Lesson 3: The Firm and its

Environment Part 1
Introduction
 All managers, without exception, must consider their
organization’s external and internal environments
before planning anything. Responding to the various
forces/ elements of the firm’s external and internal
environment is a must because failure to do so may
bring about negative effects. However, managers must
make sure that they respond based on the proper
identification and evaluation of these forces/ elements
in their surrounding environments.
Table of Contents

 KINDS OF BUSINESS ORGANIZATION

(ACTIVITY)
 FORMS OF BUSINESS ORGANIZATION
(OWNERSHIP)
Abstraction
 Theform of a business organization takes
may depend on the purpose, nature of
operations, and resources of the company.
However, a business organization’s form
may change along with the changing times
and the demands they present.
 The Business Organization
Business may be defined as profit-seeking activities and enterprises that provide goods and services
necessary to an economic system. Profits refer to the rewards for businesspersons who take the risk
involved in producing and marketing goods and services. A business firm is established primarily for
profit. There are reasons, however, why anyone would want to start a business. Some of these are to do
work that is enjoyable, to do something for pleasure and pride, and to achieve financial independence.
Professional managers maintain that a business firm should achieve the following objectives:
1. Creation and distribution of a product or service.
2. Satisfaction of personal objectives like profits for owners, salaries and other compensation for
executives, wages and other compensation for employees, psychic income for all, including pride in
work, security, recognition, and acceptance.
3. Protection and enhancement of the human and physical resources; and
4. Economy and effectiveness of operation.
Kinds of Business Organization (Activity)
Service Business is a type of business that provides labor and intangible
benefits to customers(products with no physical form). This type of
business is easy to organize as it only requires persons and machines to
do services. It also has fewer costs to look into and is simpler to
manage.
Examples
Transportation companies like airlines and shipping lines; professional
services like accounting, legal, engineering, and customer service;
entertainment like amusement parks and movie houses; hotels and
restaurants; apartments; banks and lending companies; event planners;
telecommunication services; medical services; media; and many others
Service Business

Advantages Disadvantages
1. It doesn’t maintain inventory. 1. It cannot do variations of products
other than expanding into another
2. It will only require expertise in level of services.
your field.
2. It is difficult to sell as some consumers
3. Cost can easily be managed as this prioritize goods or products.
does not require processes and
3. Valuation may be difficult
complicated costings.
4. Less demand during difficult times.
4. Profit can easily be managed.
5. There would likely a high level of
getting mistrust when services fails.
6. It is hard to sell.
Merchandising Business is a type of business that
buys products at wholesale price and sells them at
the same at retail price without changing the form.
Merchandisers can customize or improve the
physical appearance of the product to commend for
a higher price while maintaining its physical form.
They are known as “buy and sell”.
Examples:
Grocery stores, supermarkets, and electronic
stores.
Advantage and disadvantage of
Merchandising
1. High sales will result if merchandising is done right away.
2. Merchandises are not manufactured but purchased at the original state and
sold without changing the form.
3. Merchandise can be moved swiftly if handled by professional visual
merchandiser.
4. The cost component is high in terms of maintaining high level of inventories,
shipping and delivery cost, space needed, research and product development.
5. It maintains high volume of inventories
6. A merchandising business relies on finding and keeping customers
7. Selling merchandises require developing new products, and this is expensive
and time consuming.
Manufacturing Business type of business where
raw materials are transformed into finished goods
through product-processing, labor, and other
manufacturing processes.
 Examples:
Shoe, Candle and Cosmetics Manufacturing,
canned goods, and clothing production.
Advantage and disadvantage of
Manufacturing
1. Job satisfaction
2. Demand of the product
3. Cost of investment
4. Reliance on raw materials
Forms of Business Organization (Ownership)
In making the right decision and choice for a right business, the following may
be considered:
1. The size and nature of business that you want to structure;
2. The extent of ownership control;
3. The business risks and exposures;
4. The taxes to be paid up;
5. The economic conditions that suit the type of business that you will build
up;
6. The return of investments; and
7. The availability of resources which are the funds, assets and people.
Sole Proprietorship as the name suggests, are business formed by a single individual. Sole proprietorship is
considered the simplest form under which a business can operate. Unlike partnership and corporations, businesses
operating as sole proprietorship do not have separate legal existence from the owner. The law does not recognize a
sole proprietorship as a separate juridical entity distinct from the owner.

