GEB 2011 CH 5 PRACTICE QUIZ

What percentage of American businesses is considered small businesses? 99.7% 85.5% 70% 50%

99.7%

With set-aside programs for small businesses, up to _____ of certain government contracts are designated for small businesses. 23% 25% 33% 60%

23%

What percentage of small businesses survives the first five years of operations? 35% 40% 50% 60%

50%

Most manufacturing businesses are considered small if they employ fewer than _____ workers. 1000 5000 500 200

500

Which of the following is a benefit to the franchisor in a franchise agreement? A franchisor has no share in the losses faced by its franchisees. A franchisor employs fewer direct employees. A franchisor can make better buying deals because of quantity purchases. A franchisor can handle a larger, more complex business

A franchisor can make better buying deals because of quantity purchases.

Which of the following is most likely to be a cooperative business operation? A multinational software organization A group of neighboring farm owners A mom-and-pop grocery store A chain of restaurants

A group of neighboring farm owners

Which of the following is least likely to be a small business? A restaurant A construction company A nursing home An auto repair shop

A nursing home

How does a partnership differ from a sole proprietorship? A partnership is more difficult to dissolve than a sole proprietorship. The income tax paid is more in a partnership than a sole proprietorship. The funds are highly limited in a partnership. A partnership lacks the long-term continuity that is available in a sole proprietorship.

A partnership is more difficult to dissolve than a sole proprietorship.

Which type of business is most likely to operate as a cooperative business? Agricultural Textile Real estate Taxi service

Agricultural

_____ is an organization that provides temporary low-cost, shared facilities to small start-up ventures. Small business administration Loan specialist Business incubator Venture capitalist

Business incubator

Which of the following is NOT an advantage of a corporation? Limited liability for the owners Double taxation on corporate earnings Continuity Expanded financial capacity

Double taxation on corporate earnings

Why do home-based businesses often have lower costs? Owners work more hours because their office is their home. Customers are not willing to pay competitive prices for home-based services. Funds that are not being used for leasing or warehouse space can be directed into the business. There is an increase in the owner's quality of life.

Funds that are not being used for leasing or warehouse space can be directed into the business.

Which industry listed below is NOT dominated by small businesses? Florists Hospitals Funeral homes Hair salons

Hospitals

What characterizes a small business? It is independently owned and operated and is not dominant in its field. It operates at a loss for many years until it is a large business. Small businesses grow slowly. Small businesses are sole proprietorships.

It is independently owned and operated and is not dominant in its field.

Which of the following is true of a franchisor? It is the small business person who purchases the franchise. It incurs no risk in the transaction. It guarantees profits to the purchaser. It usually stipulates the purchase of certain ingredients or equipment, pricing, and marketing efforts.

It usually stipulates the purchase of certain ingredients or equipment, pricing, and marketing efforts.

Which of the following is a major drawback of family-owned businesses? Complete responsibility of business operations Double taxation on income Stringent government policies Lack of legal structure

Lack of legal structure

Which of the following risks does the franchisor take on in a franchise agreement? High initial investment costs to avail franchisees Loss of control over every aspect of the business Lack of freedom of business ownership High periodic investments due to large purchasing volumes

Loss of control over every aspect of the business

Which of the following is not one of the customary services of the Small Business Administration? Helping businesses apply for set-aside programs Providing management training Helping to write a business plan Providing direct loans

Providing direct loans

Who owns the corporation? The stockholders Board of directors The employees The CEO

The stockholders

Which of the following does not grant direct loans to small businesses? Commercial banks Small Business Investment Companies Small Business Administration Private lenders

Small Business Administration

Which is the most common form of business ownership? Corporation Partnership Public ownership Sole proprietorship

Sole proprietorship

Which of the following briefly answers the who, what, where, when, why, and how questions for a small business? The vision of the founder(s) and its mission Résumés of principals The marketing sections The executive summary

The executive summary

Which of the following is an advantage of mergers? They guarantee future profitability. They allow a company to diversify and increase customer base. They offer one company with the complete control of another. They allow firms to buy a division or subsidiary from another firm.

They allow a company to diversify and increase customer base.

What best describes the contribution of U.S. small businesses in world markets? They cannot compete because of limited resources. They are slow to respond to changes needed in international products. They attempt to compete primarily on the Internet. They generate nearly more than half the nation's gross domestic produc

They generate nearly more than half the nation's gross domestic produc

Which of the following is true of S Corporations? They increase owners' liability. They aid in creating double taxation. They have fewer than 100 stockholders. They face heavy taxes on their profits.

They have fewer than 100 stockholders.

Which of the following is true of owners of common stock? They have preferred rights in case of bankruptcy. They hire the Chief Executive Officer. They have voting rights but only a residual claim on the firm's assets. They make most of the major decisions.

They have voting rights but only a residual claim on the firm's assets.

_____ out of every three new jobs are created by small business. Three Five Four Two

Two

A written document that provides a statement of a company's goals, methods for achieving goals, and standards for measurement is called: a business plan. a marketing plan. an incorporation document. a financial blueprint

a business plan.

A legal organization with assets and liabilities separate from those of its owner is called: a sole proprietorship. a partnership. a corporation. a franchise.

a corporation.

An organization whose owners join forces to run all or part of the activities in their firm or industry is referred to as a: corporation. partnership. sole proprietorship. cooperative.

cooperative

A corporation that does business in states other than the state in which it filed incorporation papers is called a(n): alien corporation. foreign corporation. domestic corporation. multi-state corporation.

foreign corporation.

A(n) _____ combines firms in the same industry that wish to diversify, increase their customer base, cut costs, or offer expanded product lines. horizontal merger acquisition conglomerate company vertical merger

horizontal merger

Small businesses often fail due to: inadequate financing. lack of government support. employer diffidence. minimal risk-taking.

inadequate financing.

A(n) _____ consists of two or more firms combined to form one company. sole proprietorship acquisition merger joint venture

merger

Small-business loans often used to buy equipment or operate a business are called: microloans. credit cards. commercial bank loans. home equity loans.

microloans.

Amtrak is an example of: a partnership. a limited liability corporation. public ownership of a for-profit corporation. a not-for-profit franchise

public ownership of a for-profit corporation.

The primary purpose for developing a business plan is: to document the founding history of the business. to obtain financing for the business. to charter the new business with the state in which it is located. to outline the qualifications of the new business owner(s)

to obtain financing for the business.

A merger between two companies at different levels of the production and marketing of a product is called a(n) _____ merger. joint industry-dominate horizontal vertical

vertical

Unlike large businesses, small businesses often hire: fewer minorities. only women. only experienced workers. younger, teenage workers.

younger, teenage workers.