products or services in similar markets.
5. D.None of the above.

2 points

QUESTION 50

1. To qualify for S corporation status, a corporation must meet which of the following criteria?
2. A.The corporation may not have more than 100 shareholders.
3. B.The corporation 's shareholders must all be individuals, estates or certain trusts.
4. C.The corporation must be a publicly traded corporation.
5. D.Both A and B above.

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