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ENTREPRENEURSHIP 2017 - Quiz Answer : Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland) - Chapter 7

Entrepreneurship and Start Up

ENTREPRENEURSHIP 2017 - Quiz Answer and Case Study Guides

Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)

Quiz Answers and Case Guides

 

Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)

Chapter 7   Preparing the Proper Ethical and Legal Foundation

 

1) Tempered Mind, the company profiled in the opening feature in Chapter 7, has created an iPhone app that teaches users' a foreign language as they progress through the stages of a game. To get Tempered Mind off to a strong ethical start, the company was careful to avoid a temptation that mobile app developers have. That temptation, mentioned in the profile, is to ________.

  1. A) pay people to write positive reviews
  2. B) misrepresent the quality of the app
  3. C) copy material and action sequences that appear in other apps without obtaining permission from the owners
  4. D) withhold payment from freelancers who worked on the project
  5. E) ask employees to work unreasonable hours to get the project done

Answer:  A

Diff: 3      Page Ref: 219

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

2) According to the textbook, the single most important thing the founders of an entrepreneurial venture can do is ________.

  1. A) start a board of advisors
  2. B) establish business partnerships
  3. C) make money
  4. D) select a limited liability corporation as opposed to an S-corporation
  5. E) establish a strong ethical culture for their firms

Answer:  E

Diff: 2      Page Ref: 221

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

3) According to the 2013 National Business Ethics Survey, a total of ________ percent of the employees surveyed said they had observed misconduct or unethical behavior in the past year.

  1. A) 7
  2. B) 15
  3. C) 24
  4. D) 33
  5. E) 41

Answer:  E

Diff: 3      Page Ref: 221

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

4) According to the 2013 National Business Ethics Survey, which of the following forms of misconduct or unethical behavior was observed by the highest percentage of the U.S. workforce?

  1. A) Discriminating against employees
  2. B) Violating company policies related to Internet use
  3. C) Abusive behavior that creates a hostile work environment
  4. D) Lying to employees
  5. E) Stealing or theft

Answer:  C

Diff: 3      Page Ref: 222

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

5) Which of the following is the most important thing that an entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization?

  1. A) Implement an ethics training program
  2. B) Write a mission statement
  3. C) Lead by example
  4. D) Hire an ethics compliance officer
  5. E) Write a code of conduct

Answer:  C

Diff: 3      Page Ref: 222

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

 

 

 

6) A code of ________ is a formal statement of an organization's values on certain ethical and social issues.

  1. A) conduct
  2. B) behavior
  3. C) performance
  4. D) principles
  5. E) morals

Answer:  A

Diff: 2      Page Ref: 223

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

 

7) "Don't be evil" is the corporate motto for ________.

  1. A) Facebook
  2. B) Google
  3. C) Apple
  4. D) Microsoft
  5. E) Amazon.com

Answer:  B

Diff: 2      Page Ref: 223

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

8) A situation that involves doing something that is beneficial to oneself or the organization, but may be unethical, is called a(n) ________.

  1. A) ethical quandary
  2. B) ethical predicament
  3. C) ethical dilemma
  4. D) principled quandary
  5. E) just dilemma

Answer:  C

Diff: 2      Page Ref: 224

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

9) The What Went Wrong? feature in Chapter 7 focuses on Fitbit. Fitbit makes wearable activity trackers that measure data such as number of steps walked, quality of sleep, and other personal metrics. The feature centered on a product that Fitbit made (the Fitbit Force) that caused some users to develop skin rashes. The ethical issue at stake was whether Fitbit ________.

  1. A) cut corners and used inferior material in producing the product
  2. B) acted quickly enough in stopping production of the product
  3. C) misrepresented the nature of the problem to the people affected
  4. D) placed unfair blame on a supplier
  5. E) placed unfair blame on a small number of employees

Answer:  B

Diff: 2      Page Ref: 226

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

10) The single most important thing the founders of an entrepreneurial venture can do to avoid ethical misconduct is to establish a strong ethical culture for their firms.

