Chapter 15-18

Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case? A. The court will dissolve the corporation into a sole partnership under Bradham. B. The court will convert Bradham Corporation into a separate legal entity. C. The court will hold that Bradham has no personal liability for Bradham Corporation's debt. D. The court will change Bradham's liability in the business to one that of a limited partner

A. The court will dissolve the corporation into a sole partnership under Bradham.

Which of the following is an advantage of providing credit to customers? A. it reduces the cost of selling B. it speeds up the receipt of cash C. it ensures all customers make on-time payments D. it reduces the need to borrow money

A. it reduces the cost of selling

A(n) ________ is part of a contract in which a party intentionally gives up legal rights or claims. A. waiver B. retainer C. easement D. arraignment

A. waiver

Which of the following is the cost incurred in financing, insuring, taxing, or tracking an asset? A. acquisition cost B. cost of owning C. cost of operating D. replacement cost

B. cost of owning

Which of the following should be included in an employee contract for a key employee? A. specify that the employee must work at the organization for a minimum of two years B. detail the consequences of insubordination within the workplace C. encourage employees to poach clients from competitors D. offer rewards for providing adequate termination notice

D. offer rewards for providing adequate termination notice

All business contracts have to be in writing to be enforceable. True False

False

Copyright involves the expression of ideas as well as the ideas themselves. True False

False

Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market. True False

False

For small firms, business risk is caused by accepting or providing debt. True False

False

There are three general types of events that cause business risk, one of which arises from your capital structure. True False

False

Adding employees in a firm increases both the amount of work that can be done and the demands on the owner. True False

True

Clients and attorneys start with a natural conflict of interest related to money. True False

True

Contractual provisions of insurance policies that specify what risks the insurance company is assuming are called coverages. True False

True

In a C corporation and S corporation, the IRS expects the owner to pay himself or herself a salary that is roughly at market rates. True False

True

Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making. True False

True

The name of a business can be called its doing business as (dba) name. True False

True

The practice of acquiring inventory only in response to a completed sale is called a pull-through system. True False

True

________ repay employers for losses caused by dishonest or negligent employees. A. Business interruption insurance B. Fidelity bonds C. Credit insurance D. Surety bonds

B. Fidelity bonds

Scenario-JG Sawmills To meet the high production demand, Jack Wilson—the owner of JG Sawmills—needs to invest in a frame saw. He has narrowed down to two choices: a double cut frame CZ84 saw with chipper and a HY-200 saw with double arbor bearings. The cost of CZ84 will be $91,000, whereas the cost of HY-200 will be $110,000. The salvage value of each type is $0 (zero) and both will have a useful life of 4 years. Data for Capital Budgeting Estimated cash flows and accounting profits for each saw type Double cut frame CZ84 saw HY-200 saw Years Cash Flows Accounting Profits Cash Flows Accounting Profits 0 $(91,000) $(110,000) 1 $20,000 $13,000 $30,000 $20,000 2 $37,000 $21,000 $45,000 $33,000 3 $37,000 $21,000 $45,000 $33,000 4 $42,000 $32,000 $50,000 $41,000 Which of the following statements is not true of financing with leases? A. Leases can include specifications for how the leased property is to be handled. B. The two types of leases differ primarily in how the property is acquired in the beginning. C. Lease periods range from as short as a few days to 99 or more years. D. Operating leases are similar to renting.

B. The two types of leases differ primarily in how the property is acquired in the beginning.

Which of the following statements concerning small business and law is not true? A. Business and law are inseparable. B.. Understanding the legal system will help you be less intimidated by attorneys and the law. C. State laws applicable to small business are standard in all fifty states. D. Not all laws apply to your business on the day you open.

C. State laws applicable to small business are standard in all fifty states.

Which of the following is true of insurance coverages? A. A fixed amount of unemployment insurance is collected from all industries. B. Industries and businesses that have frequent seasonal layoffs pay lower amounts of unemployment premiums than do those that have stable employment. C. Vehicle liability insurance is mandated by the legislatures of all the states and territories of the United States. D. Workers' compensation insurance is mandatory in all the states and territories of the United States.

C. Vehicle liability insurance is mandated by the legislatures of all the states and territories of the United States.

Which of the following businesses should be most concerned with property, plant, and equipment? A. a retailer B. a wholesaler C. a rancher D. a hairstylist

C. a rancher

Which of the following factors refers to providing meaningful work for employees, which gives them the feeling or belief that the day's work had a valuable impact to the company and that they made a difference? A. teamwork B. empowerment C. contribution D. training

C. contribution

In a(n) ________ , all partners are equally and fully responsible for the business's obligations. A. S corporation B. limited partnership C. general partnership D. C corporation

C. general partnership

The regular court system and small-claims court are both considered A. arbitration. B. confidential. C. litigation. D. mediation.

C. litigation.

Entrepreneurial leadership has three key components over and above task and person. Which of the following answer options is not one of those three key components? A. inspiration B. operation C. truthfulness D. innovation

C. truthfulness

The rule of thumb is that perks should take no more than ________ of the annual personnel budget. A. 25 percent B. 10 percent C. 5 percent D. 3 percent

D. 3 percent

Which of the following statements is not true of managing and fostering productivity among virtual employees? A. Structure tasks with clear deadlines. B. Maintain communication with virtual workers. C. Hire employees who have experience with working independently and hitting deadlines. D. Micromanagement is important as they are remote staff.

D. Micromanagement is important as they are remote staff.

Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business? A. ensuring that all employees have easy access to all assets B. securing valuable assets from low-level employees C. developing an informal code of ethics for all employees to follow D. creating provisions for subcontracting work to minimize business interruption to

D. creating provisions for subcontracting work to minimize business interruption to

Which of the following answer options is not one of the most commonly identified sources of U.S. business risk small businesses face? A. cyberattacks B. storms, floods, fire, and earthquakes C. employee misbehavior D. government instability

D. government instability

Which of the following is the last step in crafting a job description? A. list the credentials and experience desired B. define the duties and responsibilities C. give a job overview D. state special requirements

D. state special requirements

For a small business, the amount and type of inventory held for resale is not important because the supply of inventory and demand of customers can be matched at all times. True False

False

In employee leasing, the leased employees actually work for the hiring company rather than the leasing company. True False

False

Lines of communication means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard. True False

False

Off-the-job training includes coaching. True False

False

Providing credit to your customers accelerates the receipt of cash. True False

False

Reviewing employees' performance is a one-time process done after the probationary period. True False

False

Small businesses are not eligible to obtain government subsidies. True False

False

Some business owners are risk-adverse, although most small business owners are risk seeking. True False

False

Depreciation is based on which of the following assumptions? A. The period of utility of an asset is not fixed or determinable. B. The value of an asset is not fixed or determinable. C. The salvage value of an asset will not exist when the depreciation process is complete. D. The value of an asset declines in a predictable manner over the period of utility.

The value of an asset declines in a predictable manner over the period of utility.