Badm-134 Business Organization & Management



Badm-134 Business Organization & Management

TEST 2 Chap. 4 – 6 50 Points

Bring a #2 pencil to record your answers. There is a total of 62 questions. You could possibly earn 12 extra credit points.

|1. |Legal behavior and ethical behavior are basically the same. |

|2. |People involved in business may be tempted to do something unethical in order to increase sales and profits. However, if they |

| |are caught, our legal system will deal harshly with them. |

|3. |An ethical manager's decisions are based on the following questions: "Is it legal?" and "Is it profitable?" |

|4. |Management can create an environment in which unethical behavior can develop. |

|5. |Corporate values, like personal values, are learned by observing what others do. |

|6. |Corporate standards and values can lead to unethical behavior. |

|7. |Avoiding lawsuits is one reason to manage a firm ethically. |

|8. |Being responsible to your customers may require your firm to provide more information regarding your product than the law |

| |demands. |

|9. |Applying the ethical standards of the U.S. to foreign firms is more difficult than judging the behavior of U.S firms. |

|10. |The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations. |

|11. |A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type|

| |of business to establish. |

|12. |A major advantage of sole proprietorships is that an owner has limited liability for the debts of his or her business. |

|13. |The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.|

|14. |Sandy Beech is a talented fashion designer who wants to start her own women's sportswear company. However, she is concerned |

| |about some problems she might face. She knows little about actual production methods or the financial aspects of running a |

| |business, and has little personal wealth to put into the company. In order to overcome these problems, Sandy should start her |

| |business as a sole proprietorship. |

|15. |In a general partnership, all owners share in both management of the business and in the assumption of liability for the firm's|

| |debts. |

|16. |Limited partnerships are just like general partnerships, except that they are organized to operate as a going concern for only |

| |a limited time period. |

|17. |Ted and Mark have been partners in a dry cleaning business for the past three years. They would like their brother Todd to join|

| |them. Unfortunately, partnership law states that only two partners can participate in a partnership. |

|18. |Alphonzo has agreed to become a partner in his brother's new clothing store and has provided 30 percent of the startup capital |

| |for Remora's Clothiers. Since he provided 30 percent of the money to start the firm, he is entitled to 30 percent of any the |

| |profits the firm earns during its first year of operations. |

|19. |A corporation can raise financial capital by selling shares of stock to interested investors. |

|20. |Stockholders in a corporation must accept unlimited liability for the corporation's debts. |

|21. |Dr. Wright is interested in incorporating as an individual. While this is legally possible, there are really no advantages to |

| |doing so. |

|22. |In a merger, two firms combine to form one company. |

|23. |The purpose of a conglomerate merger is to diversify operations and investments. |

|24. |A franchise agreement is an arrangement where a franchisor sells the rights to a business name and to sell a product or service|

| |within a given territory to a franchisee. |

|25. |One of the major advantages of a franchise system is the franchisee often gets instant recognition from consumers. |

|26. |Franchisees must follow more rules, regulations, and procedures than if they operated independently owned businesses. |

|27. |It is not unusual for members of cooperatives to work for and help manage their cooperative. |

|28. |Jaquanda has eliminated the risk of entrepreneurship by preparing a detailed business plan. |

|29. |A business is considered small by comparing its size to others in the same industry. |

|30. |The principles of managing vary according to the size of the business. |

|31. |A good business plan describes the nature of the proposed business, the target market, the competitive advantages, and the |

| |qualifications of the owners. |

|32. |Ethical behavior covers a ________ range of conduct than does legal behavior. |

|33. |Three questions often help individuals and organizations in deciding if their decisions are ethical. All of the following are |

| |ethics check questions except: |

|34. |When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with: |

|35. |Business relationships often present ethical dilemmas that are ________. |

|36. |A(n) ________-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.|

|37. |A(n) ________-based ethics code defines corporate values, creates a supportive environment, and stresses shared accountability |

| |among employees. |

|38. |Corporate social responsibility describes the firm's: |

|39. |Which of the following describes charitable donations by corporations to nonprofit organizations? |

|40. |One factor causing businesses to vigorously enforce ethical standards is the: |

|41. |Management and employees at Boyer Enterprises are given time off each year to work in local charities. This firm clearly |

| |practices: |

|42. |A significant disadvantage of owning a sole proprietorship is the: |

|43. |Joe Jackson operates a sole proprietorship, but he is in poor health and may be unable to continue running the business. If Joe|

| |becomes incapacitated, his business: |

|44. |The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond: |

|45. |When entering into a new partnership, the partners should: |

|46. |A major reason why partners should spell out the details of their arrangements in writing is that: |

|47. |A(n) ___________________ is a state-chartered legal entity with authority to act and to have liability separate from its |

| |owners. |

|48. |An owner of a corporation is known as a(n): |

|49. |Which of the following is an advantage of the corporate form of business when compared to sole proprietorships and |

| |partnerships? |

|50. |A(n) _________ occurs when one company buys the property and obligations of another company. |

|51. |The three major types of corporate mergers are known as: |

|52. |A major reason given for conglomerate mergers is that they: |

|53. |An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing is called |

| |a(n): |

|54. |If a group of stockholders or management tries to obtain all the stock of a firm for themselves, this is referred to as: |

|55. |Hair's to You, a nationwide network of hair styling salons, recently approached Flair All, Inc., a maker of hair care products,|

| |about the potential for a merger. Many of Flair All's products are used by professional hair stylists, and Hair's to You |

| |believes that such a merger would ensure a supply of good quality products for use in its salons. If the firms do merge, it |

| |would be an example of a: |

|56. |A ____________ is the share of profits or percentage of sales a franchisee pays to a franchisor. |

|57. |A distinguishing feature of a cooperative is that it: |

|58. |Which of the following would not be helpful in explaining why individuals accept the risks of business ownership? |

|59. |Business incubators are government-funded facilities intended to: |

|60. |Which of the following would an experienced business owner offer to help someone who is thinking about starting a business |

| |venture? |

|61. |A detailed written statement that describes the nature of the business, the target market, the firm's competitive advantages, |

| |as well as the owner's resources and qualifications is a: |

|62. |A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is |

| |called a(n): |

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