Answer:  TRUE

Diff: 1      Page Ref: 221

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

11) The most important thing that any entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization is to hire an aggressive attorney.

Answer:  FALSE

Diff: 2      Page Ref: 222

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

12) An ethical dilemma is a situation that involves doing something that is beneficial to oneself or the organization, but may be unethical.

Answer:  TRUE

Diff: 2      Page Ref: 214

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

13) List and briefly describe three specific steps that an entrepreneurial organization can take to build a strong ethical culture.

Answer:  (1) Lead by example. The most important thing that any entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization is to lead by example. (2) Establish a code of conduct. A code of conduct is a formal statement of an organization's values on certain ethical and social issues. The advantage of having a code of conduct is that it provides specific guidance to managers and employees regarding what is expected of them in terms of ethical behavior. (3) Implement an ethics training program. Firms also use ethics training programs to promote ethical behavior. Ethics training programs teach business ethics to help employees deal with ethical dilemmas and improve their overall ethical conduct.

Diff: 2      Page Ref: 217

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Ethical Understanding and Reasoning

 

 

14) What is a founders' agreement? Describe the purpose of a buyback clause and why it's important?

Answer:  A founders' (or shareholders') agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founders will have to remain with the firm for their shares to fully vest. An important issue addressed by most founders' agreements is what happens to the equity of a founder if the founder dies or decides to leave the firm. Most founders' agreements include a buyback clause, which legally obligates the departing founders to sell to the remaining founders their interest in the firm if the remaining founders are interested. In most cases, the agreement also specifies the formula for computing the dollar value to be paid. The presence of a buyback agreement is important for at least two reasons. First, if a founder leaves the firm, the remaining founders may need the shares to offer to a replacement person. Second, if founders leave because they are disgruntled, the buyback clause provides the remaining founders a mechanism to keep the shares of the firm in the hands of people who are fully committed to a positive future for the venture.

Diff: 2      Page Ref: 228

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Reflective Thinking

 

15) Describe the purpose of a nondisclosure agreement. Provide an example of when a nondisclosure agreement kicks in.

Answer:  A nondisclosure agreement is a promise made by an employee or other party (e.g., a supplier) to not disclose the company's trade secrets. An example would be an employee who is privy to a company's marketing strategy. If the employee quit her job and went to work for a competitor, it would be a violation of her nondisclosure agreement to tell her new employer the details of her previous employer's marketing strategy.

Diff: 2      Page Ref: 231

LO:  7.1: Discuss the action founders can take to establish a strong ethical culture in their entrepreneurial ventures.

AACSB:  Reflective Thinking

16) A(n) ________ is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founder will have to remain with the firm for their shares to fully vest.

  1. A) entrepreneurs' agreement
  2. B) creators' agreement
  3. C) founders' agreement
  4. D) initiators' agreement
  5. E) originators' agreement

Answer:  C

Diff: 2      Page Ref: 228

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

 

17) Most founders' agreements include a ________ clause, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested.

  1. A) redemption
  2. B) buyback
  3. C) statutory purchase
  4. D) voluntary recoup
  5. E) shareholder surrender

Answer:  B

Diff: 2      Page Ref: 228

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

18) Which of the following is typically not included in the founders' agreement for a firm?

  1. A) Marketing plan
  2. B) Legal form of business ownership
  3. C) Buyback clause
  4. D) Apportionment of stock
  5. E) Identity and proposed titles of the founders

Answer:  A

Diff: 2      Page Ref: 228

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

19) The Savvy Entrepreneurial Firm feature in Chapter 7 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff.

