TEST BANK For Business Ethics Ethical Decision Making
and Cases, 13th Edition By O. C. Ferrell, John Fraedrich
Explain the following terms?
Sole proprietorship - ANSWER: Unincorporated business owned by one person with
total control and unlimited personal liability
General partnership (GP) - ANSWER: Unincorporated business owned by two or
more with equal control and unlimited personal liability
Limited partnership (LP) - ANSWER: Incorporated business with at least one general
partner and one limited partner, requiring state filings
Limited liability partnership (LLP) - ANSWER: Business where all partners assume
liability, requiring state filings and no separate legal entity
Corporation - ANSWER: State-sanctioned business with separate legal identity,
limited liability for shareholders, and double taxation
Limited liability company (LLC) - ANSWER: Hybrid organization with limited liability of
a corporation and partnership tax treatment
Joint venture (JV) - ANSWER: Business relationship for a specific undertaking
between two or more entities
Franchise - ANSWER: Business model where an individual operates under the name
of a larger company
S corporation - ANSWER: Business taxed like a partnership, limited to 100
shareholders, and must meet specific requirements
Sole proprietorship Advantages - ANSWER: Easy startup, total control, and owner
retains all profits
General partnership Disadvantages - ANSWER: Joint and several liability for all
debts/obligations, including those created by partners
Corporation Advantages - ANSWER: Separation of ownership and control, limited
liability, and easy fundraising through stock
Limited liability company Taxation - ANSWER: Owners pay personal income taxes on
shares received, with no limitation on the number of owners
Corporation Control Considerations - ANSWER: Separation of ownership and control,
with the board of directors hiring officers for operations
, Limited partnership Liability - ANSWER: General partner has unlimited personal
liability, while limited partner's liability is limited to capital contributions
Limited liability partnership Liability - ANSWER: Partners assume liability for business
and each other, limited to partnership assets, with negligence exceptions
Limited liability company Creation - ANSWER: Formed under state law by filing
articles of incorporation, with no requirement for a written operating agreement
Sole proprietorship Lifetime - ANSWER: Limited to life of proprietor, nontransferable,
and dissolution upon death or decision to close
General partnership Transferability of Ownership Interest - ANSWER:
Nontransferable, dissolution upon partner's death or mutual agreement
Corporation Dissolution - ANSWER: Not dissolved by shareholder death, requires
extensive legal procedures and shareholder approval
Joint venture - ANSWER: Business relationship for specific undertaking between two
or more entities
Antitrust Scrutiny - ANSWER: Examination and regulation when competitors
collaborate for specific goals
Franchisor - ANSWER: Owner of trade name or trademark
Franchisee - ANSWER: Sells goods/services under franchisor's trade name
Chain-style Business Operation - ANSWER: Franchise operates under franchisor's
name and standards
Distributorship - ANSWER: Franchisor licenses dealer to sell in exclusive territory
Manufacturing Arrangement - ANSWER: Franchisor provides technical knowledge
and license to manufacture products
Trademark - ANSWER: Distinctive mark used to identify a product with its producer
Trade Dress - ANSWER: Overall appearance and image of a product
Copyright - ANSWER: Protects fixed form of expression of an original creative idea
Fair-Use Doctrine - ANSWER: Allows reproduction of copyrighted work for specific
purposes
No Electronic Theft Act - ANSWER: Prohibits infringing copyrights for financial gain
and Cases, 13th Edition By O. C. Ferrell, John Fraedrich
Explain the following terms?
Sole proprietorship - ANSWER: Unincorporated business owned by one person with
total control and unlimited personal liability
General partnership (GP) - ANSWER: Unincorporated business owned by two or
more with equal control and unlimited personal liability
Limited partnership (LP) - ANSWER: Incorporated business with at least one general
partner and one limited partner, requiring state filings
Limited liability partnership (LLP) - ANSWER: Business where all partners assume
liability, requiring state filings and no separate legal entity
Corporation - ANSWER: State-sanctioned business with separate legal identity,
limited liability for shareholders, and double taxation
Limited liability company (LLC) - ANSWER: Hybrid organization with limited liability of
a corporation and partnership tax treatment
Joint venture (JV) - ANSWER: Business relationship for a specific undertaking
between two or more entities
Franchise - ANSWER: Business model where an individual operates under the name
of a larger company
S corporation - ANSWER: Business taxed like a partnership, limited to 100
shareholders, and must meet specific requirements
Sole proprietorship Advantages - ANSWER: Easy startup, total control, and owner
retains all profits
General partnership Disadvantages - ANSWER: Joint and several liability for all
debts/obligations, including those created by partners
Corporation Advantages - ANSWER: Separation of ownership and control, limited
liability, and easy fundraising through stock
Limited liability company Taxation - ANSWER: Owners pay personal income taxes on
shares received, with no limitation on the number of owners
Corporation Control Considerations - ANSWER: Separation of ownership and control,
with the board of directors hiring officers for operations
, Limited partnership Liability - ANSWER: General partner has unlimited personal
liability, while limited partner's liability is limited to capital contributions
Limited liability partnership Liability - ANSWER: Partners assume liability for business
and each other, limited to partnership assets, with negligence exceptions
Limited liability company Creation - ANSWER: Formed under state law by filing
articles of incorporation, with no requirement for a written operating agreement
Sole proprietorship Lifetime - ANSWER: Limited to life of proprietor, nontransferable,
and dissolution upon death or decision to close
General partnership Transferability of Ownership Interest - ANSWER:
Nontransferable, dissolution upon partner's death or mutual agreement
Corporation Dissolution - ANSWER: Not dissolved by shareholder death, requires
extensive legal procedures and shareholder approval
Joint venture - ANSWER: Business relationship for specific undertaking between two
or more entities
Antitrust Scrutiny - ANSWER: Examination and regulation when competitors
collaborate for specific goals
Franchisor - ANSWER: Owner of trade name or trademark
Franchisee - ANSWER: Sells goods/services under franchisor's trade name
Chain-style Business Operation - ANSWER: Franchise operates under franchisor's
name and standards
Distributorship - ANSWER: Franchisor licenses dealer to sell in exclusive territory
Manufacturing Arrangement - ANSWER: Franchisor provides technical knowledge
and license to manufacture products
Trademark - ANSWER: Distinctive mark used to identify a product with its producer
Trade Dress - ANSWER: Overall appearance and image of a product
Copyright - ANSWER: Protects fixed form of expression of an original creative idea
Fair-Use Doctrine - ANSWER: Allows reproduction of copyrighted work for specific
purposes
No Electronic Theft Act - ANSWER: Prohibits infringing copyrights for financial gain
