30 Questions
What is the primary function of a board of directors in a corporation?
To set corporate management and oversight policies
Who is responsible for electing the members of a board of directors?
Shareholders
What is the difference between inside directors and outside directors?
Inside directors are top managers from within the corporation, while outside directors are experienced managers from outside the corporation
What is the role of corporate officers in a corporation?
To implement the chosen strategy and direct the work of the corporation
Why is it necessary for every public company to have a board of directors?
To provide representation for shareholders
What is the primary responsibility of the board of directors in terms of corporate goals?
To develop strategic plans to meet the corporate goals
What is the primary characteristic of a sole proprietorship?
It is owned by one person
What is the main advantage of a sole proprietorship over other forms of business ownership?
It is easier to start
What is the purpose of a partnership agreement?
To define the relationship between partners
What type of partner contributes capital to a business but has no management responsibility or liability for losses beyond the amount invested?
Limited partner
What is a unique feature of S-corporations?
They have special tax benefits
What is the primary purpose of a cooperative?
To provide a service to its members
What is the primary difference between a master limited partnership and a corporation?
How it is taxed
What is a key difference between growth from within and growth through mergers?
Growth from within is organic, while growth through mergers is external
What is the purpose of an articles of partnership agreement?
To outline the terms of a partnership, including duties and investments
How are the profits and losses of a partnership typically divided?
As outlined in the articles of partnership agreement
What is the benefit of having a written articles of partnership agreement?
It provides a clear outline of the partnership terms
What is the primary characteristic of a general partner in a partnership?
They manage the business
What is a characteristic of a horizontal merger?
The firms make and sell similar products
What is the main purpose of federal agencies reviewing mergers?
To protect competition
What is a characteristic of a vertical merger?
One firm is a supplier or customer of the other
According to takeover advocates, what is a result of takeovers?
Companies become more profitable and productive
What is a criticism of takeovers according to takeover opponents?
They force managers to focus on defense rather than vital business activities
Why do financially secure firms engage in mergers and acquisitions during an economic crisis?
To take over firms in financial trouble
What is the primary purpose of a franchise agreement?
To distribute recognized goods and services through a legal agreement
What is the term for a franchise that operates within another store's facilities?
Piggyback Franchising
What is the role of a franchisor in a franchise agreement?
To own the name and/or system that is being distributed through a licensing arrangement
What is the term for the person who buys the right to sell goods or services of a parent company?
Franchisee
What is the main goal of franchising?
To distribute recognized goods and services through a legal agreement
What is the nature of a franchise agreement?
A legal agreement between two parties
Test your understanding of the different forms of business ownership, including sole proprietorships, partnerships, and corporations. Learn about the advantages and disadvantages of each and how to form a corporation.
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