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Business Structures — Quiz Answers

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1
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Franchising is typically done by

A
corporations.
B
cooperatives.
C
LLC
D
partnerships.
2
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Cooperatives save members money by

A
sharing all profits democratically as a group.
B
charging more to sell their products as a group.
C
purchasing supplies and services as a group.
D
securing financing from banks as a group.
3

Which document determines the number of shares in a company?

A
an annual bill of rights
B
a corporate charter
C
a stock prospectus
D
an annual report
4

Which best describes the difference between preferred and common stocks?

A
Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.
B
Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.
C
Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.
D
Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights.
5

Franchises are attractive to business owners because

A
they are typically inexpensive to buy.
B
they get to keep all profits.
C
they have a proven business model.
D
they come with very little risk.
6

How do corporations raise money and resources to expand?

A
They cash in dividends.
B
They request a bank loan.
C
They agree to sell stocks.
D
They increase franchise fees.
7

A disadvantage of forming a partnership is that owners

A
are only responsible for their own finances.
B
can find it tougher to start and stop a business.
C
are fully responsible for their partners' losses.
D
can find it more difficult to get a bank loan.
8

The main advantage that corporations have is

A
being inexpensive and easy to establish.
B
requiring fewer state and federal regulations.
C
giving many owners a say in business decisions.
D
limiting liability for owners and stockholders.
9

Entrepreneurs who want to open a franchise

A
invest in a location and create a business model for the franchise.
B
invest in a location and develop a trademark for the franchise.
C
buys the rights from the parent company and creates his or her own rules.
D
buy the rights from the parent company and invest in a location approved by the parent company.
10

The main advantage that corporations have is

A
requiring fewer state and federal regulations.
B
limiting liability for owners and stockholders.
C
giving many owners a say in business decisions.
D
being inexpensive and easy to establish.
11

What happens to earnings in a cooperative?

A
They are used to buy more stock for members.
B
They are used to pay middlemen for services.
C
They are shared with customers through dividends.
D
They are shared with member owners.
12

Which best describes the difference between preferred and common stocks?

A
Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.
B
Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.
C
Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.
D
Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights.
13

Which best describes the difference between preferred and common stocks?

A
Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.
B
Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.
C
Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.
D
Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights.
14

The main advantage that corporations have is

A
limiting liability for owners and stockholders.
B
requiring fewer state and federal regulations.
C
being inexpensive and easy to establish.
D
giving many owners a say in business decisions.
15

Which document determines the number of shares in a company?

A
an annual report
B
a stock prospectus
C
an annual bill of rights
D
a corporate charter
16

A disadvantage of forming a partnership is that owners

A
are only responsible for their own finances.
B
are fully responsible for their partners' losses.
C
can find it more difficult to get a bank loan.
D
can find it tougher to start and stop a business.
17

A disadvantage of forming a partnership is that owners

A
are fully responsible for their partners' losses.
B
are only responsible for their own finances.
C
can find it tougher to start and stop a business.
D
can find it more difficult to get a bank loan.
18

What happens to earnings in a cooperative?

A
They are shared with member owners.
B
They are used to buy more stock for members.
C
They are shared with customers through dividends.
D
They are used to pay middlemen for services.
19

Cooperatives save members money by

A
sharing all profits democratically as a group.
B
securing financing from banks as a group.
C
purchasing supplies and services as a group.
D
charging more to sell their products as a group.
20

Franchising is typically done by

A
corporations.
B
LLC
C
cooperatives.
D
partnerships.

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