  1. A) 12 months
  2. B) 12 months to 24 months
  3. C) 24 months to 36 months
  4. D) 36 months to 48 months
  5. E) 48 months to 60 months

Answer:  D

Diff: 3      Page Ref: 229

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Analytical Thinking

 

20) A(n) ________ agreement binds an employee or another party to not disclose a company's trade secret. A ________ agreement prevents an individual from competing against a former employer for a specific period of time.

  1. A) nondisclosure; noncompete
  2. B) non breach-of-trust; nonchallenge
  3. C) voluntary truth; nonparticipate
  4. D) binding confidentiality; noncompete
  5. E) ethics; nonparticipate

Answer:  A

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

21) Jessica Marsh just took a job with Instagram. As part of her employment contract, Jessica signed an agreement that states that he will not disclose any of Instagram's trade secrets. The agreement that Jessica signed is called a(n) ________ agreement.

  1. A) nondisclosure
  2. B) non breach-of-trust
  3. C) ethics
  4. D) binding confidentiality
  5. E) legitimacy

Answer:  A

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

22) Steven Diaz just took a job with Harley Davidson. As part of his employment agreement, Harley Davidson required Steven to sign an agreement, which states that if he leaves Harley Davidson, he will not work for a firm that competes against Harley Davidson for at least two years. The agreement that Steven signed is called a ________ agreement.

  1. A) nondisclosure
  2. B) nonparticipate
  3. C) nonchallenge
  4. D) noncompete
  5. E) noncontend

Answer:  D

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

 

23) ________ is the process in which an impartial third party helps those involved in a dispute reach an agreement.

  1. A) Conciliation
  2. B) Reconciliation
  3. C) Negotiation
  4. D) Appeasement
  5. E) Mediation

Answer:  E

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

24) It is important for an entrepreneur to select an attorney as late as possible when developing a business venture.

Answer:  FALSE

Diff: 2      Page Ref: 225

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

25) A founders' agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm.

Answer:  TRUE

Diff: 2      Page Ref: 228

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

26) The idea that it's important to get "everything in writing" in regard to business agreements causes unnecessary work and can lead to an erosion of trust between business partners.

Answer:  FALSE

Diff: 2      Page Ref: 230

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

27) A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.

Answer:  TRUE

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

28) Mediation is the process in which an impartial third party helps those involved in a dispute reach an agreement.

Answer:  TRUE

Diff: 2      Page Ref: 231

LO:  7.2: Describe actions taken in new firms to effectively deal with legal issues.

AACSB:  Reflective Thinking

 

29) Which of the following statements regarding business licenses and permits is incorrect?

  1. A) Most business licenses and permits can wait until after a business is launched to be obtained.
  2. B) A business license can typically be obtained at the city clerk's office in the community where the business will be located.
  3. C) If a business will be run out of a home, a home occupation business license is often required.
  4. D) Some business licenses are hard to get.
  5. E) The business licenses and permits that are needed vary by city, county, and state.

Answer:  A

Diff: 1      Page Ref: 233

LO:  7.3: Provide an overview of the business licenses and permits that a start-up must obtain before it begins operating.

AACSB:  Reflective Thinking

30) Most businesses that plan to use a fictitious name, which is any name other than the business owner's name, need a(n) ________ permit.

  1. A) unreal business name
  2. B) fabricated business name
  3. C) invented business name
  4. D) conjured business name
  5. E) fictitious business name

Answer:  E

Diff: 2      Page Ref: 233

LO:  7.3: Provide an overview of the business licenses and permits that a start-up must obtain before it begins operating.

AACSB:  Reflective Thinking

 

31) Very few businesses require licenses and permits to operate.

Answer:  FALSE

Diff: 3      Page Ref: 233

LO:  7.3: Provide an overview of the business licenses and permits that a start-up must obtain before it begins operating.

AACSB:  Reflective Thinking

 

32) Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm?

  1. A) C corporation
  2. B) Sole proprietorship
  3. C) Subchapter S corporation
  4. D) Limited partnership
  5. E) Limited liability corporation

Answer:  B

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

33) Which of the following is not one of the four factors identified in the textbook as critical in selecting a form of business ownership?

