1. Hal and Miranda have a general partnership business for landscaping projects. Hal makes a contract with a customer for a project one day while Miranda is absent and leaves on vacation the next day. Miranda does not feel she has the time to perform the contract for the customer. Which of the following is true?
· Miranda is obligated to perform the contract.
· Only Hal is obligated to perform the contract. · Indeterminable without more information. · Miranda may relinquish her obligation to perform the contract since Hal signed it without her knowledge. |
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2. Bookmark question for later
Noodleoo, a struggling restaurant chain, wants to enact a franchise agreement with Stephen to sell its product through a chain-style franchise. Stephen agrees and opens the store, and 6 months later Noodleoo goes bankrupt. Which is most likely true of this situation?
· If Noodleoo was not transparent with its financial data, Stephen has no recourse.
· If Noodleoo was transparent with its financial data, it owes no recompense to Stephen. · More than one response is correct. · If Noodleoo was not transparent with its financial data, it has broken the franchise rule. |
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3. Bookmark question for later
Match each prompt with the role that matches each person best.
Apol wants to start or join a business but is not sure which business organization would be best. She has a large amount of capital but does not yet have any partners who can invest or effectively manage the business.
Kevin wants to create a business but is not sure what role is best for him. He has capital to invest. He has several partners with which he can begin a business. He has the most management experience of all his potential partners.
Manny wants to be involved in a business but is not sure which type of business to join or create. He has capital to invest. He has a good network of potential investors and partners. He has no experience in management.
Drag and drop the choices from below.
Neither a limited or general partner would be a good choice.
Limited partner in a limited partnership
General partner in a limited partnership
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Match each event with the order in which it occurs in the formation of a corporation.
First
Second
Fourth
Third
Drag and drop the choices from below.
Articles of incorporation are filed
Incorporators select a name for the corporation
Business selects a state of incorporation
Novations are executed
5. Bookmark question for later
Abigail is a manager at her company. The company just launched an initiative to improve its corporate citizenship practices. Abilgail is responsible for all but which of the following areas?
· Disclosure and transparency
· Vigilance of the board of directors · Integrity and ethical behavior · Safeguarding shareholders’ interests |
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Identify the description that properly completes each prompt.
Zoey is the CEO of a corporation she organized herself with 15 shareholders. The company operates in several states, as well as outside of the U.S. Her business consists mostly of training services for in-home medical care personnel. Her company would be a __________ corporation.
Tucker works for a retail distribution company that was recently started. Tucker has invested a lot of his earnings into shares of the company. When quarterly earnings are posted, Tucker receives a check for 8% of the quarterly profit of the company. Tucker belongs to a __________ corporation.
Piper is a manager in a corporation that was organized in Canada by one of his former coworkers. The company provides consulting services and training for architects employed by construction companies. The company recently went public, with shares being sold to about 500 investors. Piper’s company would be a __________ corporation.
Lenny organized his business in Delaware. He has customers in Delaware, other states in the U.S., and in foreign countries. Lenny’s business is __________ in Delaware.
Hal organized his business in Canada. Most of his customers are in Montana. In Montana, Hal’s business would be considered a(n) __________ corporation.
Drag and drop the choices from below.
Professional
Closely-held
Domestic
Subchapter S
Alien
7. Bookmark question for later
Sandy works for RigorMart. She supervises regional managers and directs them based on orders from the board of directors. Sandy’s position also entitles her to stock ownership in the company. What is Sandy’s position in the company?
· Executive
· Executive, shareholder, and director · Executive and shareholder · Shareholder |
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Cadence works for WilderCorp. She meets with a team to make all-encompassing decisions concerning the direction of the business. She also personally supervises managers and conducts training for supervisors and plant managers. Cadence also buys stock in WilderCorp. What is Cadence’s position in the company?
· Director
· More than one option · Executive · Shareholder |
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9. Bookmark question for later
Match each term with its appropriate description.
Chain-style franchise
Distributorship
Plant-processing franchise
Drag and drop the choices from below.
A franchisee makes or sells a franchisor’s product.
A franchisee produces and sells a franchisor’s product using the franchisor’s name.
A franchisee sells a franchisor’s product in a specific geographic area.
10. Bookmark question for later
Lily wants to build a business. She has very little capital. She does, however, have a partner with which she could run a business. Lily wants to be able to avoid being held personally liable for any problems the business has. Which of the following would lead Lily to choose a sole proprietorship organization for her business?
· None of the above
· Little capital · Possession of a partner · Avoidance of personal liability |
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11. Bookmark question for later
Mario and Johnny want to start a business. They have very little capital. They are new partners and largely unfamiliar with each other’s management practices. They are happy, however, to be organizing a business together in order to avoid full liability for the business. Which detail(s) of this situation would be the largest contributor toward Wade and Hunter’s decision to organize a general partnership?
· Little capital
· Unfamiliar with each other’s management practices · Sharing profits · Avoiding full liability |
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12. Bookmark question for later
Juan wants to be involved in business. He has plenty of capital to invest, but he does not want to be involved in management. He also does not want to worry about fluctuations in the market prices of debt and equity instruments. Which form of business would be best for Juan?
· General partnership
· Corporation · LLC · Sole proprietorship |
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13. Bookmark question for later
Loptech, a technology firm, wants to issue bonds for investment purposes. Loptech has one of the best credit ratings in the industry. Market rates for debt instruments average at .5% interest. Based on its credit rating, Loptech would likely sell bonds that pay _____.
· Indeterminable with current information
· 0.5% · 0.25% · 0.75% |
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14. Bookmark question for later
Koffman Corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating?
· Stock issuance, since stocks are more valuable as finance instruments.
· Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating. · Bond issuance, since additional debt can provide the company with more leverage. · Stock issuance, since a credit rating won’t negatively affect Koffman’s ability to sell stock. |
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15. Bookmark question for later
Kara wants to build a business. She has plenty of capital and potential investors and partners. She wants to avoid the burden of sole liability for her business and wants to be able to close the business when she is no longer interested in it. Which of the following would lead Kara to choose a sole proprietorship organization for her business?
· Avoidance of sole liability
· Ability to close the business easily · Many potential investors/partners · Plenty of capital |