Business Principles Unit 2 Exam

In the context of corporate restructuring, a _____ refers to a combination of firms that are at different stages in the production of a good or service.

vertical merger

In the context of responsibility to the community, which of the following statements is true of corporate philanthropy?

It includes all business donations to nonprofit groups

Which of the following is a drawback of buying an established business?

It may entail inheriting the previous owner's mistakes.

Which of the following statements is true of small businesses?

They have more scope to provide personal customer service than large businesses.

In the context of a limited partnership, which of the following statements is true of general partners?

They have the right to participate fully in managing their partnership.

Which of the following is a reason why many members of the European Union have low entrepreneurship rates?

They provide strong unemployment insurance to their citizens.

_____ are employees who report their employer's illegal or unethical behavior to either the authorities or the media.

Whistle-blowers

An advantage of a general partnership is that the:

business is taxed as the personal income of its owners.

Entrepreneurs must understand that no conventional lending source, whether private or government, will:

lend all of a start-up's funding

When starting a business from scratch, _____.

the logistics can be challenging

In the context of various launching options when starting a new business, which of the following statements is a drawback associated with buying a franchise?

It has less opportunity for creativity

Which of the following is a threat to small businesses?

A bigger regulatory burden compared to large businesses

In the context of small businesses and the economy of a country, which of the following factors can bring down entrepreneurship rates?

A high level of employment protection

_____ are individuals who finance start-up companies with high growth potential in exchange for a share of ownership.

Angel investors

Which of the following is a disadvantage of a limited liability company (LLC)?

Complexity of formation

Which of the following is a characteristic of successful entrepreneurs?

Confidence

_____ refers to business contributions to the community through the actions of the business itself rather than donations of money and time.

Corporate responsibility

In the context of monitoring ethics and social responsibility in organizations, which of the following statements is true of a social audit?

Determining how to measure the achievement of established goals is the second step in the process of conducting a social audit.

From the franchisee's perspective, which of the following is an advantage offered by franchising?

Easy access to funding

_____ is a characteristic that most successful entrepreneurs possess.

Energy

Which of the following is an appealing benefit that entrepreneurs enjoy?

Flexible schedule

_____ are organizations that pool contributions from investors, clients, or depositors and use these funds to buy stocks and other securities.

Institutional investors

To bring a code of ethics to life, experts advocate a forceful, integrated approach to ethics. In this context, which of the following steps is essential?

Integrating ethics into mandatory staff training

The _____ considers a C corporation to be a separate legal entity and taxes its earnings accordingly.

Internal Revenue Service

In the context of funding options for small businesses, which of the following statements is true of crowdfunding?

Its sites are used to funds nonprofits.

Which of the following is one of the largest crowdfunding sites in terms of traffic?

Kickstarter.com

_____ are small segments of a market with fewer competitors than the market as a whole.

Market niches

Which of the following examples of business conduct is legal but unethical?

Paying nonliving wages to workers in developing countries

_____ is the strategy of deliberately designing products to fail in order to shorten the time between purchases.

Planned obsolescence

_____ is the obligation of a business to contribute to society.

Social responsibility

_____ is a federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms.

The Sarbanes-Oxley Act

Which of the following is an advantage of starting a business from scratch?

The entrepreneur gets to build his or her own business concept and structure

Which of the following statements is true of franchises set up across borders?

The limit of a franchisee's right over a territory is decided through a franchise agreement.

Which of the following consumer rights is referred to when businesses are legally responsible for injuries and damages caused by their products, even if they have no reason to suspect that their products might cause harm?

The right to be safe

Which of the following statements is true of limited liability companies (LLCs)?

There is no separate tax on the earnings of the companies if they choose to be treated as a partnership

Which of the following statements is true of people with an external locus of control?

They believe that the actions of others can control their fate

_____ are companies that invest in start-up businesses with high growth potential in exchange for a share of ownership.

Venture capital firms

In the context of business ethics, which of the following situations best describes an ethical dilemma?

When a person is forced to choose among bad options

Entrepreneurs who mortgage their homes for the business and stake their reputation on the success of an unproven product demonstrate:

a high tolerance of uncertainty

In the context of corporations, _____ is a corporate restructuring in which one firm buys another.

an acquisition

In the context of business ownership, the document filed with a state government to establish the existence of a new corporation is referred to as the _____.

articles of incorporation

In accordance with corporate bylaws, stockholders elect a _____ and rely on it to oversee the operation of their company and protect their interests.

board of directors

A _____ is a formal, written document that defines the moral standards of an organization and gives employees the information they need to make moral decisions across a range of situations.

code of ethics

A _____ is a form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

corporation

A _____occurs when a firm transfers total or partial ownership of some of its operations to investors or to another company.

divestiture

In the context of carbon footprint, Scope 2 refers to:

emissions that result from purchased electricity, heat, and steam

People who risk their time, money, and other resources to start and manage a business are known as _____.

entrepreneurs

An individual who decides to establish a sole proprietorship must realize that he or she would be:

facing unlimited personal liability for the company's debts

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, providing equal opportunity represents the core value of _____.

fairness

Socially responsible firms support consumer choice by:

following the laws that prevent anticompetitive behavior such as monopolies.

A _____ is a licensing arrangement under which one party allows another party to use its name, trademark, patents, copyrights, business methods, and other property in exchange for monetary payments and other considerations.

franchise

In the context of corporate restructuring, a _____ is defined as a combination of firms in the same industry.

horizontal merger

One of the drawbacks of sole proprietorships is that the owners:

may find it difficult to attract and maintain talented employees.

The starting point for socially responsible employers is to:

meet legal standards

A _____ refers to a corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.

merger

The _____ is a situation where the behavior of an incompetent or an irresponsible franchisee adversely affects not only the franchise as a whole but also the success of other franchisees.

negative halo effect

According to the U.S. Small Business Administration (SBA), to officially count as a small business the:

number of employees should range from fewer than 100 to 1,500.

The vast majority of limited liability companies (LLCs) elect to be taxed as:

partnerships

In the context of ethical individuals, _____ refers to identification with and understanding of another's situation, feelings, and motives.

personal empathy

According to the universal ethical standards identified by the nonprofit, nonpartisan Character Counts organization, treating others how you'd like to be treated, being considerate, and being tolerant of differences represent the core value of _____.

respect

Ethics refer to:

sets of beliefs about good and bad.

A(n) _____ is a systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.

social audit

In the context of responsibility to the environment, _____ refers to doing business to meet the needs of the current generation without harming the ability of future generations to meet their needs.

sustainable development