  1. A) The cost of setting up and maintaining the legal form
  2. B) The number and types of investors involved
  3. C) Accounting considerations
  4. D) Tax considerations
  5. E) The extent to which personal assets can be shielded from the liabilities of the business

Answer:  C

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

34) The simplest and most common form of business entity is the ________.

  1. A) sole proprietorship
  2. B) general partnership
  3. C) C Corporation
  4. D) limited liability company
  5. E) subchapter S corporation

Answer:  A

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

35) All of the following are advantages of a sole proprietorship except ________.

  1. A) creating one is easy and inexpensive
  2. B) unlimited liability
  3. C) it is not subject to double taxation
  4. D) the owner maintains complete control of the business
  5. E) business losses can be deducted against the sole proprietor's other sources of income

Answer:  B

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

36) Which of the following statements is incorrect regarding sole proprietorships?

  1. A) There is one owner.
  2. B) Sole proprietor is in full control.
  3. C) Business ends at the owner's death or loss of interest in the business.
  4. D) Liquidity of the investment is high.
  5. E) Money must be raised by the sole proprietor.

Answer:  D

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

37) Partnerships are organized as either ________ or ________ partnerships.

  1. A) specific; general
  2. B) narrow; broad
  3. C) inward; outward
  4. D) general; limited
  5. E) partial; full

Answer:  D

Diff: 2      Page Ref: 238

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

38) A(n) ________ details the responsibilities and the ownership shares of the partners involved with an organization.

  1. A) partnership agreement
  2. B) industry contract
  3. C) business pledge
  4. D) business agreement
  5. E) partnership pledge

Answer:  A

Diff: 2      Page Ref: 238

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

39) Which of the following is not an advantage of a general partnership?

  1. A) Business losses can be deducted against the partners' other sources of income.
  2. B) The skills and abilities of more than one individual are available to the firm.
  3. C) The liquidity of each partner's investment is low.
  4. D) Creating one is relatively easy and inexpensive compared to a C corporation or limited liability company.
  5. E) It is not subject to double taxation.

Answer:  C

Diff: 2      Page Ref: 238

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

40) A ________ partnership is a modified form of a general partnership.

  1. A) restricted
  2. B) limited
  3. C) partial
  4. D) constrained
  5. E) fractional

Answer:  B

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

41) Which of the following statements about limited partnerships is incorrect?

  1. A) A limited partnership is a modified form of a general partnership.
  2. B) Limited partnerships are common in real estate and oil and gas exploration.
  3. C) A limited partnership is usually formed to raise money or to spread out the risk of a venture without forming a corporation.
  4. D) Both the limited partners and the general partners are responsible for the debts and obligations of the partnership.
  5. E) A limited partnership contains two classes of owners-general and limited partners.

Answer:  D

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

42) A ________ sets forth the rights and duties of the general and limited partners, along with the details of how the partnership will be managed and eventually dissolved.

  1. A) partnership accord
  2. B) restricted partnership agreement
  3. C) business partnership agreement
  4. D) limited partnership concurrence
  5. E) limited partnership agreement

Answer:  E

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

43) According to the textbook, ________ are common in real estate development, oil and gas exploration, and motion picture ventures.

  1. A) sole proprietorships
  2. B) limited liability companies
  3. C) subchapter S corporations
  4. D) limited partnerships
  5. E) general partnerships

Answer:  D

Diff: 3      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

44) A separate legal entity organized under the authority of a state is referred to as a ________.

  1. A) limited partnership
  2. B) conglomerate
  3. C) general partnership
  4. D) sole proprietorship
  5. E) corporation

Answer:  E

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

45) Corporations are organized as either ________ corporations or ________ corporations.

