Ch6 Form of ownership

In a partnership, a(n) __________ partner is an owner who is active in managing the company and has unlimited liability for claims against the firm. 

• unlimited

• limited

• general

• associate

The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond: 

• the firm's total assets.

• the amount they have invested in the company.

• the percentage of profits they are entitled to earn.

• their total personal assets.

Homer and Marge have decided to open a floral design shop, which they intend to run as co-owners. Both intend to take an active role in the management of their new business, and each will accept unlimited liability. Homer and Marge are planning to operate a: 

• joint venture.

• general partnership.

• limited partnership.

• co-operative.

The form of business ownership that is best suited to raising large amounts of money for expansion is the: 

• sole proprietorship.

•  partnership.

• corporation.

• co-operative.

Dr. Driller is a dentist who is interested in incorporating as an individual. If he attempts to do so, Dr. Driller is likely to find that: 

• most provinces do not allow individuals to incorporate.

• the procedures for an individual to incorporate are extremely complex.

• he may actually save on taxes.

• his business will be owned by a large number of stockholders with whom he must share his income.

Daggie's Sandwiches, Inc., sells the rights to use its name and sell its sandwiches in a given market area to aspiring business people who are willing to pay agreed upon fees and meet certain contractual terms. Daggie's: 

•  is offering investors the opportunity to form limited partnerships.

• is a franchisor.

• creates private subsidiary companies.

• offers a tax-free investment potential.

Mary is interested in becoming a franchisee in Katie's Grill, a very successful fast food chain from the Canadian West. Which of the following problems is Mary most likely to encounter if she agrees to become a franchisee? 

• High initial costs and fees.

• Poor name recognition and visibility.

•  Lack of financing.

• Lack of managerial assistance.

People who form co-operatives: 

•  believe the government should play a larger role in the economy.

• dislike the notion of having owners, managers, and customers as separate individuals with separate goals.

• see competitive behaviour as the key to ensuring rapid economic growth.

• want to find a way to supply basic necessities free of charge to everyone.