AnswersRAIL NCAA OC Economics 2027Business Structures

Case Study: Starting a Business Answers

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1
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The most common business organizations in the United States are

p
partnerships.
s
sole proprietorships.
c
corporations.
f
franchises.
2
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Which document determines the number of shares in a company?

A
a stock prospectus
B
an annual bill of rights
C
a corporate charter
D
an annual report
3

Franchising is typically done by

A
cooperatives.
B
partnerships.
C
LLC
D
corporations.
4

Which are examples of sole proprietorships? Check all that apply.lawyers working for a corporationdoctors in a partnershipindependent workersfranchise restaurants in a partnershiptax preparer working his own businessfreelance writers

l
lawyers working for a corporation
d
doctors in a partnership
i
independent workers
f
franchise restaurants in a partnership
t
tax preparer working his own business
f
freelance writers
5

Cooperatives save members money by

p
purchasing supplies and services as a group.
s
securing financing from banks as a group.
c
charging more to sell their products as a group.
s
sharing all profits democratically as a group.
6

feestaxesinsuranceinterest

A
fees
B
taxes
C
insurance
D
interest
7

A disadvantage of forming a partnership is that owners

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

Which best describes the difference between sole proprietorships and partnerships?

S
Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
S
Sole proprietors share responsibilities, while partners are responsible for only a portion of the business.
S
Sole proprietors split profits and share liabilities, while partners keep all profits and have unlimited liability.
S
Sole proprietors pay taxes only on business profits, while partners do not have to pay taxes on profits.
9

Entrepreneurs who want to open a franchise

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

Analyze the chart, which depicts a typical corporate structure.

Question illustration
A
run the business by electing a board of directors, who then hire the company’s leaders.
B
run the business by electing a board of directors and hiring a president and other leaders.
C
make business decisions on the advice of a board of directors, a president, and other leaders.
D
make business decisions on the advice of a board of directors, who follow the expertise of leaders.
11

How do corporations raise money and resources to expand? Select THREE answers.They request a bank loan.They raise franchise fees.They cash in dividends.They agree to sell stocks.They issue bonds.

A
They request a bank loan.
B
They raise franchise fees.
C
They cash in dividends.
D
They agree to sell stocks.
E
They issue bonds.
12

Franchising is typically done by

A
cooperatives.
B
partnerships.
C
LLC
D
corporations.
13

The main advantage that corporations have is

A
limiting liability for owners and stockholders.
B
giving many owners a say in business decisions.
C
being inexpensive and easy to establish.
D
requiring fewer state and federal regulations.
14

Which are examples of sole proprietorships? Check all that apply.lawyers working for a corporationdoctors in a partnershipindependent workersfranchise restaurants in a partnershiptax preparer working his own businessfreelance writers

A
lawyers working for a corporation
B
doctors in a partnership
C
independent workers
D
franchise restaurants in a partnership
E
tax preparer working his own business
F
freelance writers
15

What happens to earnings in a cooperative?

A
They are used to pay middlemen for services.
B
They are shared with member owners.
C
They are used to buy more stock for members.
D
They are shared with customers through dividends.
16

A disadvantage of forming a partnership is that owners

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

shareholderspartnersbankersboard members

A
shareholders
B
partners
C
bankers
D
board members
18

Entrepreneurs who want to open a franchise

A
buys the rights from the parent company and creates his or her own rules.
B
buy the rights from the parent company and invest in a location approved by the parent company.
C
invest in a location and create a business model for the franchise.
D
invest in a location and develop a trademark for the franchise.
19

Which best describes the difference between preferred and common stocks?

A
Preferred stock allows shareholders to vote for a board of directors, while shareholders of common stock do not have voting rights.
B
Common stock gives shareholders one vote per share owned, while shareholders of preferred stock do not have voting rights.
C
Preferred stock gives shareholders priority for dividends distributed, while shareholders of common stock are not allowed dividends.
D
Common stock allows shareholders to get priority for dividends distributed, while shareholders of preferred stock are not allowed dividends.
20

feestaxesinsuranceinterest

A
fees
B
taxes
C
insurance
D
interest

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