Chapter 6: Business Ownership and Operations
Chapter Practice Review Quiz
1.. What are the three main forms of business B) car sharing
organization? C) nonprofit organization A) corporations, proprietorships, and stockholders D) franchise
B) partnerships, corporations, and dividends
8. Which type of business makes a finished product, such C) sole proprietorships, partnerships, and corporations
as an automobile? D) partner proprietorships, corporations, and sole partnerships A) industry
2. Which is true of a sole proprietorship? C) processor
A) A sole proprietorship is often difficult and complicated D) producer
to start up.
9. How does a product get from a manufacturer to a B) Revenue for a sole proprietorship is usually higher than that for a corporation. wholesaler?
C) Sole proprietors share decision making with others. A) by a producer
D) Profits from a sole proprietorship are only taxed once. B) by a processor
C) by an intermediary
3. What does unlimited liability mean to the owner of a D) by a retailer
10. Where do stores get the products that they sell? A) The owner is responsible for all the company's debts. B) The owner has limited credit. A) industries
C) The corporation is dissolved when the owner dies. B) intermediaries
D) The company will fail if the owner does not have all the C) wholesalers
skills needed to run the business. D) retailers
4. Which type of business organization is a partnership 11. Which is true of intermediaries, wholesalers, and
most like? retailers?
A) limited liability A) They buy and sell goods. B) sole proprietorship B) They store goods for long periods of time.
C) corporation C) They ship goods. D) bank D) They divide up goods into smaller lots.
5. Which is NOT an advantage of forming a corporation? 12. In which type of business do most Americans work?
A) The company continues even after one owner dies. A) intermediary
B) There is limited liability for the founder B) retail
C) Raising capital for startup is easier. C) service
D) Profits are taxed twice: at the corporate level and at the D) wholesale
13. Which department in a company sets the price of a
6. In order to become a corporation, what must a business product?
have? A) production
A) over 500 employees B) marketing
B) double taxation C) finance
C) a corporate charter D) accounting
D) stock certificates
14. Which department in a company pays the bills for the
7. Which business structure contains both the benefits of a business?
small business and a corporation? A) procurement
A) cooperative B) management
15. Which best describes management's most important job?
A) Improving production efficiency and increasing profits. B) Monitoring the interdependence of functional areas of the business.
C) Making future decisions by analyzing financial statements
D) Achieving goals by planning, controlling, and evaluating the effective use of resources.
13.B ANSWER KEYS: Feedback: The people in marketing should know just how
much the consumer will be willing to pay for a product. 1.C
Feedback: There are three main types of business 14.D
organizations: sole proprietorships, partnerships, and Feedback: People in the accounting department take care
corporations. of bills, financial reports, and maintaining financial
records for the company. 2.D
Feedback: Sole proprietorships are easy to begin and 15.D
only one person is involved; revenues are often lower Feedback: Management is the process of achieving
than a corporation's. Profits are only taxed once. company goals by planning, organizing, directing,
controlling, and evaluating the effective use of resources. 3.A
Feedback: If the owner does not make enough money to
pay all the company's bills, he is still responsible for them, and will have to pay out of his own personal fun
Feedback: A partnership has many of the same
advantages and disadvantages of a sole proprietorship. 5.D
Feedback: Corporations pay taxes on income and shareholders pay taxes on profits issued to them. 6.B
Feedback: To form a corporation, the owners must get a corporate charter from the state where their main office is located. A corporate charter is a license to run a business.
Feedback: A franchise allows a small business owner to have a company using the big business's name and business plan for part of the profits and fees. 8.B
Feedback: A manufacturer makes a completely finished product out of raw or processed parts.
Feedback: An intermediary moves finished goods, stores them, and resells them to a wholesaler.
Feedback: Stores are retailers, which get their products from wholesalers distributing goods.
Feedback: Each type of business has to first buy the goods, then sell them to some kind of buyer. 12.C
Feedback: About seventy-five percent of the American workforce is employed in the service industry.