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ch 35 - Chapter 35 Sole Proprietorships and Franchises...

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Sheet1 Page 1 Chapter 35 Sole Proprietorships and Franchises TRUE/FALSE QUESTIONS A1. Starting a sole proprietorship is easier and less costly than starting any other form of business. ANSWER: T PAGE: 724 TYPE: N NAT: AACSB Analytic AICPA Legal B1. A sole proprietorship¡¯s income is taxed as the firm¡¯s profits, not as the owner¡¯s personal income. ANSWER: F PAGE: 724 TYPE: = NAT: AACSB Analytic AICPA Legal A2. In choosing a form of business organization for a new enterprise, important factors include the ambiance of the home office. ANSWER: F PAGE: 724 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking B2. In choosing a form of business organization for a new enterprise, important factors include the titles of the organization¡¯s officers. ANSWER: F PAGE: 724 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking 105 106 TEST BANK A¡ªUNIT EIGHT: BUSINESS ORGANIZATIONS A3. One of the advantages of a sole proprietorship is that the owner is not liable for the actions of the business. ANSWER: F PAGE: 725 TYPE: N NAT: AACSB Analytic AICPA Legal
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Sheet1 Page 2 B3. A sole proprietor may own and manage any type of business. ANSWER: T PAGE: 724 TYPE: N NAT: AACSB Analytic AICPA Legal A4. A sole proprietorship is a separate legal entity for tax purposes. ANSWER: F PAGE: 725 TYPE: = NAT: AACSB Analytic AICPA Legal B4. In choosing a form of business organization for a new enterprise, important factors include the ease of creation. ANSWER: T PAGE: 724 TYPE: N NAT: AACSB Analytic AICPA Legal A5. A franchise is a form of business organization. ANSWER: F PAGE: 726 TYPE: = NAT: AACSB Analytic AICPA Legal B5. One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business. ANSWER: T PAGE: 725 TYPE: N NAT: AACSB Analytic AICPA Legal A6. A franchisee is a party who sells a franchise. ANSWER: F PAGE: 726 TYPE: N NAT: AACSB Analytic AICPA Legal CHAPTER 35: SOLE PROPRIETORSHIPS AND FRANCHISES 107 B6. A sole proprietorship automatically dissolves on the death of the owner. ANSWER: T PAGE: 725 TYPE: =
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Sheet1 Page 3 NAT: AACSB Analytic AICPA Legal A7. A franchise is an association, which may or may not be incorporated, that is organized to provide an economic service to its members. ANSWER: F PAGE: 726 TYPE: = NAT: AACSB Analytic AICPA Legal B7. A franchise exists when the owner of a trademark licenses its use to another party to sell goods or services. ANSWER: T PAGE: 726 TYPE: = NAT: AACSB Analytic AICPA Legal A8. A manufacturer¡¯s license to an outside dealer to sell a product is a distributorship. ANSWER: T PAGE: 727 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking B8. In a chain-style business operation, a franchise operates under a franchisor¡¯s trade name. ANSWER: T PAGE: 727 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A9. Most fast-food chains are distributorships.
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