Advantages Disadvantages
1. It is owned by a single person 1. The owner is personally liable for
2. It is easy to organize the obligation.
3. It requires low capital 2. Difficult in raising funds
4. The owner has complete control of the 3. Hard time in attracting high-caliber
business employees
5. It has no special legal requirements 4. Some personal benefits of the
upon formation owner are not directly deductible
6. The business is easy to dissolve or from business income unless these
liquidate. are related to business itself.
7. Simple taxation
Partnership – article 1767 of the Civil Code states that a partnership is a contract whereby two or more
persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession.
Note: General, Limited, Joint, General Professional Partnership
Features of Partnerships

1. Separate legal exictence – A partnerships can also be defined as an artificial being created by
operation of law. This results in partnerships having juridical prsonalities separate and distinct from their
owners (called partners). Being an artificial person, a partnership can perform the acts that the partners can do
except those acts that are purely personal in nature.
2. Mutual agency – Partners, being co-owners of the business, can perform acts for the partnership even
without asking permission from other partners. Mutual agency means that the acts of a partner are binding on
a partnerships even though he or she no authority to do so as long as th e act concerns the normal business
operations of the partnership.
3. Unlimited liability – Even though a partnerships has separate legal existence, partners are still liable for
debts and obligations that cannot be paid by partnership assets. Like in a sole partnerships, creditors and other
parties can go after the personal assets of the partners when partnership assets not enough to satisfy their claims.
4. Limited life – The life of a partnership can be easliy ended through partnership dissolution or liquidation.
Partnership dissolution occurs when one of the partners withdraws from the partnership or if a new partner is
admitted.
5. Co-ownership of partnership propeprty – An owner of a sole proprietorship is personally liable for
all the debts incurred by the business since a sole proprietorship has no separate legal existence distinct from th
eowner
6. Partnership agreement – The definition provided by the law states that a partnerships is a contract.
Contracts are perfected through oral or written agreement. Thus, a partnership can be formed orally or in written
form. However, to protect the interests of all partners, it is deal to form a partnership in a written contract.
Corporation – corporation code of the Philippines section 2 defines a corporations as “an artificial being
created by cooperation of law, having the right of succession and the powers, attributes, and properties expressly
authorized by law or incident to its existence.
Note: 50 years
Features of Corporation
1. Separate legal existence - Just like a partnership, a corporation is treated by law as an artificial being
separate and distinct from its owners. A corporatin can enter into contracts and transactions under its name.
2. Limited liability – The limited liability characteristic is an advantage a corporation has over a partnership.
The personal assets of the stockholders of a corporation are protected from the claims of creditors and other
outside parties. Thus, the maximum loss that a stockholder can bear equals his or her invesments.
3. Transferable ownership rights - Ownership rights in a corporation are represented by stocks. A
stock is an intangible (no physical form) asset evidencing a proportionate share in the properties of a
corporation. A stock is represented by a stock certificate.
4. Virtually unlimited life – A corporation shall exist for a period not existing 50 years from the date of its
formation. The term of a corporation may, however, be extended for periods not exceeding 50 years. This gives
corporations virtually unlimited life.
5. Corporation management – The management structure of a corporation is more complex than that of the
other forms of business organizations. Stockholders are the owners of a corporation. However, unlike in sole
proprietorships and partnership where the owners or partners manage the business, stockholders may elect a board
of directors to manage the corporation.
6. Government regulation – Corporations are subject to stricter government regulation than sole
proprietorship and partnerships. Being major constributors to the income of the whole economy, the operations of
corporations are closely monitored by the government.
7. Double taxation – The income of the corporation is taxed on the corporate level and the individual level. The
income of the sole proprietorship or a partnership is part of the individual income of the owners. It is taxed once the
owner file their respective tax returns.
8. Dividends – When a sole proprietorship or a partnership generates income, it is immediately distributed to the
owneror partners. This is not the case for a corporation. The corporation is not required to distribute to stockholders
the income it generated from operations.
Cooperatives – according to the Cooperative Code of the Philippines, “a cooperative is a duly
registered association of persons, with a common bond of interest, who have voluntarily joined
together a lawful common social or economic end, making equitable contributions to the capital
required and accepting a fair share of the risks and benefits of the undertaking in accordance with
universally accepted cooperative principles.” According to the same Code, the primary objective of a
cooperative is to provide goods and services to its members and enable them to attain increased income
and savings. A cooperative may be formed by at least 15 person for any of the following purposes:
1.To encourage thrift and savings mobilization among the members.
2.To generate funds and extend credit to the members for productive and provident purposes.
3. To encourage among members systematic production and marketing.
4. To provide goods and services and other requirements to the members.
5. To develop expertise and skills among its members.
6. To acquire lands and provide housing benefits for the members.
7. To insure against losses of the members.
8. To promote and advance the economic,social, and educational status of the members.
Other characteristics of a cooperative include the following:
1. It can sue and be used under its own name.
2. It has the right of succession.
3. Members of a cooperative are subject to limited liability.
4. It shall exist for a period not exceeding 50 years from the date of formation. The
cooperative term may be extended for periods not exceeding 50 years.
5. A cooperative has its set of leaders called board of trustees.
6.Income of a cooperative (called net surplus) belongs to its members.
Business Requirements

