OLS 274 EXAM 2 REVIEW

___________ use their own capital supplemented with government loans to invest in small businesses. -Small Business Investment Companies (SBICs) -Franchisors -Joint ventures -Microloans

Small Business Investment Companies (SBICs)

True or false: The set-aside program designates that a percentage of government contracts must be awarded to qualifying small businesses.

True

True or false: Owning a business, by definition, means that you are an entrepreneur.

false

True or false: Sole proprietorships are concentrated mainly in corporations.

false

True or false: The Hewlett Packard purchase of Compaq is an example of a conglomerate merger.

false

Logan is an entrepreneur who takes personal responsibility for the success or failure of his actions rather than believing in luck or fate. Which characteristic best describes Logan's entrepreneurial philosophy? -tolerance for failure -tolerance for ambiguity -need to achieve -internal locus of control

internal locus of control

The primary reasons people become entrepreneurs include all of the following reasons EXCEPT: -to create one's own job security. -to become a financial success. -to create employment opportunities for other people -to be one's own boss.

to create employment opportunities for other people.

True or false: Obtaining financing for an existing business is easier than it is for most start-up companies.

true

True or false: Small businesses produce over 16 times more patents than large businesses each year.

true

True or false: Social entrepreneurs recognize a societal problem and use business principles to develop innovative solutions.

true

True or false: Students who graduate from entrepreneurship programs are more likely to be self-employed.

true

True or false: Tata Motors' purchase of Jaguar is an example of a horizontal merger.

true

True or false: The average amount rewarded to owners of small businesses through Small Business Administration (SBA) microloans is $13,000.

true

True or false: Twenty-first century innovations developed by small businesses include social networking sites and green energy industries.

true

The maximum number of shareholders is limited to ________ for a firm to qualify as a subchapter S corporation. -75 -100 -50 -25

100

What percent of U.S. companies are considered SMALL BUSINESSES? -99.7% -15% -25% -50%

99.7%

Which of the following persons is LEAST likely to become an ENTREPRENEUR? -An intelligent person -A flexible person -A calm, low-energy person -An inquisitive person

A calm, low-energy person

True or false: Small businesses are not required to pay any taxes.

False

James is putting together a business plan for his new bookstore and café. Which of the following will NOT be part of his business plan? -An overview of prospective customers that identifies their needs -An executive summary that covers the who, what, where, why, when, and how of the business -An detailed, itemized budget for the entire fiscal year -An outline of what makes the company unique

An detailed, itemized budget for the entire fiscal year

Devon and Keith opened a restaurant as a partnership. Two years later, Keith left the restaurant, and Devon discovered that Keith had charged numerous expenses to their account. These expenses resulted in thousands of dollars' worth of debt for the restaurant. What option does Devon have in this situation? -Business creditors will expect full payment from Devon. -Business creditors will pursue Keith alone since his signature authorized payments. -Business creditors will expect Devon to pay at least half the debt since he owns 50 percent of the business. -He doesn't have to worry because, according to law, everyone is responsible for his/her own debts.

Business creditors will expect full payment from Devon.

___________ must verify in writing the accuracy of their corporation's financial statements. -CEOs and CFOs -government officials -stockholders -board members

CEOs and CFOs

When the Small Business Administration (SBA) assists a small business in applying for a major loan, it acts as the lender's ________. -Bank -savings and loan association -Guarantor -credit union

Guarantor

Angie wants to be her own boss, but she doesn't have an idea for a profitable business. What could Angie do to help her identify a successful business idea? -Pick an industry that is not experiencing a lot of change -Identify the most popular companies in her area and create a replica business -Make a list of her interests and abilities and a list of businesses that match these interests and abilities -Ask her friends and family for suggestions

Make a list of her interests and abilities and a list of businesses that match these interests and abilities

Concerning education and entrepreneurs, all of the following statements are correct EXCEPT: -Hundreds of colleges and universities offer classes in entrepreneurship. -Obtaining a college degree in entrepreneurship is essential before starting your own business. -Some colleges and universities sponsor business plan contests. -Some colleges and universities offer entrepreneurship courses outside the usual business curriculum.

Obtaining a college degree in entrepreneurship is essential before starting your own business.

