- 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?
| · If Noodleoo was transparent with its financial data, it owes no recompense to Stephen. · If Noodleoo was not transparent with its financial data, it has broken the franchise rule. · More than one response is correct. · If Noodleoo was not transparent with its financial data, Stephen has no recourse. |
2.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?
| · More than one option · Director · Executive · Shareholder |
3.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?
| · Miranda may relinquish her obligation to perform the contract since Hal signed it without her knowledge. · Miranda is obligated to perform the contract. · Indeterminable without more information. · Only Hal is obligated to perform the contract. |
4.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?
| · Limited partnership · LLC · Sole proprietorship · Corporation |
5.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?
| · Stock issuance, since stocks are more valuable as finance instruments. · Stock issuance, since a credit rating won’t negatively affect Koffman’s ability to sell stock. · Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating. · Bond issuance, since additional debt can provide the company with more leverage. |
6.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?
| · Unfamiliar with each other’s management practices · Avoiding full liability · Sharing profits · Little capital |
7.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?
| · Shareholder · Executive, shareholder, and director · Executive and shareholder · Executive |
- fill in the blanks by choosing an answer from the box below
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.
Piper is a manager in a corporation that was organized in Canada by one of his former coworkers. The company provides consulting services and training for architects employed by construction companies. The company recently went public, with shares being sold to about 500 investors. Piper’s company would be a __________ corporation.
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.
Zoey is the CEO of a corporation she organized herself with 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.
Hal organized his business in Canada. Most of his customers are in Montana. In Montana, Hal’s business would be considered a(n) __________ corporation.
Choose from here
Alien
Closely-held
Subchapter S
Professional
Domestic
9.J-Chron’s board of directors periodically meets with the CFO of the company. The CFO reports on the financial status of a company project, after which the board inquires about the project’s compliance with legally-required accountings principles. It asks no other questions about the project. Which of the following is true?
| · The board is meeting legally-required vigilance standards, but not necessarily those which would protect shareholders’ interest. · The board is meeting all of its vigilance requirements. · The board is not legally required to meet vigilance requirements. · The board is not meeting any basic vigilance requirements. |
10.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?
| · LLC · Corporation · General partnership · Sole proprietorship |
11.fill in the blanks by choosing an answer from the box below
Plant-processing franchise
Distributorship
Chain-style franchise
Choose from here
A franchisee makes or sells a franchisor’s product.
A franchisee produces and sells a franchisor’s product using the franchisor’s name.
A franchisee sells a franchisor’s product in a specific geographic area.
12.fill in the blanks by choosing an answer from the box below
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.
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 or effectively manage the business.
Manny wants to be involved in a business but is not sure which type of business to join or create. He has capital to invest. He has a good network of potential investors and partners. He has no experience in management.
Choose from here
General partner in a limited partnership
Neither a limited or general partner would be a good choice.
Limited partner in a limited partnership
13.Abigail is a manager at her company. The company just launched an initiative to improve its corporate citizenship practices. Abilgail is responsible for all but which of the following areas?
| · Safeguarding shareholders’ interests · Vigilance of the board of directors · Disclosure and transparency · Integrity and ethical behavior |
14.fill in the blanks by choosing an answer from the box below
First
Fourth
Third
Second
Choose from here
Incorporators select a name for the corporation
Articles of incorporation are filed
Novations are executed
Business selects a state of incorporation
15.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?
| · Many potential investors/partners · Ability to close the business easily · Plenty of capital · Avoidance of sole liability |