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Lily wants to build a business. She has verylittle capital. She does, however, have apartnerwith which she could run a business. Lily wants to beable toavoid being held personally liablefor any problems the business has. Which of the following would lead Lily to choose a sole proprietorship organization for her business?

Possession of a partner

Little capital

None of the above

Avoidance of personal liability

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What is the appropriate description for achain-stylefranchise?

A franchisee makes or sells a franchisor's product under their own business name or organization.

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.

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Hal organized his businessin Canada. Most of his customers are in Montana.In Montana, Hal's business would be considered a(n) __________ corporation.

Subchapter S

Alien

Professional

Domestic

Closely-held

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Abigail is a manager at her company. The company just launched an initiative to improve its corporate citizenship practices. Abigail is responsible for all but which of the following areas?

Integrity and ethical behavior

Disclosure and transparency

Safeguarding shareholders' interests

Vigilance of the board of directors

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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 _____.

0.25%

0.5%

Indeterminable with current information

0.75%

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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 hundreds ofinvestors. Piper's company would be a __________ corporation.

Closely-held

Subchapter S

Professional

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Rita wants to be involved in business. She has afair amount of moneyto invest, but shedoes not want to be involved in management. She wants to form a business in thequickest way possibleunder her circumstances. Which form of business would be best for Rita?

LLC

Corporation

Limited partnership

Sole proprietorship

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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.

Subchapter S

Professional

Alien

Domestic

Closely-held

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J-Chron's board of directors periodically meets with the CFO of the company. The CFO reports on the financial status of a company project. The board asks whether the project is compliant withlegally-required accounting principles, butasks no other questions about the project, such as how the project supports the company's mission and strategy. Which of the following is true?

The board is meeting legal requirements but not its duty of care to shareholders.

The board is fully meeting its duty of care to shareholders.

The board is not legally required to meet any duty of care requirements.

The board is not meeting its duty of care to shareholders.

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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

LLC

Sole proprietorship

Corporation

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Kara wants to build a business. She hasplenty of capitalandpotential investors and partners. She wants toavoid the burden of sole liabilityfor her business andwants to be able to close the business when she is no longer interested in it. Which of the following would lead Kara to choose asole proprietorshiporganization for her business?

Ability to close the business easily

Many potential investors/partners

Avoidance of sole liability

Plenty of capital

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Mario and Johnny want to start a business. They have verylittle capital. They are new partners and largelyunfamiliar with each other's management practices. They are happy, however, to be organizing a business together in order toavoid full liability for the business. Which detailof this situation is a good reason for Mario and Johnny to create ageneral partnership?

Avoiding full liability

Little capital

Sharing profits

Unfamiliar with each other's management practices

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Hal and Miranda have ageneral partnershipbusiness 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.

Miranda may relinquish her obligation to perform the contract since Hal signed it without her knowledge.

Only Hal is obligated to perform the contract.

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Zoey is the CEO of a corporation she organized herself, and the corporation has15 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.

Subchapter S

Closely-held

Professional

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What role best fits the following situation?

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 agood network of potential investors and partners. He hasno experience in management.

Limited partner in a limited partnership.

General partner in a limited partnership.

Neither a limited or general partner would be a good choice.

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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?

Bond issuance, since additional debt can provide the company with more leverage.

With low credit, Koffman doesn't have any options for raising capital.

Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating.

Stock issuance, since a credit rating won't negatively affect Koffman's ability to sell stock.

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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?

Shareholder

Executive

Executive, shareholder, and director

Executive and shareholder

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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.

Closely-held

Subchapter S

Professional

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Which of the following roles best fits the situation?

Kevin wants to create a business but is not sure what role is best for him.He has capital to invest. He hasseveral partnerswith which he can begin a business. He hasthe most management experienceof all his potential partners.

Limited partner in a limited partnership.

General partner in a limited partnership.

Neither a limited or general partner would be a good choice.

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What is the correct order of events for the formation of a corporation?

Business selects a state of incorporation; Incorporators select a name for the corporation; Articles of incorporation are filed; Novations are executed

Business selects a state of incorporation; Novations are executed; Incorporators select a name for the corporation; Articles of incorporation are filed

Novations are executed; Articles of incorporation are filed; Incorporators select a name for the corporation; Business selects a state of incorporation

Incorporators select a name for the corporation; Articles of incorporation are filed; Business selects a state of incorporation; Novations are executed

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What is the appropriate description for adistributorship?

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.

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What is the appropriate description for aplant-processingfranchise?

A franchisee focuses on making a franchisor's product using the franchisor's manufacturing method or recipe.

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.