1. Registration with the following:

a. DTI for sole proprietorship
b. SEC for partnership and corporation
c. BIR
d. HDMT, PhilHealth, and SSS

2. Application of business permits from local municipalities

3. Registration with other government agencies which will regulate the business
in the business industry that they will be doing the business.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is NOT an advantage of a partnership?

a. Ease of formation
b. No government regulation
c. Unlimited liability
d. Larger pool of human capital than sole proprietorships
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A corporation can extend its life for a period

not exceeding.

a. 40 years
b. 45 years
c. 50 years
d. 60 years
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following does NOT enjoy limited

liability?

a. General partner
b. Corporations
c. Cooperatives
d. Limited partner
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is NOT a disadvantage of a

corporation?

a. Subject to less stringent government regulation

b. Double taxation
c. Not easy to establish
d. More expensive to establish than sole
proprietorships and partnership
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

All of the following are general features of a corporation, EXCEPT

I. Limited life
II. More complex management structure
III. Unlimited liability
IV. Double taxation

a. I only
b. I and IV only
c. ll and Ill only
d. I and Ill only
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following CANNOT be done by a

limited partner?

a. Buy supplies of stocks for the partnership

b. Participate in the decision-making process
c. Share in the profits of the company
d. Supervise the production of goods
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements is true?

a. The stockholders of a corporation are responsible for

selecting the board of directors.
b. A stockholder cannot be a member of the board of
directors.
c. The stockholders are responsible for the management of
the business.
d. The board of directors has the sole authority to make
decisions for the corporation.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which is the most likely reason why corporations are considered to

have unlimited life?

a. Corporations are not affected by the death, withdrawal, or

admission of stockholders.
b. The life of a corporation normally exceeds the life of the founding
members.
c. Corporations are created by operation of law and only the law can
extinguish it.
d. There is no limit to the number of times the life of a corporation
can be extended.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

One advantage of a corporation over a partnership is

a. A corporation has separate legal existence.

b. Partnership net income is taxed only on the
company level.
c. Stockholders of a corporation have limited liability.
d. A corporation is easier to form than a partnership.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A cooperative can be established for the following

purposes, EXCEPT

a. To develop expertise and skill among its members

b. To provide services for charitable purposes
c. To insure against losses of the members
d. To promote and advance the economic, social, and
educational status of the members
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Why is it relatively easier for a corporation to acquire

additional capital?

a. The stocks of a corporation are transferable,

b. The corporation can sell additional shares of stocks when
necessary
c. Creditors are more willing to lend to corporations because of
the corporations' high levels of income.
d. Investors are more interested to invest in a corporation
because of its ability to maintain high levels of profit.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

