Question 1

A new business typically adopts one of four main organizational forms.They are

Accepted Answer

sole proprietorship,partnership,corporation,or co-operative.

Question 2

A major disadvantage of the sole proprietorship is

Accepted Answer

unlimited liability.

Question 3

A general partnership has advantages that are similar to a sole proprietorship,such as

Accepted Answer

being simple to organize.

Question 4

Gilbert is considering setting up a business.He likes some of the advantages of sole proprietorships,but is concerned about some of the disadvantages.He should consider all of the following except

Accepted Answer

difficulty of liquidation.

Question 5

A limited partnership attempts to

Accepted Answer

avoid the problem of unlimited liability for the owners.

Question 6

Lester is hoping that by buying a franchise he will get a lot of assistance from the company providing the franchise.Which of the following would not be a benefit to Lester should he decide to buy a franchise?

Accepted Answer

Guaranteed success

Question 7

Which of the following is considered to be an advantage to both the franchisee and the franchisor?

Accepted Answer

Recognition

Question 8

Hector wants to buy a franchise.He has developed a list of advantages and disadvantages.Which one does not apply?

Accepted Answer

It is virtually impossible to lose money owning a well-known franchise

Question 9

Low start-up costs,simplicity in formation,and freedom are advantages in establishing a

Accepted Answer

sole proprietorship.

Question 10

In a franchise agreement,the ________ is purchasing the right to sell the products of the ________.

Accepted Answer

franchisee; franchisor

Question 11

Jim Short and Ron Tall are trying to decide whether to start a new business or buy an existing one.Which of the following would strengthen the case for buying an existing business?

Accepted Answer

They would benefit from the customer base of an existing business.

Question 12

Tax laws permit ________ to treat the sales revenues and operating expenses of the business as part of their personal finances.

Accepted Answer

sole proprietorships

Question 13

Which of the following is not likely to be provided by the seller of a franchise?

Accepted Answer

Guarantee of success

Question 14

Franchising accounts for approximately ____ percent of retail sales in Canada.

Accepted Answer

40

Question 15

Which of the following is an advantage for the franchisee?

Accepted Answer

Recognition

Question 16

Sam Clark has a custom cheesecake business that he owns and operates out of his home.Sam's ownership structure likely is

Accepted Answer

a sole proprietorship.

Question 17

Which of the following is not typical for a sole proprietorship?

Accepted Answer

Limited liability

Question 18

Mary is trying to decide whether to start her own business or buy a franchise.Which of the following would be a strong reason for her to buy a franchise rather than start a new business?

Accepted Answer

The franchiser requires $3000 in start-up costs and a 5 percent monthly royalty fee.

Question 19

The features of a sole proprietorship include all the following except

Accepted Answer

a lot of government paperwork

Question 20

Roger has made a list of what he considers to be advantages of buying a franchise.You tell him that one item on his list is not an advantage.Which one is it?

Accepted Answer

Low start-up costs

Quiz 4: Understanding Entrepreneurship, small Business, and New Venture Creation