Ch. 8: Business Organizations
Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | assets | f. | professional
association | b. | business organization | g. | business license | c. | trade association | h. | corporation | d. | limited
partnership | i. | cooperative | e. | sole proprietorship | j. | bond |
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1.
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an establishment owned by two or more persons in which only one person has
unlimited personal liability for the business
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2.
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nonprofit association that promotes the interests of a particular
industry
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3.
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money and other valuables belonging to an individual or business
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4.
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a business owned and managed by a single individual
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5.
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a business organization owned and operated by a group of individuals for their
mutual benefit
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6.
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a legal entity owned by individual stockholders
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7.
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a certificate issued by a corporation promising to repay a loan with interest
to the buyer
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8.
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an establishment formed to carry on commercial enterprise
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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Which of the following is an advantage of a sole proprietorship?
a. | No one is responsible if it fails. | b. | It is the least-regulated form of business
organization. | c. | It is an easy way to make a lot of money. | d. | It is easy to get
financing to start one. |
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10.
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What percentage of businesses are sole proprietorships?
a. | 25 percent | c. | 60 percent | b. | 40 percent | d. | 75 percent |
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11.
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If a general partnership fails, who is responsible for the debts?
a. | anyone who works for the partnership | c. | only the most senior general
partner | b. | all of the partners | d. | no one |
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12.
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A joining of two or more businesses that are involved in different stages of
producing the same good or service is called which of the following?
a. | vertical merger | c. | cooperative | b. | horizontal merger | d. | conglomeration |
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13.
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Why is it easier for a partnership to borrow money and to hold good employees
than it is for a sole proprietorship to do so?
a. | The more limited access to a partner’s personal funds make the business more
careful. | b. | The large number of partners makes it more likely that the business will be a
success. | c. | The larger number of partners means that people are easier to get along
with. | d. | A partnership has more personal stability and access to more
money. |
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14.
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What is the major difference between a corporation and other kinds of
businesses?
a. | A corporation is much larger than other kinds of businesses. | b. | A corporation is not
responsible for its debts if it fails. | c. | A corporation has a separate entity apart from
that of the owners and workers. | d. | A corporation has officers who are responsible
for the business. |
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15.
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What are royalties?
a. | fees paid to law firms and accountants | b. | a percentage of a franchise’s earnings
paid to the parent company | c. | fees paid to celebrities for using their
names | d. | a percentage of profits paid to the government |
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16.
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Which of the following represents the percentage of all U.S. businesses that are
corporations, and the percentage of all goods that those corporations sell?
a. | 10 percent of businesses; 50 percent of goods sold | b. | 20 percent of
businesses; 90 percent of goods sold | c. | 50 percent of businesses; 75 percent of goods
sold | d. | 20 percent of businesses; 50 percent of goods sold |
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17.
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What is a fringe benefit?
a. | a cash payment for casual work | b. | a business other than sales or
marketing | c. | a payment other than wages or salaries | d. | an accounting term meaning
profits |
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18.
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Which of the following is a disadvantage of a sole proprietorship?
a. | lack of permanence | c. | legal constraints | b. | high taxes | d. | difficult to start
up |
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Short Answer
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Reading a Chart
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19.
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What percentage of all U.S. corporations are devoted to either retail or
wholesale trade?
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20.
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What size corporation represents about 30 percent of all U.S.
corporations?
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21.
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What percentage of U.S. corporations are construction companies?
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Essay
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Critical Thinking
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22.
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Identifying Central Issues Why would a businessperson establish a sole
proprietorship when it was possible to have a partnership or a corporation instead?
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23.
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Making a Comparison How does a stockholder in a corporation differ from a
person who buys a bond from the same corporation?
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24.
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Analyzing Information What are some of the advantages and disadvantages
of a multinational corporation?
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