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Eco 08

True/False
Indicate whether the sentence or statement is true or false.
 

1. 

A sole proprietorship is easier and less expensive to start and run than a partnership.
 

2. 

The personal assets of a sole proprietor may be seized to pay off business debts.
 

3. 

Partnerships are less efficient than proprietorships.
 

4. 

In a limited partnership, all partners have unlimited liability.
 

5. 

A joint venture is set up to be a continuing business.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

6. 

To which element of business operation does the saying, "You have to spend money to make money" refer?
a.
expenses
c.
record keeping
b.
advertising
d.
risk
 

7. 

To determine whether a business made a profit, you must
a.
subtract total expenses from receipts.
b.
subtract taxes from other expenses.
c.
subtract the cost of new equipment from income.
d.
subtract wages from receipts.
 

8. 

In the startup phase of a business, advertising
a.
increases inventory.
c.
increases risk.
b.
reduces profits.
d.
has no effect.
 

9. 

When you run a business, you should pay yourself a wage that is
a.
higher than you pay anyone else.
b.
lower than you pay your workers.
c.
equal to what you could earn elsewhere.
d.
based on the profits you expect to make.
 

10. 

Record keeping is necessary
a.
only if your business earns a profit.
c.
for any business to be successful.
b.
only if you have a large inventory.
d.
only if you have many employees.
 

11. 

The most basic type of business organization is a
a.
sole proprietorship.
c.
partnership.
b.
joint venture.
d.
limited partnership.
 

12. 

The biggest disadvantage of a sole proprietorship is that
a.
the proprietor receives all the profits.
b.
the proprietor has unlimited liability.
c.
the operation of the business is more complicated.
d.
business decisions can be made quickly.
 

13. 

In a partnership, the partners
a.
share the profits or losses.
b.
have no say in how the business is run.
c.
share only the profits.
d.
have no liability for debts and damages.
 

14. 

In a limited partnership, the limited partners
a.
have an active voice in the management.
b.
are equal to the general partner.
c.
only contribute money or property to the business.
d.
have unlimited liability for debts.
 

15. 

A joint venture is a
a.
temporary partnership.
c.
general partnership.
b.
limited partnership.
d.
sole proprietorship.
 

16. 

The most important type of business organization in the United States today in terms of the amount of business done is the
a.
limited partnership.
c.
corporation.
b.
joint venture.
d.
sole proprietorship.
 

17. 

A disadvantage of a corporation is that
a.
it has limited liability.
c.
it is taxed heavily.
b.
it can issue stock to raise capital.
d.
it can continue indefinitely.
 

18. 

A corporate charter is granted by
a.
the federal government.
b.
the state where the corporation is established.
c.
stockholders.
d.
a franchiser.
 

19. 

Holders of preferred stock are guaranteed
a.
voting rights.
b.
a certain amount of dividend each year.
c.
nothing.
d.
double the dividend paid on common stock.
 

20. 

The largest corporations are usually listed
a.
only with regional stock markets.
c.
on the New York Stock Exchange.
b.
only with NASDAQ.
d.
only as over-the-counter stock.
 

Completion
Complete each sentence or statement.
 

21. 

An ____________________assumes the risks of a business in order to gain profits.
 

 

22. 

An ____________________ is a supply of whatever items are used in a business.
 

 

23. 

In the startup phase of a business, ____________________ makes potential customers aware that your goods or services are available.
 

 

24. 

New equipment, wages, insurance, taxes, electricity, and telephone services are some of the ____________________ of running a business.
 

 

25. 

____________________ minus expenses equals profit.
 

 

26. 

A ____________________ has a separate and distinct existence from the stockholders who own its stock.
 

 

27. 

The ____________________ is a license to operate granted by the state in which a corporation is established.
 

 

28. 

A ____________________ is responsible for supervising and controlling a corporation.
 

 

29. 

Holders of preferred stock are guaranteed a ____________________ each year.
 

 

30. 

One advantage of a ____________________ is that the owner benefits from advertising campaigns that the chain runs.
 

 

Matching
 
 
Match each item with the correct statement below.
a.
entrepreneur
b.
startup
c.
small business incubator
d.
inventory
e.
receipts
 

31. 

private or government-funded agency that assists new businesses
 

32. 

income received from the sale of goods and/or services
 

33. 

beginning business enterprise
 

34. 

person who organizes, manages, and assumes the risks of a business in order to gain profits
 

35. 

extra supply of items used in a business
 
 
Match each item with the correct statement below.
a.
sole proprietorship
b.
unlimited liability
c.
assets
d.
partnership
e.
joint venture
 

36. 

all items to which a business holds legal claim
 

37. 

requirement that an owner is personally and fully responsible for all losses and debts of a business
 

38. 

business that two or more individuals own and operate
 

39. 

two businesses work together for a specific purpose just for a short period of time
 

40. 

business owned and operated by one person
 
 
Match each item with the correct statement below.
a.
corporation
b.
stock
c.
limited liability
d.
dividend
e.
franchise
 

41. 

contract in which one business sells to another business the right to use its name and sell its products
 

42. 

requirement in which an owner's responsibility for business debts is limited to the size of the owner's investment in the business
 

43. 

share of ownership in a corporation
 

44. 

type of business owned by many people, but treated by law as a single person
 

45. 

portion of a corporation's profits paid to its stockholders
 



 
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