  1. A) permanent; temporary
  2. B) general; limited
  3. C) voluntary; statutory
  4. D) C; subchapter S
  5. E) regular; limited liability

Answer:  D

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

46) Large firms like Apple, Facebook, General Electric, and Microsoft, that trade on organized stock exchanges, are ________.

  1. A) limited partnerships
  2. B) limited liability companies
  3. C) subchapter S corporations
  4. D) C corporations
  5. E) general partnerships

Answer:  D

Diff: 1      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

47) Most C corporations have two classes of stock— ________ and ________.

  1. A) premium; normal
  2. B) common; preferred
  3. C) standard; substandard
  4. D) regular; special
  5. E) ordinary; distinct

Answer:  B

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

48) Which of the following is true regarding common and preferred stock?

  1. A) Preferred stock is rarely issued.
  2. B) Common stock is rarely issued.
  3. C) Common stock is issued more broadly than preferred stock.
  4. D) Preferred stock is issued more broadly than common stock.
  5. E) Common stock and preferred stock are issued in the same amount.

Answer:  C

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

49) ________ stock is typically issued to conservative investors who have preferential rights over common stockholders in regard to dividends and to the assets of the corporation in the event of liquidation.

  1. A) Restricted
  2. B) Partial
  3. C) Preferred
  4. D) Common
  5. E) Limited liability

Answer:  C

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

50) Which of the following statements is incorrect regarding common stock?

  1. A) Common stock is issued more narrowly than preferred stock.
  2. B) The common stockholders have voting rights.
  3. C) The common stockholders get paid after the creditors in the event of the liquidation of the corporation.
  4. D) Common stock is the form of stock that most shareholders of a corporation own.
  5. E) The common stockholders elect the board of directors.

Answer:  A

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

51) A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation.

  1. A) a certificate of intent to incorporate
  2. B) articles of business
  3. C) corporate credentials
  4. D) a corporation permit
  5. E) articles of incorporation

Answer:  E

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

52) A disadvantage of C corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.

  1. A) double taxation
  2. B) dual toll
  3. C) double duty
  4. D) double assessment
  5. E) dual harm

Answer:  A

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

53) Corporations that trade their stock on organized exchanges like the New York Stock Exchange and the NASDAQ are called ________ corporations.

  1. A) national
  2. B) civil
  3. C) public
  4. D) premier
  5. E) common

Answer:  C

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

54) In a ________ corporation, the voting stock is held by a small number of individuals and is very thinly or infrequently traded.

  1. A) public
  2. B) private
  3. C) narrow
  4. D) cautious public
  5. E) closely-held

Answer:  E

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

55) If the owners of a corporation don't file their annual paperwork, neglect to pay their annual fees, or commit fraud, a court could ignore the fact that a corporation has been established and the owners could be held personally liable for the actions of the corporation. This chain of events is referred to as ________.

  1. A) vacating the corporate status
  2. B) yielding the corporate privilege
  3. C) surrendering the corporate shield
  4. D) piercing the corporate veil
  5. E) capitulating the corporate doctrine

Answer:  D

Diff: 3      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

56) ________ are a special form of incentive compensation. These plans provide employees the option or right to buy a certain number of shares of their company's stock at a stated price over a certain period of time.

  1. A) Corporate options
  2. B) Collective plans
  3. C) Share plans
  4. D) Stock options
  5. E) Dividends

Answer:  D

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

57) Which of the following is a disadvantage of a C Corporation?

  1. A) Income is subject to double taxation.
  2. B) Limited liability
  3. C) Raising capital is easier than a partnership or sole proprietorship.
  4. D) Stock is liquid if traded on a major stock exchange.
  5. E) No restrictions exist on the number of shareholders.

Answer:  A

Diff: 2      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

58) Which of the following is an advantage of a C Corporation?

  1. A) Setting up and maintaining one is more difficult than for a sole proprietorship or a partnership.
  2. B) Stock is liquid if traded on a major stock exchange.
  3. C) Business losses cannot be deducted against the shareholders' other sources of income.
  4. D) Income is subject to double taxation.
  5. E) Small shareholders typically have little voice in the management of the firm.

