Chapter
16 Examination
True/False
Indicate
whether the sentence or statement is true or false.
____
1.
The simplest form of business is the sole proprietorship.
____
2.
A sole proprietorship is treated as a separate legal entity for tax
purposes.
____
3.
Agreements to form a partnership must be written.
____
4.
Partnership books and records must be accessible to all partners.
Multiple
Choice
Identify
the letter of the choice that best completes the statement or answers the
question.
____
5.
Amy wants to go into the business of construction contracting. Among the
reasons that would probably convince Amy to set up her business as a sole
proprietorship would be
|
a. |
its
greater organizational flexibility. |
|
b. |
its
limited liability. |
|
c. |
its
perpetual existence. |
|
d. |
the
ease of transferring the business to other family members. |
____
6.
Bob, the owner of Best Bookkeeping, a sole proprietorship, wishes to
increase his business capital while maintaining control. This objective can best
be accomplished by
|
a. |
borrowing
funds. |
|
b. |
bringing
in partners. |
|
c. |
issuing
stock. |
|
d. |
selling
the business. |
____
7.
Alan and Beth agree while talking on the telephone to form a partnership.
Their partnership agreement is legally binding
|
a. |
only
if a third person knows of the agreement. |
|
b. |
only
if the agreement is reduced to writing. |
|
c. |
only
if the parties exchange valid consideration. |
|
d. |
without
any further measures. |
____
8.
Dan and Edie are partners in Fine Sports Equipment. In general, a partner
who devotes his or her time and energy to partnership business will
|
a. |
be
entitled to compensation if he or she is an equity partner. |
|
b. |
be
entitled to compensation if the partnership agreement is silent. |
|
c. |
not
be entitled to compensation if the partnership agreement is silent. |
|
d. |
not
be entitled to compensation if he or she is an equity partner. |
____
9.
Omega Corporation and Peak Code, Inc., two software firms, wish to
combine their research and development capabilities to make a special, limited
edition computer game. The most appropriate legal entity for this project might
be
|
a. |
a
business trust. |
|
b. |
a
joint stock company. |
|
c. |
a
joint venture. |
|
d. |
a
syndicate. |
____
10.
Joan, Kyle, and other consumers form Metro Purchasing Cooperative. This
form of business organization makes it possible for these individuals to
|
a. |
avoid
personal liability for the acts of the cooperative. |
|
b. |
obtain
an exemption from state laws governing corporations. |
|
c. |
pool
their resources to gain an advantage in the market. |
|
d. |
all
of the above. |
Chapter
16 Examination
Answer
Section
TRUE/FALSE
1.
ANS:
T
REF:
374
OBJ:
TYPE: =
2.
ANS:
F
REF:
375
OBJ:
TYPE: N
3.
ANS:
F
REF:
378
OBJ:
TYPE: N
4.
ANS:
T
REF:
379
OBJ:
TYPE: N
MULTIPLE
CHOICE
5.
ANS:
A
REF:
375
OBJ:
TYPE: =
6.
ANS:
A
REF:
375
OBJ:
TYPE: +
7.
ANS:
C
REF:
378
OBJ:
TYPE: +
8.
ANS:
C
REF:
379
OBJ:
TYPE: +
9.
ANS:
C
REF:
384
OBJ:
TYPE: N
10.
ANS:
C
REF:
387
OBJ:
TYPE: =