True/False
Indicate whether the
statement is true or false.
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1.
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Limited liability is one characteristic of the corporate form of business
organization.
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2.
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One advantage of a corporation is the ease of obtaining a charter.
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3.
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One disadvantage of a general partnership is each partners' responsibility
for the acts of all other partners.
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4.
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Many schools, medical care facilities, and churches operate as nonprofit
organizations.
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5.
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Cooperatives can be organized to help consumers, provide services, or help
producers.
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6.
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Labor unions use collective bargaining to negotiate job-related issues with
management.
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7.
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Sole proprietorships must request a charter from the state in which they are
organized.
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8.
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People form partnerships because it often improves a business's management
and can usually attract capital more easily than proprietorships.
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9.
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Investors in corporations have unlimited liability for the company's
debts.
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10.
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The dividends of stockholders in a corporation are subject to double
taxation.
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11.
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An income statement is prepared by businesses to report sales, expenses,
profits, and other financial activities.
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12.
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When two firms merge, both retain their legal identities.
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13.
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One of the principal reasons that companies merge is to diversify their product
lines.
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14.
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A consumer cooperative can offer members prices that are lower than those
charged by regular businesses.
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15.
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A professional association tries to improve the working conditions, skill
levels, and public perceptions of the profession.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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16.
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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 inactive partner has limited liability for the business's
debts. | c. | the partners must pay special business taxes. | d. | the business does
not end with the death of a partner. |
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17.
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This regulates the sale of stock in a corporation.
a. | labor unions | c. | stockbrokers | b. | Securities and Exchange
Commission | d. | chamber of
commerce |
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18.
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A merger of corporations involved in different steps of manufacturing or
marketing is known as a
a. | multinational merger. | c. | vertical merger. | b. | horizontal merger. | d. | conglomerate. |
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19.
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Non-profit organizations may
a. | issue stock. | b. | pay dividends. | c. | provide goods and
services to members. | d. | pay income
taxes. |
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20.
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The local chamber of commerce works to
a. | promote the welfare of its members and the community. | b. | earn dividends for
members. | c. | protect its members from consumer complaints. | d. | aid member companies
in negotiating with labor unions. |
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21.
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In a general partnership,
a. | the business continues even if one partner dies. | b. | partners must pay
specific business taxes. | c. | partners usually draw up legal papers called
articles of partnership. | d. | partners are only liable for the
business's debt up to the amount of their investment. |
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22.
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An advantage of a corporation is that
a. | owners pay fewer taxes than owners of other forms of business. | b. | the business is
subject to little government regulation. | c. | owners have limited liability for
debt. | d. | owners have direct and immediate control over daily management of the
business. |
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23.
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All of the following are examples of the government playing a direct role in the
economy EXCEPT
a. | public utility regulation. | c. | court systems. | b. | police and fire
protection. | d. | libraries. |
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24.
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Which of the following is NOT a nonprofit organization?
a. | multinational | c. | chamber of commerce | b. | producer cooperative | d. | labor union |
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25.
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In its direct role as an economic organization, American government
a. | regulates public utilities. | b. | acts as an umpire to make sure the market
operates smoothly. | c. | owns and manages public
utilities. | d. | makes grants to people in the form of Social
Security. |
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Completion
Complete each
statement.
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26.
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____________________, sometimes called “the bottom line,” is the sum
of net income and non-cash charges such as depreciation.
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27.
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In a ____________________ merger, companies that are involved in different steps
of manufacturing join together.
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28.
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Multinationals are usually welcome in foreign countries because they produce
____________________ for the host country.
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29.
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During the 1970s and 1980s, ____________________ mergers were popular in the
United States.
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30.
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____________________ help spread technology throughout the world.
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Matching
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Match each statement with the correct item below. a. | form of business organization recognized by law as a separate legal entity having all
the rights of an individual | b. | corporation that has manufacturing or service
operations in a number of countries | c. | voluntary association that buys bulk amounts of
goods on behalf of its members | d. | business owned and run by one
person | e. | price paid for the use of another's money | f. | investor's
responsibility for the debts of a business which is limited by the size of his or her investment in
the business | g. | organization of workers formed to represent its members' interests in various
employment matters | h. | money that is borrowed | i. | non-cash charge a
firm takes for the general wear and tear on its capital goods | j. | stock of finished
goods and parts in reserve |
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31.
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sole proprietorship
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32.
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principal
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33.
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limited liability
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34.
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labor union
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35.
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corporation
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36.
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multinational
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37.
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interest
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38.
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consumer cooperative
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Match each statement with the correct item below. a. | court-granted permission to an individual or business to cease or delay paying
debts | b. | organization that operates in a businesslike way to promote the collective interests
of its members rather than to seek profit for its owners | c. | negotiation by a
labor union with management over issues such as pay, working hours, and vacation | d. | payment to a
stockholder representing a portion of the corporate earnings | e. | financial
organization that accepts deposits from and makes loans to employees from a particular company or
government agency | f. | business that is jointly owned by two or more
persons | g. | revenues minus expenses, including taxes | h. | sum of net income
and non-cash charges, such as depreciation | i. | ownership certificates in a
firm |
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39.
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dividend
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40.
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partnership
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41.
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cash flow
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42.
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stock
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43.
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collective bargaining
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44.
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credit union
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45.
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bankruptcy
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46.
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nonprofit organization
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Short Answer
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47.
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Summarizing Information List two reasons businesses merge. Define a
vertical merger and a horizontal merger.
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48.
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Analyzing Information Why should members of a general partnership be
concerned about the financial responsibility of their partners?
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49.
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Analyzing Information Why does a corporation sell bonds?
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Essay
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50.
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Making Comparisons Define and compare mergers, conglomerates, and
multinationals. How does each of these business forms benefit the consumer?
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51.
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Analyzing Information Explain how the government plays both a direct and
an indirect role in the economy.
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52.
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Making Comparisons Name three forms of businesses in the United States.
Then compare their structures and list one advantage and one main disadvantage of each.
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