Multiple Choice: Identify the letter of the choice that best completes the
statement or answers the question.
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1.
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Which
type of business structure combines the limited liability of a corporation with the single-taxation
benefit of a sole proprietorship? A. | Government-owned Corporation | C. | General Partnership | B. | S-Corporation | D. | S-Proprietorship | | | | |
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2.
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In a
general partnership, A. | the business continues even if one partner
dies. | B. | the business profits are subject to double
taxation. | C. | the business profits and losses are divided among the
partners. | D. | partners are only liable for the business's debt up to the
amount of their investment. | | |
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3.
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Which
type of business organization is subject to "double taxation"? A. | S-Corporation
| C. | corporation | B. | sole proprietorship | D. | general partnership | | | | |
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4.
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Unlike a general partnership, in a limited partnership A. | all partners
share equal financial responsibility for the firm's decisions. | B. | the business
does not end with the death of a partner. | C. | the limited partner is subject to double
taxation. | D. | the inactive partner has limited liability for the business's
debts. | | |
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5.
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Which
of the following is an advantage of a sole proprietorship? A. | No one is
responsible if it fails. | B. | It is easy to create and organize
one. | C. | The owners
benefit from limited liability. | D. | It is easy to raise capital to expand
one. | | |
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6.
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An
advantage of a corporation is that A. | the business can easily raise capital through initial public
offerings. | B. | the business is subject to little government
regulation. | C. | owners pay fewer taxes than owners of other forms of
business. | D. | owners have direct and immediate control over daily management
of the business. | | |
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7.
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Which
of the following is an example of a horizontal merger? A. | Outback
Steakhouse purchases American Cattleman's Association | B. | Subway purchases
Armour Meat Co. | C. | Starbucks purchases Gloria Jean's Coffee
Co. | D. | Perkins
Restaurant purchases Goodyear Tire Co. | | |
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8.
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Which
of the following is a disadvantage of a sole proprietorship? A. | difficult to
raise capital | C. | difficult to set
up | B. | double taxation
of profits | D. | limited
liability | | | | |
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9.
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Which
of the following is an example of a vertical merger? A. | Outback
Steakhouse purchases Ruth Chris' Steakhouse | B. | Subway purchases
Armour Meat Co. | C. | Starbucks purchases Gloria Jean's Coffee
Co. | D. | Perkins
Restaurant purchases Goodyear Tire Co. | | |
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10.
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What
is the major difference between a corporation and other kinds of businesses? A. | A corporation is
the most common type of business structure. | B. | A corporation is
not responsible for its debts if it fails. | C. | A corporation is a separate legal entity from its
owners. | D. | A corporation has officers who are responsible for the
business. | | |
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