When there is no profit-sharing agreement among the

partners, profits should be distributed

a. Based on the original capital contributions of the partners

b. Equally among the partners
c. Based on the amount of time the partners worked for the
partnership
d. The partners must create a profit-sharing agreement first
before the profits can be distributed
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following best describes the liquidation of a

partnership?

a. Withdrawal, death, or admission of partners usually result

in the liquidation of a partnership
b. Liquidation is a change of the relationship among the
partners.
c. After liquidation, the partners can resume normal business
operations.
d. Liquidation ends the life of the partnership.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is/are false?

I. A corporation is created by the operation of law.

II. Ownership rights in a corporation can be transferred through sale or
donation.
III. The law has the authority to restrict the acts that can be performed by
a corporation.

a. I only
b. Il only
c. Ill only
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This type of partnership is suitable mainly for

companies that invest in real estate.

a. General partnership
b. Limited partnership
c. Limited liability partnership
d. Limited liability company
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The profits of a sole proprietorship are taxed on

a. The company level only

b. The individual level only
c. Both the company and individual levels
d. Profits of a sole proprietorship are exempted
from taxation.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements best describes mutual agency?

a. A partner acts or makes decision for the benefit of the partnership

rather than himself or herself.
b. The acts of a partner are binding on a partnership even if they are not
related to the normal business operations of the partnership.
c. The acts of a partner are binding on a partnership if he or she has the
authority to do so and he or she did not go beyond the authority given.
d. A partner cannot act in the best interests of the partnership even if
the problem requires immediate action if he or she has no authority to do
so.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Tanya is a stockholder of Sky Is the Limit Corporation. The

board of directors recently declared a cash dividend of
P1.50 per share of stock. Tanya owns 2 500 shares of the
company. How much would Tanya receive?

a. P3 750
b. P2 500
c. P1 666.67
d. P3 000
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The consent of this group of individuals is necessary

before the income of a corporation can be distributed.

a. Stockholders or Owners
b. Board of Directors
c. Chief Executive Officer (CEO)
d. Chief Operating Officer (COO)
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

All of the following are advantages of a sole

proprietorship, EXCEPT

a. The owner has full control of the business.

b. All the profits of the business belong to the owner.
c. A sole proprietorship can operate under fictitious or
trade names.
d. Taxation of a sole proprietorship is simple.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The disadvantages of a limited liability partnership include

I. General partners are still personally liable for business debts.

II. More expensive to create than regular partnerships
III. Often limited to a short list of professions.

a. I only
b. Il only
c. Ill only
d. l and ll only
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

What do you call the term used to describe the

profits of a cooperative?

a. Net surplus
b. Net income
c. Net profit
d. Net gain
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This form of business organization has characteristics

of both a partnership and a
corporation.

a. Limited liability partnership

b. Limited partnership
c. Limited liability company
d. Cooperative
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following are characteristics of a cooperative?

I. It has the right of succession.

II. Members of a cooperative are subject to unlimited liability.
III. It cannot sue and be sued under the cooperative name.

a. I only
b. Il only
c. Ill only
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

What distinguishes a sole proprietorship from other forms

of business organizations?

a. The number of owners

b. A sole proprietor gets the largest amount of profit since
he or she does not have to share it with other owners.
c. The taxation in a sole proprietorship is simple.
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements is/are true?

I. The acts of a stockholder always bind a corporation even if the

stockholder has no authority.
II. A partnership is considered an association of individuals.
III. A partnership can only be formed for the purpose of generating profit.

a. l and ll only
b. Il and llI only
c. I, II, and Il
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This type of corporation is composed of a few

stockholders.

a. Publicly held corporation

b. Privately held corporation
c. Not-for-profit corporation
d. For-profit corporation
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Fred and Pat formed a partnership for the practice of their profession.
Fred contributed 100 000 in cash and a vehicle to be used for company
purposes. On the other hand, Pat contributed a piece of land where
the office of the partnership will be located.
Which of the following is true?

a. Pat is the owner of land.

