Business Administration Exam
questions and answers graded A+
What is the most common form of business ownership? - ANS✅✅Sole Proprietorship
*(1)* Explain the key characteristics of *corporations*. *(2)* What are the advantages *(3)* What
are the disadvantages? - ANS✅✅*(1)* A state-chartered legal entity with authority to act and have
liability separate from its owners (its stockholders).
*(2)* Ability to raise more money for investment, ease of attracting talented employees, ease of
ownership change.
*(3)* Extensive paperwork, double taxation, two tax returns
What is meant by *unlimited liability*? - ANS✅✅Any debts or damages incurred by the business
are your debts, even if it means selling your home, car or anything else.
What are some special types of partnerships? What are the key characteristics of each? -
ANS✅✅*General Partnership*: All owners share in operating the business and in assuming liability
for the business's debts.
*Limited Partnership*: A partnership with one or more general partners and one or more limited
partners.
*Master Limited Partnership*: A partnership that looks much like a corporation, but is taxed like a
partnership and thus avoids the corporate income tax.
*Limited Liability Partnership*: Limits partners' risk of losing their personal assets to the outcomes
of only their own acts and omissions and those of people under their supervision.
Who are the owners of a corporation? - ANS✅✅Stockholders
What are some of the major advantages of the conventional (C) corporation as a form of business
ownership? - ANS✅✅- Limited liability
- Ability to raise more money for investment
- Perpetual life
- Ease of ownership change
- Ease of attracting talented employees
- Separation of ownership from management
, Describe the difference between S corporations and limited liability companies. - ANS✅✅LLC's do
not have eligibility requirements
What are some of the benefits of franchising? - ANS✅✅- Management and marketing assistance
- Personal ownership
- Nationally recognized name
- Financial advice and assistance
- Lower failure rate
What is an acquisition? How is it different from a merger? - ANS✅✅*Acquisition*: One company's
purchase of the property and obligations of another company. *Merger* is the joining of two
companies
Describe the three different types of corporate mergers. Give an example of each type. -
ANS✅✅*Vertical Merger*: The joining of two firms in different stages of related businesses.
*Horizontal Merger*: The joining of two firms in the same.
*Conglomerate Merger*: The joining of firms in completely unrelated industries.
What is a leveraged buyout? - ANS✅✅An attempt by employees, management or a group of
investors to buy out the stockholders in a company.
What is a cooperative? Give an example. - ANS✅✅Businesses owned and controlled by the people
who use them- producers, consumers, or workers with similar needs who pool their resources for
mutual gain.
How is an intrapreneur different from an entrepreneur? - ANS✅✅*Entrepreneurship*: Accepting
the risk of starting and running a business.
*Intrapreneur*: A creative person who works as an entrepreneur within a corporation.
Explain incubators. - ANS✅✅Offer new businesses low-cost offices with basic services.
What are some key reasons for small business success? For small business failure? -
ANS✅✅*SUCCESS*
questions and answers graded A+
What is the most common form of business ownership? - ANS✅✅Sole Proprietorship
*(1)* Explain the key characteristics of *corporations*. *(2)* What are the advantages *(3)* What
are the disadvantages? - ANS✅✅*(1)* A state-chartered legal entity with authority to act and have
liability separate from its owners (its stockholders).
*(2)* Ability to raise more money for investment, ease of attracting talented employees, ease of
ownership change.
*(3)* Extensive paperwork, double taxation, two tax returns
What is meant by *unlimited liability*? - ANS✅✅Any debts or damages incurred by the business
are your debts, even if it means selling your home, car or anything else.
What are some special types of partnerships? What are the key characteristics of each? -
ANS✅✅*General Partnership*: All owners share in operating the business and in assuming liability
for the business's debts.
*Limited Partnership*: A partnership with one or more general partners and one or more limited
partners.
*Master Limited Partnership*: A partnership that looks much like a corporation, but is taxed like a
partnership and thus avoids the corporate income tax.
*Limited Liability Partnership*: Limits partners' risk of losing their personal assets to the outcomes
of only their own acts and omissions and those of people under their supervision.
Who are the owners of a corporation? - ANS✅✅Stockholders
What are some of the major advantages of the conventional (C) corporation as a form of business
ownership? - ANS✅✅- Limited liability
- Ability to raise more money for investment
- Perpetual life
- Ease of ownership change
- Ease of attracting talented employees
- Separation of ownership from management
, Describe the difference between S corporations and limited liability companies. - ANS✅✅LLC's do
not have eligibility requirements
What are some of the benefits of franchising? - ANS✅✅- Management and marketing assistance
- Personal ownership
- Nationally recognized name
- Financial advice and assistance
- Lower failure rate
What is an acquisition? How is it different from a merger? - ANS✅✅*Acquisition*: One company's
purchase of the property and obligations of another company. *Merger* is the joining of two
companies
Describe the three different types of corporate mergers. Give an example of each type. -
ANS✅✅*Vertical Merger*: The joining of two firms in different stages of related businesses.
*Horizontal Merger*: The joining of two firms in the same.
*Conglomerate Merger*: The joining of firms in completely unrelated industries.
What is a leveraged buyout? - ANS✅✅An attempt by employees, management or a group of
investors to buy out the stockholders in a company.
What is a cooperative? Give an example. - ANS✅✅Businesses owned and controlled by the people
who use them- producers, consumers, or workers with similar needs who pool their resources for
mutual gain.
How is an intrapreneur different from an entrepreneur? - ANS✅✅*Entrepreneurship*: Accepting
the risk of starting and running a business.
*Intrapreneur*: A creative person who works as an entrepreneur within a corporation.
Explain incubators. - ANS✅✅Offer new businesses low-cost offices with basic services.
What are some key reasons for small business success? For small business failure? -
ANS✅✅*SUCCESS*