Answer:  B

Diff: 2      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

59) A ________ combines the advantages of a partnership and a C corporation.

  1. A) subchapter S corporation
  2. B) limited partnership
  3. C) general partnership
  4. D) sole proprietorship
  5. E) subchapter K corporation

Answer:  A

Diff: 2      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

60) Which of the following is not one of the standards that a business must meet to qualify for status as a subchapter S corporation?

  1. A) The business must be a subsidiary of another corporation.
  2. B) All shareholders must agree to have the corporation formed as a subchapter S corporation.
  3. C) It can have no more than 100 members (husbands and wives count as one member).
  4. D) It can have only one class of stock issued and outstanding.
  5. E) The shareholders must be U.S. citizens.

Answer:  A

Diff: 3      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

61) The ________ is a form of business organization that is rapidly gaining popularity in the United States. The concept originated in Germany and was first introduced in the United States in the state of Wyoming.

  1. A) limited partnership
  2. B) general partnership
  3. C) limited liability company
  4. D) subchapter S corporation
  5. E) C corporation

Answer:  C

Diff: 2      Page Ref: 242

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

62) In which form of business ownership are the owners called "members"?

  1. A) general partnership
  2. B) limited partnership
  3. C) limited liability company
  4. D) subchapter C corporation
  5. E) C corporation

Answer:  C

Diff: 2      Page Ref: 242

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

63) Choosing a legal entity for a firm is a one-time event. Once a form of legal entity has been chosen, it cannot be changed.

Answer:  FALSE

Diff: 2      Page Ref: 235

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

64) A disadvantage of a sole proprietorship is that it is subject to double taxation.

Answer:  FALSE

Diff: 2      Page Ref: 236

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

65) A disadvantage of a general partnership is that the liquidity of each partner's investment is low.

Answer:  TRUE

Diff: 2      Page Ref: 238

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

66) The major difference between a general and a limited partnership is that a limited partnership includes two classes of owners-general and limited partners.

Answer:  TRUE

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

67) Corporations are organized as either C corporations, T corporations, or subchapter S corporations.

Answer:  FALSE

Diff: 2      Page Ref: 239

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

68) It is usually easier for a corporation to raise investment capital than a sole proprietorship or a general partnership because the shareholders are not liable beyond their investment in the firm.

Answer:  TRUE

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

69) The vast majority of corporations in the United States are public corporations.

Answer:  FALSE

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

70) Stock options are a special form of incentive compensation.

Answer:  TRUE

Diff: 2      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

71) A subchapter S corporation combines the advantages of a partnership and a C corporation.

Answer:  TRUE

Diff: 2      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

72) Few entrepreneurial firms start as subchapter S corporations.

Answer:  FALSE

Diff: 2      Page Ref: 241

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

73) The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.

Answer:  FALSE

Diff: 2      Page Ref: 242

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

74) Describe what is meant by a "general partnership" and a "limited partnership." Describe the major difference between the two.

Answer:  A general partnership is a form of business organization where two or more people pool their skills, abilities, and resources to run a business. A limited partnership is a modified form of a general partnership. The major difference between the two is that a limited partnership includes two classes of owners: general partners and limited partners. Similar to a general partnership, the general partners are liable for the debts and obligations of the partnership, but the limited partners are liable only up to the amount of their investment.

Diff: 2      Page Ref: 238

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

75) What is meant by the term "piercing the corporate veil"? How can the corporate veil be pierced?

Answer:  In most states, corporations must file papers annually, to maintain their status as a corporation and to comply with state regulations. It is important that a corporation's owners fully comply with these regulations. If the owners of a corporation don't file their annual paperwork, neglect to pay their annual fees, or commit fraud, a court could ignore the fact that a corporation has been established, and the owners could be held personally liable for actions of the corporation. This chain of events is referred to as "piercing the corporate veil."