b. During liquidation, Fred can claim the vehicle since he is also the
one that contributed it.
c. The partnership is the owner of the vehicle only.
d. The partnership is the owner of both the land and the vehicle.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following regarding partnerships and corporations

is true?

a. Corporations always generate higher levels of profit than

partnerships since corporations are usually bigger companies
b. Unlike a partnership, a corporation can be owned by a single
person.
c. The tax the government receives from a corporation is
higher since the corporation is taxed twice.
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is an advantage of a limited liability company over

the other types of partnerships?

a. The owners in a limited liability company will not lose the limited
liability protection even if they participate in the management of the
business.
b. The limited liability company is easier to create than the other forms
of partnership.
c. Owners in a limited liability company are not liable for the malpractice
of other owners.
d. Partners can raise cash without involving outside investors in
management of business.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This form of business organization is under

heavy government regulation.

a. Limited liability company

b. Partnership
c. Sole proprietorship
d. Corporation
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following CANNOT exist?

a. For-profit corporations
b. Privately held corporations
c. Not-for-profit partnerships
d. Publicly held corporations
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

At least how many persons are required to form

a cooperative?

a. 10 persons
b. 15 persons
c. 20 persons
d. 5 persons
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A major disadvantage of a corporation is

a. Limited liability of stockholders

b. Additional taxes
c. Transferable ownership rights
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following types of business cannot

be a corporation?

a. Restaurants
b. Law firms
c. Shoe manufacturers
d. Car manufacturers
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Taken collectively, this form of business

organization generates the highest level of income.

a. Sole proprietorships
b. Partnerships
c. Corporations
d. Cooperatives
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Income of a cooperative (called net surplus)

belongs to

a. The board of directors

b. The government
c. The beneficiary of the cooperative
d. The members
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A corporation CANNOT perform which of the

following acts?

a. Voting in the elections

b. Running for a position in the government
c Representing itself in a litigation case
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is NOT considered a

service company?

a. Beauty salon
b. Carwash business
c. Bus company
d. Bakeshop
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements is true?

a. Operating cycle is the time it takes for a company to create

products, sell, and deliver them to customers.
b. The time it takes for a company to create products, sell them,
and collect cash payments from customers is called servicing time.
c. The time it takes for a company to create products, sell them,
and collect cash payments from customers is called operating
cycle.
d. Operating cycle is the average length of time a company runs a
business.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Services performed by service companies may

include all of the following, EXCEPT

a. Professional services
b. Legal advice
c. Transportation services
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Francesca Co., an accounting firm, earns P120 000 from

its audit engagement with San Miguel Corporation. The
P120 000 is considered as Francesca Co's

a. Service revenues
b. Sales revenues
c. Capital
d. Investment
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This refers to the input of service companies.

a. Raw materials
b. Labor
c. Overhead
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The operating cycle of a service company

involves which of the following?

a. Paying out labor and other operating expenses

b. Performing services
c. Collecting cash payments
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements regarding service companies is

correct?

a. Service companies are firms that generally use their employees to

provide tangible products or services to customers.
b. Service companies basically provide almost the same services to
their customers.
c. Service companies are firms that generally use their employees to
provide intangible products or services to customers.
d. A department store may be considered a service company because
the sales ladies assist the customers in buying merchandise.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is considered a service

type of business?

a. Shaskia's Cakes and Pastries Bakery

b. Karla's Meat Shop
c. Dresses by Pauline
d. Patricia's School for Toddlers
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The disadvantages of running a service company are the

following, EXCEPT

a. Inability to standardize services as services performed

vary from one client to another
b. Existence of inventory
c. The reliance on highly skilled and motivated employees
d. Managing human capital
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

What is the primary source of revenues of

service companies?

a. Performance of service
b. Sale of equipment
c. Sale of finished goods
d. Sale of component part
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

The main difference of a merchandising

company over a service company is

a. It does not need employees.

b. It has no inventory.
c. It provides tangible products,
d. It has production facilities.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A merchandising company that sells goods

directly to customers is called

a. Retailer
b. Wholesaler
c. Manufacturer
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

