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Exam 6: Forms of Business Ownership

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Question 61

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Compared to sole proprietorships,an advantage of partnerships is their ability to obtain more financial resources.

A) True
B) False

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Question 62

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Ron and Jon want to go into business together.They do not want to bring in other partners,but they both want to avoid unlimited liability for any debts incurred by their new company.Ron and Jon can achieve their aims by organizing the firm as a limited partnership.

A) True
B) False

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Question 63

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Franchising has certainly become a key component of the Canadian economy.What do you see as the major advantages and disadvantages of franchising?

The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond:

A disadvantage of co-operatives is that they are subject to higher tax rates than corporations.

The authorization from the federal or provincial/territorial government for a company to use the corporate format is known as what?

Dann is convinced that he has a great idea for a new business.Unfortunately,the type of business he wants to start would require a fairly high initial investment and Dann has a poor credit rating and very little personal wealth.Dann would be unlikely to find success if he organized his business as a sole proprietorship.

In a sole proprietorship,the equipment and profits of the business are:

The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

One disadvantage to home-based franchises is the feeling of isolation.

Although most new firms start out as sole proprietorships,few large firms are organized this way.Why is the sole proprietorship such a popular form of ownership for new firms? What features of the sole proprietorship make it unattractive to growing firms?

The group farthest removed from the daily operations of a corporation are:

The earnings of corporations are taxed:

A person who buys the right to use a business name and sell a product within a given territory is called a:

Corporations are easy to start and easy to terminate.

It is usually easy to start and end a sole proprietorship.

Ellen wants to start a business.She is leaning toward setting up her company as a sole proprietorship,but she is also looking at other possibilities.Ellen has two major goals.First,given her limited personal wealth and eagerness to get started,she wants to get her business up and running with the least possible hassle and expense.Second,she wants to minimize her personal risk in the event that her company experiences difficulties.If Ellen chooses a sole proprietorship,she would:

A separation between ownership and management is most likely to occur in a:

Twenty-six years ago,several small vineyard owners in the Niagara region joined voluntarily to market their grapes and wine in an attempt to get better prices.Over the years,they expanded the organization to include other services such as buying and selling farm supplies and equipment and providing financial and technical services.The arrangement established by these vineyard owners is an example of a:

Why is size an advantage as well as a disadvantage of corporations?