Diff: 3      Page Ref: 240

LO:  7.4: Identify and describe the different forms of organization available to new firms.

AACSB:  Reflective Thinking

 

 

-----
Entrepreneurship: Starting and Operating A Small Business, 4th Edition, 2016, Steve Mariotti
Entrepreneurship: Successfully Launching New Ventures, 5th Edition, 2016, Bruce R. Barringer
Essentials of Entrepreneurship and Small Business Management, 8th Edition, 2016, Norman M. Scarborough
Fundamentals for Becoming a Successful Entrepreneur: From Business Idea to Launch and Management, 2016, Malin Brannback, Alan Carsrud
Entrepreneurship and Effective Small Business Management, 11th Edition, 2015, Norman M. Scarborough

------
PART 1: Decision to Become an Entrepreneur
1. Introduction to Entrepreneurship
PART 2: Developing Successful Business Ideas
3. Feasibility Analysis
4. Developing an Effective Business Model
5. Industry and Competitor Analysis
6. Writing a Business Plan
PART 3: Moving from an Idea to an Entrepreneurial Firm
7. Preparing the Proper Ethical and Legal Foundation
8. Assessing a New Venture’s Financial Strength and Viability
9. Building a New-Venture Team
10. Getting Financing or Funding
PART 4: Managing and Growing an Entrepreneurial Firm
11. Unique Marketing Issues
12. The Importance of Intellectual Property
13. Preparing for and Evaluating the Challenges of Growth
14. Strategies for Firm Growth
15. Franchising

------
PART I. STARTING THE PROCESS
Chapter 1. Why Plan?
PART II. WHAT TO DO BEFORE THE BUSINESS PLAN IS WRITTEN
Chapter 2. Developing and Screening Business Ideas
Chapter 3. Feasibiity Analysis
PART III. PREPARING A BUSINESS PLAN
Chapter 4. Introductory Material, Executive Summary, and Description of the Business
Chapter 5. Industry Analysis
Chapter 6. Market Analysis
Chapter 7. Marketing Plan
Chapter 8. Management Team and Company Structure
Chapter 9. Operations Plan and Product (or Service) Design and Development Plan
Chapter 10. Financial Projections
PART IV. PRESENTING THE BUSINESS PLAN
Chapter 11. Presenting the Plan with Confidence

