Question 1

Assume that you are a corporate manager and that a corporate raider is trying to take over your company. What steps could you follow to avoid the takeover?

Accepted Answer

The answer of Assume that you are a corporate manager...

Question 2

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.
-Refer to B&G, Inc. What type of organization was Kevin considering switching to?

Accepted Answer

Kevin was looking to switch to a not-for-profit corporation, one that focuses on serving the community rather than making a profit.

Question 3

Which form of business is the easiest to start?

Accepted Answer

Sole proprietorship is the easiest form of business to start because it does not require any legal formalities, fees or documents. The business is owned and operated by a single person without any distinction between the owner and the business. This makes it easy to set up, manage and dissolve the business. Other forms of business such as corporations, partnerships, and S-corporations require formal registration, legal documentation, fees, and complex operational procedures.

Question 4

Samantha's Dilemma
Samantha graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual owner of her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States.
After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hard-working she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.
-Refer to Samantha's Dilemma. Based on the information provided, what type of business does Samantha's aunt operate?

Accepted Answer

Based on the information provided, Samantha's aunt operates a small business that she started about twenty years ago. The fact that she is the individual owner of the business suggests that it is a sole proprietorship.

Answer: D 
 Samantha decided to work for the large retail company so that she could gain the most experience for herself. Therefore, the best choice for her is to work for the large retail company.

Question 5

Which of the following is necessary for starting a sole proprietorship?

Accepted Answer

No specific legal documents are required to start a sole proprietorship. However, depending on the business, certain permits or licenses may be necessary.

Question 6

Karen Howard loves to cook and receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Karen decides to open a small neighborhood restaurant. Since she plans to maintain complete control of the business, she will most likely organize it as a

Accepted Answer

Karen plans to maintain complete control of the business, which is best achieved through a sole proprietorship. A sole proprietorship is the simplest and most common form of business organization in which the owner is personally responsible for all aspects of the business and its debts.

Question 7

The simplest form of business owned and operated by one person is called a(n)

Accepted Answer

A sole proprietorship is a business owned and operated by a single individual who is fully responsible for its profits and losses. It is the simplest and most common form of business ownership.

Question 8

Local residents have always thought the small store on the corner of Locust and Congress was a partnership between John and Joe, two brothers from the neighborhood. But Joe is the real owner. This probably means that the store is a

Accepted Answer

Since Joe is the sole owner of the store, it is most likely a sole proprietorship. A limited partnership would require two or more partners, a corporation would have a board of directors and shareholders, a cooperative would involve multiple members working together, and a joint venture is a temporary partnership for a specific project or goal.

Question 9

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total sales.

Accepted Answer

Sole proprietorships, while numerous, account for a relatively small percentage of total sales when compared to partnerships and corporations, with the correct figure being around 4%.

Question 10

A business can grow by expanding its current operations. It can also grow by completing a merger or acquisition. Which do you think is the best method for growing a company?

Accepted Answer

The answer of A business can grow by expanding its...

Question 11

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.
-Refer to B&G, Inc. Which of these features does not belong to this type of corporation?

Accepted Answer

The answer of B&G, Inc.
A year ago, Kevin went to...

Question 12

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.
-Refer to B&G, Inc. B&G, Inc. was going through a ____ merger.

Accepted Answer

A horizontal merger is a merger between companies that operate in the same industry or sector, and this is what appears to be happening with B&G, Inc. and one of its major competitors. Vertical mergers involve companies in different stages of the same supply chain, conglomerate mergers involve companies in unrelated industries, hostile mergers are not agreed upon by the target company's management, and leveraged mergers involve significant debt to finance the merger.

Question 13

In your own words, explain the differences among a horizontal merger, a vertical merger, and a conglomerate merger.

Accepted Answer

The answer of In your own words, explain the differences...

Question 14

Samantha's Dilemma
Samantha graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual owner of her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States.
After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hard-working she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.
-Refer to Samantha's Dilemma. What type of company does Samantha's friend operate?

Accepted Answer

Samantha's friend and her husband jointly own the company, which indicates a partnership, where two or more individuals own and operate the business.

Question 15

Samantha's Dilemma
Samantha graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual owner of her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States.
After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hard-working she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.
-Refer to Samantha's Dilemma. What would not be an advantage of Samantha's aunt's business?

Accepted Answer

Samantha's aunt's business, being a sole proprietorship, offers advantages such as pride of ownership, retention of profits, no special taxes, and the ability to be your own boss. However, unlimited liability is a disadvantage, not an advantage, of a sole proprietorship, as the owner is personally responsible for all the business's debts and obligations.

Question 16

Samantha's Dilemma
Samantha graduated from college and needed to decide where she wanted to work. She had several options. Her aunt Julie owned and operated a small business that she started about twenty years ago. Julie, an individual owner of her business, informed Samantha that she could work for her. On one hand, Samantha thought it would be a great opportunity to be able to work for her aunt, learn the business, and then run the business when her aunt retired. On the other hand, she also felt that she wanted something a little more challenging; a job where she could really use her education. Her other option would be to work for a company that a friend and her husband had started and jointly owned. It was a rapidly growing company with plenty of opportunity for advancement. However, Samantha had some reservations about this choice because she was not sure she wanted to work for friends. Her last option was to work for a large retail company, headquartered in Maryland, which had stores across the United States.
After much consideration, Samantha decided she didn't want an opportunity and a job because someone knew her. She wanted to prove how motivated and hard-working she was. Once she weighed all the advantages and disadvantages of her different options, she decided to work for the large retail company so that she could gain the most experience for herself.
-Refer to Samantha's Dilemma. If Samantha worked for the large retail company in Philadelphia, what type of corporation would that be?

Accepted Answer

A corporation is considered "foreign" in any state other than where it is incorporated. Since the large retail company is headquartered in Maryland, it would be considered a foreign corporation in Philadelphia, Pennsylvania.

Question 17

In the United States, approximately 72 percent of all businesses are

Accepted Answer

According to data from the U.S. Small Business Administration, approximately 72 percent of all businesses in the U.S. are sole proprietorships, which are businesses owned and operated by a single person. This is followed by partnerships (7%), corporations (6%), and other types of businesses such as franchises and cooperatives. Joint ventures are not as common as these other types of businesses.

Question 18

B&G, Inc.
A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.
While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.
-Refer to B&G, Inc. What type of organization is B&G, Inc.?

Accepted Answer

B&G, Inc. is taxed as though it were a partnership, which is a characteristic of an S-corporation. Therefore, the best choice is option C. The passage does not provide any information indicating that it is a sole proprietorship, limited-liability company, not-for-profit corporation, or cooperative.

Question 19

Glenn owns and operates a large hardware store in Missouri that employs about fifty people. He delegates some of the decision making to two managers, but he remains the only owner. Glenn's business is organized as a

Accepted Answer

A sole proprietorship is the simplest form of business organization that is owned and operated by one individual. In this case, Glenn is the only owner of the hardware store. Additionally, he has delegated some decision-making power to two managers, but he remains the sole proprietor. Therefore, a sole proprietorship is the best fit for Glenn's business. The other options, such as a corporation, partnership, limited partnership or a limited-liability corporation, involve multiple owners or investors, and do not fit the description of Glenn's business.

Question 20

Describe the merger trends affecting American business.

Accepted Answer

The answer of Describe the merger trends affecting American business....

Quiz 4: Choosing a Form of Business Ownership