Buying A Business and Franchises
Franchise, Family, and Partnerships
Corporations and LLCs
Growth, Regulations, and Patents
Trademarks and Consumer Protection
100
What is a disadvantage of buying an existing business?

a. Equipment, suppliers, and procedures are in place.
b. The business may be for sale because it is not profitable.
c. Financial arrangements, including loans, may be easier.
d. Established financial records may exist.
b. The business may be for sale because it is not profitable.
100
What is one disadvantage of owning a franchise?

a. Franchise fees are cheap.
b. Lifelong franchise agreement.
c. More freedom to make decisions.
d. Less freedom to make decisions than other entrepreneurs.
d. Less freedom to make decisions than other entrepreneurs.
100
Which of the following describes a corporation?

a. A unit of ownership.
b. Legal rights of a person, but independent of owners.
c. A group that makes important decisions for a company.
d. Profit distributed to shareholders.
b. Legal rights of a person, but independent of owners.
100
Which type of firm has the greatest level of growth since 1997?

a. Sole proprietorship.
b. C-Corporations.
c. Non-employers.
d. Partnerships.
c. Non-employers.
100
What is a trademark?

a. Protects original works of authorship.
b. Gives exclusive right to an inventor for his or her invention.
c. A name, symbol, or special mark used to identify a business or brand of product.
d. Verifies the quality of a product.
c. A name, symbol, or special mark used to identify a business or brand of product.
200
What is an advantage of buying an existing business?

a. The business may be for sale, because it is not profitable.
b. Serious problems may be inherited.
c. Financial arrangements, including loans, may be easier.
d. Capital is required.
c. Financial arrangements, including loans, may be easier.
200
What is one advantage of having a family business?

a. Pride and sense of satisfaction.
b. Poor business decisions can be made.
c. Retaining non-family employees.
d. Business and family life affect each other.
a. Pride and sense of satisfaction.
200
What is an advantage of incorporation?

a. Liability protection.
b. More government regulation.
c. Income is taxed twice.
d. More complicated than setting up a proprietorship.
a. Liability protection.
200
The Sherman Act makes it illegal:

a. To own a beauty salon.
b. For competitors to get together and set prices on products and services.
c. To name a dog Sherman.
d. To falsely advertise.
b. For competitors to get together and set prices on products and services.
200
Federal Food, Drug, and Cosmetic Act:

a. Sets safety standards for products other than food and drugs.
b. Bans the sale of impure, improperly labeled, falsely guaranteed, and unhealthful foods, drugs, and cosmetics.
c. Prevents federal distribution of food, drugs, and cosmetics.
d. Helps consumers resolve problems with food, drugs, and cosmetics purchased from the federal government.
b. Bans the sale of impure, improperly labeled, falsely guaranteed, and unhealthful foods, drugs, and cosmetics.
300
Which of the following IS NOT a step in purchasing a business?

a. Obtaining accounting records for the prior three years.
b. Get expert help to determine price to offer for the business.
c. Review by an Accountant.
d. Purchase goodwill separately.
Purchase goodwill separately.
300
Benefits of starting your own business include all of the following except:

a. Complete control over all business decisions.
b. A great sense of accomplishment when the business turns a profit.
c. An established product or service.
d. The challenge of creating something brand new.
c. An established product or service.
300
What is a corporation organized unders Subchapter S of the Internal Revenue Code?

a. Partnership.
b. Sole Proprietorship.
c. S Corporation.
d. Limited Liability Company.
c. S Corporation.
300
The Robinson-Patman Act makes it illegal:

a. To shop at Walmart.
b. To charge different prices to different customers.
c. For competitors to get together and set prices on products or services.
d. To shop at KMart.
b. To charge different prices to different customers.
300
Truth-In-Lending Act:

a. Prevents truthful lending.
b. Requires all banks to calculate loan costs in the same way.
c. Requires lenders to tell the truth when opening savings accounts.
d. Requires a customer to be truthful when obtaining a loan from the bank.
b. Requires all banks to calculate loan costs in the same way.
400
Which of the following IS NOT an operating cost of a franchise?

a. Startup costs.
b. Shutdown costs.
c. Initial franchise fee.
d. Advertising fees.
b. Shutdown costs.
400
Which of the following is an advantage of a partnership?

a. More than one source of capital.
b. Share profits with other people.
c. Legal liability for errors of partners.
d. Can lead to disagreements.
a. More than one source of capital.
400
What IS NOT a disadvantage of an LLC?

a. Type of business may be limited by state law.
b. Limited personal liability for owners.
c. A single owner cannot establish an LLC.
d. Many states limit the life of an LLC to 30 years.
b. Limited personal liability for owners.
400
The federal trade commission monitors all of the following activities except:

a. False or misleading advertising.
b. Price setting by competitors.
c. Price discrimination.
d. Filing taxes.
d. Filing taxes.
400
The Fair Credit Billing Act helps consumers resolve problems related to:

a. product quality when items are purchased with a credit card.
b. not owning a credit card.
c. consumer cash purchases.
d. none of the above.
a. product quality when items are purchased with a credit card.
500
Advantages to owning a franchise include all of the following except:

a. Satisfaction derived from creating a new product or service.
b. Management, technical and other assistance.
c. Equipment and supplies can be less expensive.
d. An established product or service.
a. Satisfaction derived from creating a new product or service.
500
What is a disadvantage of a partnership?

a. Any losses shared across all partners.
b. Little government regulation.
c. Share responsibilities and profits with other people.
d. More than one source of capital.
c. Share responsibilities and profits with other people.
500
An advantage of a C-Corporation is:

a. Easier to raise financial capital.
b. More forms and regulations.
c. Double taxation.
d. Higher corporate tax rates.
a. Easier to raise financial capital.
500
How many years is a patent good for?

a. 20 years.
b. 15 years.
c. 25 years.
d. 5 years.
a. 20 years.
500
The second element of a contract, which is consideration, refers to:

a. Being punctual in arriving to the contract meeting.
b. Money that is exchanged, which makes the contract binding.
c. The legal ability to enter into a contract.
d. A precursor to an agreement.
b. Money that is exchanged, which makes the contract binding.
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