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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