A merchandising company that sells goods

directly to retailers is called

a. Major retailer
b. Wholesaler
c. Manufacturer
d. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Sophia buys candies from Candies Manufacturing and

sells them in her sari-sari store. Sophia earns revenue
from

a. The sale of Candies Manufacturing

b. The purchase of supply of candies
c. The sale of candies in her sari-sari store
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements is true?

a. The operating cycle of a merchandising company is

typically shorter than that of a service company.
b. The operating cycle of a merchandising company is
typically longer than that of a service company
c. The operating cycle of a merchandising company and the
operating cycle of a service company are equal.
d. Merchandising company has no operating cycle.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

This term refers to goods that are held by a

company and are subsequently sold to customers.

a. Supply of goods
b. Goods held by the company
c. Finished goods
d. Inventory
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is considered a

merchandising company?

a. National Book Store

b. SM Hypermarket
c. Rey's Convenience Store
d. All of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

PAL Merchandise which sells various consumer goods buys supplies

from its long-term supplier, Baby Inc., which buys manufactured
goods from FDG Company. Which of the following statements is true?

a. FDG Company is the manufacturing company.

b. PAL Merchandise and Baby Inc. are both merchandising companies.
c. PAL Merchandise is the retailer, whereas Baby Inc. is the
wholesaler.
d. All of the above
e. None of the above
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following statements regarding merchandising companies

is false?

a. Merchandising companies provide tangible products.

b. Merchandising companies may sell directly either to customers or
retailers.
c. Merchandising companies buy raw materials, convert them into
finished goods,
d. Merchandising companies generally incur less cost relative to other
types of business as they consume less conversion time and effort.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

These are the revenues earned by

merchandising companies.

a. Sales Revenues
b. Sales
c. Service Revenues
d. Both a and b are correct
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

These companies use raw materials, components, or

parts which are processed using machines,
computers, and labor to create their own products.

a. Service companies
b. Merchandising companies
c. Manufacturing companies
d. Partnerships
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Samsung is a major player in the electronics industry with products such

as tablets, smartphones, cameras, and laptops. It distributes its products
to its stores and dealers all over the country. Some of its authorized
dealers include Robinsons Appliances, Abenson, SM Appliance Center, and
Automatic Centre. Which of the following is considered a manufacturing
company?

a. Samsung
b. Robinsons Appliances
c. Abenson
d. All of the above except a
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Which of the following is considered a retail

company?

a. Samsung
b. Robinsons Appliances
c. Abenson
d. All of the above except a
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Partners X, Y, Z formed Partnership called XYZ Partnership. Their capital

contributions are as follows respectively: 100,000, 150,000, and 125,000.
X is a limited partner while the others are general partners. If the profit
and loss contribution is based on their capital contribution. How much
does each partner received if the partnership incurred 95,000 profit?

a. X=31,663.50, Y=25,336.50, and Z= 38,000

b. X=38,000, Y=25,336.50, and Z= 31,663.50
c. X=25,336.50, Y=31,663.50, and Z= 38,000
d. X=25,336.50, Y=38,000, and Z= 31,663.50
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Partners X, Y, Z formed Partnership called XYZ Partnership. Their capital

contributions are as follows respectively: 100,000, 150,000, and 125,000.
X is a limited partner while the others are general partners. If the profit
and loss contribution is based on their capital contribution. Which among
the partners received the highest income if the partnership incurred
95,000 profit?

a. Partner X
b. Partner Y
c. Partner Z
d. All partners received equal profits.
Multiple Choice. Read and analyze each item. Circle the letter of the best answer.

Partners X, Y, Z formed Partnership called XYZ Partnership. Their capital

contributions are as follows respectively: 100,000, 150,000, and 125,000. X
is a limited partner while the others are general partners. The profit and
loss contribution is based on their capital contribution. If the partnership
incurred 95,000 loss and all the assets of the partnership have been
exhausted, can creditor claim against X partner and by how much?

a. Yes, 25,336.50
b. Yes, up to the extent of his personal asset.
c. No, but creditor can claim it against other partners.
d. No, creditor can claim only up to his contribution to the partnership.