ETH321T Week 2 Apply Exercise SCORE 80 PERCENT

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  1. Which of the following roles best fits the situation?

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 in or effectively manage the business.

  

o Neither   a limited or general partner would be a good choice (Not sure if this is   correct).

o General   partner in a limited partnership.

o Limited partner in a limited partnership.

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  1. What is the appropriate description for a      plant-processing franchise? 

  

o A franchisee makes or sells a franchisor’s product.

o A   franchisee produces and sells a franchisor’s product using the franchisor’s   name.

o A   franchisee sells a franchisor’s product in a specific geographic area.

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  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?

  

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

o Miranda is obligated to perform the contract.

o Indeterminable   without more information.

o Only Hal   is obligated to perform the contract.

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

  

o Closely-held

o Subchapter   S

o Domestic

o Alien

o Professional

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  1. What is the appropriate description for a chain-style      franchise? 

  

o A   franchisee makes or sells a franchisor’s product.

o A   franchisee sells a franchisor’s product in a specific geographic area.

o A franchisee produces and sells a franchisor’s product   using the franchisor’s name.

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

  

o Professional

o Alien

o Subchapter   S

o Closely-held

o Domestic

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  1. 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 has several partners with which he can begin a business. He has the most management experience of all his potential partners.

  

o Limited   partner in a limited partnership.

o General partner in a limited partnership.

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

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  1. Rita wants to be involved in business. She has a fair      amount of money to invest, but she does not want to be involved in      management. She wants to form a business in the quickest way possible      under her circumstances. Which form of business would be best for Rita?

  

o Corporation

o Sole   proprietorship

o LLC

o Limited partnership

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  1. 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?

  

o Stock   issuance, since stocks are more valuable as finance instruments.

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

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

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

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  1. What is the appropriate description for a      distributorship?

  

o A franchisee sells a franchisor’s product in   a specific geographic area.

o A franchisee   produces and sells a franchisor’s product using the franchisor’s name.

o A   franchisee makes or sells a franchisor’s product.

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  1. 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?

  

o Ability to close the business easily

o Many   potential investors/partners

o Plenty   of capital

o Avoidance   of sole liability

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  1. 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?

  

o Corporation

o LLC

o General   partnership

o Sole   proprietorship

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  1. 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?

  

o If   Noodleoo was transparent with its financial data, it owes no recompense to   Stephen.

o If   Noodleoo was not transparent with its financial data, it has broken the   franchise rule.

o If   Noodleoo was not transparent with its financial data, Stephen has no   recourse.

o More than one response is correct.

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  1. 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?

  

o None of the above

o Little   capital(I think this should be correct)

o Avoidance   of personal liability

o Possession   of a partner

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Sole proprietorships are the cheapest business organization to form.

  1. 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?

  

o Executive,   shareholder, and director

o Executive and shareholder

o Executive

o Shareholder

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

  

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

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

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

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

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  1. 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.

  

o Subchapter   S

o Domestic

o Professional

o Alien

o Closely-held

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  1. 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 Mario      and Johnny's decision to organize a general partnership?

  

o Sharing   profits

o Avoiding full liability

o Unfamiliar   with each other’s management practices

o Little   capital

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  1. 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.

  

o Subchapter   S

o Closely-held

o Professional

o Alien

o Domestic

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  1. 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?

  

o Shareholder

o More than one option

o Executive

o Director

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    ETH321T Week 2 Apply Exercise SCORE 80 PERCENT
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