------
BRIEF CONTENTS
UNIT 1 Entrepreneurial Pathways
Chapter 1 Entrepreneurs Recognize Opportunities
Chapter 2 Franchising
Chapter 3 Finding Opportunity in an Existing Business
Chapter 4 The Business Plan: Road Map to Success
Honest Tea Business Plan
Unit 1 Case Study: Spanx
UNIT 2 Who Are Your Customers?
Chapter 5 Creating Business from Opportunity
Chapter 6 Exploring Your Market
Unit 2 Case Study: Kitchen Arts & Letters, Inc.
UNIT 3 Integrated Marketing
Chapter 7 Developing the Right Marketing Mix and Plan
Chapter 8 Pricing and Credit Strategies
Chapter 9 Integrated Marketing Communications
Chapter 10 Marketing Globally
Chapter 11 Smart Selling and Effective Customer Service
Unit 3 Case Study: Empact
UNIT 4 Show Me the Money: Finding, Securing, and Managing It
Chapter 12 Understanding and Managing Start-Up, Fixed, and Variable Costs
Chapter 13 Using Financial Statements to Guide a Business
Chapter 14 Cash Flow and Taxes
Chapter 15 Financing Strategy: Debt, Equity, or Both?
Unit 4 Case Study: Lee’s Ice Cream
UNIT 5 Operating a Small Business Effectively
Chapter 16 Addressing Legal Issues and Managing Risk
Chapter 17 Operating for Success
Chapter 18 Location, Facilities, and Layout
Chapter 19 Human Resources and Management
Unit 5 Case Study: ONLC
UNIT 6 Leadership, Ethics, and Exits
Chapter 20 Leadership and Ethical Practices
Chapter 21 Franchising, Licensing, and Harvesting: Cashing in Your Brand
Unit 6 Case Study: Honest Tea
Appendix 1 Sample Student Business Plan: University Parent, Inc.
Appendix 2 BizBuilder Business Plan
Appendix 3 Resources for Entrepreneurs
Appendix 4 Useful Formulas and Equations
------
Section 1: The Rewards and Challenges of Entrepreneurship
1. Entrepreneurs: The Driving Force Behind Small Business
2. Ethics and Social Responsibility: Doing the Right Thing
3. Creativity and Innovation: Keys to Entrepreneurial Success
4. Strategic Management and the Entrepreneur
Section 2: Launching a Venture: Entry Strategies
5. Choosing a Form of Ownership
6. Franchising and the Entrepreneur
7. Buying an Existing Business
8. New Business Planning Process: Feasibility Analysis, Business Modeling, and Crafting a Winning Business Plan
Section 3: Building a Marketing Plan
9. Building a Bootstrap Marketing Plan
10. Creative Use of Advertising and Promotion
11. Pricing and Credit Strategies
12. Global Marketing Strategies
13. E-Commerce and Entrepreneurship
Section 4: Building a Financial Plan
14. Creating a Solid Financial Plan
15. Managing Cash Flow
16. Sources of Equity Financing
17. Sources of Debt Financing
Section 5: Building an Operating Plan
18. Location, Layout, and Physical Facilities
19. Supply Chain Management
20. Managing Inventory
21. Staffing and Leading a Growing Company
Section 6: Legal Aspects of Small Business: Succession, Ethics, and Government Regulation
22. Management Succession and Risk Management Strategies in the Family Business
23. The Legal Environment: Business Law and Government Regulation
------
Section I: The Challenge of Entrepreneurship 
1. The Foundations of Entrepreneurship
2. Ethics and Social Responsibility: Doing the Right Thing
3. Inside the Entrepreneurial Mind: From Ideas to Reality
Section II: The Entrepreneurial Journey Begins
4. Conducting a Feasibility Analysis and Designing a Business Model
5. Crafting a Business Plan and Building a Solid Strategic Plan
6. Forms of Business Ownership and Buying an Existing Business
7. Franchising and the Entrepreneur
Section III: Launching the Business
8. Building a Powerful Bootstrap Marketing Plan
9. E-commerce and the Entrepreneur
10. Pricing and Credit Strategies
11. Creating a Successful Financial Plan
12. Managing Cash Flow
Section IV: Putting the Business Plan to Work: Sources of Funds
13. Sources of Financing: Equity and Debt
14. Choosing the Right Location and Layout
15. Global Aspects of Entrepreneurship
16. Building a New Venture Team and Planning the Next Generation
------

 

ENTREPRENEURSHIP 2017 - NEW COLLECTION 2016 - 2017

1. Youtube Playlist: See the collection of videos - www.youtube.com/ecomftu2012

2. Download Power Point Slides Free

Entrepreneurship: Starting and Operating A Small Business, 4th Edition, 2016, Steve Mariotti - LINK
Entrepreneurship: Successfully Launching New Ventures, 5th Edition, 2016, Bruce R. Barringer  - LINK
Essentials of Entrepreneurship and Small Business Management, 8th Edition, 2016, Norman M. Scarborough - LINK
Fundamentals for Becoming a Successful Entrepreneur: From Business Idea to Launch and Management, 2016, Malin Brannback - LINK
Entrepreneurship and Effective Small Business Management, 11th Edition, 2015, Norman M. Scarborough - LINK

 

For Test Bankz, Quiz Answers and Case study Guides, email toThis email address is being protected from spambots. You need JavaScript enabled to view it.

Good Luck and Success, Enjoy Your Study !

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