All of the following are contributions of small businesses EXCEPT: -They provide more job security than large corporations. -They provide needed services to the larger corporate community. -They create a substantial number of new jobs. -They fuel local economies.

They provide more job security than large corporations.

Franz and Arlene had an idea for a different type of ice cream. They struggled to open their own small business, and later, to expand production and distribution. Their products are distributed nationwide and their sales continue to increase. Franz and Arlene are examples of ________. -social entrepreneurs -change agents -classic entrepreneurs -serial entrepreneurs

classic entrepreneurs

According to surveys, the largest lenders to small businesses are ________ . -investors -commercial banks -family members -credit card companies

commercial banks

Isabella owns 100 shares of IBM ________ stock, which means she has voting rights on company decisions at IBM, but only residual claims on the company's assets. -common -preferred -management -principal

common

In 2009, Walmart started working together with another company in India by forming a __________ with Bharti Enterprises, Inc., one of India's leading business groups. -joint venture -vertical merger -horizontal merger -subsidiary

joint venture

Entrepreneurs possess all of the following traits EXCEPT ________. -low self-confidence -tolerance for ambiguity -vision -creativity

low self-confidence

Elian wants to start a business. He takes a personality test and discovers he possesses a trait that may reduce the likelihood he will succeed. Which of the following is that trait? -low tolerance for risk -internal locus of control -creativity -vision

low tolerance for risk

Which of the following is the leading cause of today's small business failures? -no marketing plan -management shortcomings -location -poor products and/or services

management shortcomings

An acquisition occurs when ________. -two or more firms combine to form a single company -one corporation owns 8 percent of the stock of another corporation -one company purchases the property and assumes the obligations of another company -owners of small companies band together to operate their businesses collectively

one company purchases the property and assumes the obligations of another company

After starting a web design company while still in college, Rodrigo sold the company after graduation. He then opened a computer repair shop; and most recently, he has started a marketing firm that specializes in social media. Rodrigo is an example of a(n): -serial entrepreneur. -social entrepreneur. -classic entrepreneur. -lifestyle entrepreneur.

serial entrepreneur.

Alexander has just opened a bakery & café in a busy New York City neighborhood. He has received an SBA-guaranteed microloan of $13,000. Alexander can use the microloan for all of the following, EXCEPT: -to buy a new dough mixer -to pay for a new advertising campaign -to pay off outstanding business-related credit card bills -to pay rent and utility bills for the building

to pay off outstanding business-related credit card bills

Lucia is a chief financial officer in a large corporation. Her responsibilities include the full financial authority to make appropriations and authorize expenditures. Lucia is likely to be a member of ________ management. -middle -supervisory -advisory -top

top

True or false: Desire for improved quality of life is often a motivation for becoming an entrepreneur.

true

True or false: Entrepreneurial environments created within companies can help firms retain valuable employees who might otherwise leave to start their own businesses.

true

True or false: For small businesses, establishing a Website is generally cheaper than opening up a retail store.

true

True or false: High start-up expenses sometimes prove to be challenging for owners of small businesses.

true

True or false: Horizontal mergers are popular in the auto and healthcare industries.

true

True or false: Many entrepreneurs rely on personal savings or loans from business associates, family members, or even friends for start-up funds.

true

True or false: Many small businesses prove successful when they become suppliers to large corporations.

true

True or false: Most owners of small businesses rely on loans from financial institutions for their start-up funds.

true

Owners of small businesses can increase their chances of success if they: -become an expert in legal, financial, marketing, and other related business areas. -hire only family members or friends. -understand their own limitations. -incorporate their business.

understand their own limitations.

Sole proprietorships have all of the following advantages EXCEPT ________. -unlimited life -profits subject only to a single tax -ease of liquidation -ease of formation

unlimited life

If Smith Steel buys Kennedy Iron Ore to assure itself of a constant flow of ore, this is an example of a ________. -conglomerate company -domestic company -vertical merger -subsidiary corporation

vertical merger

The ________ industry represents the greatest percentage of minority-owned businesses. -Finance -Service -Retail -Transportation

Service

Kayla is opening a home HEALTH CARE business that she knows will do well in her community based on prior research. Although she must repay borrowed funds, Kayla chooses to maintain complete control over the business without having to answer to investors or partners. -sole proprietor financing -venture financing -debt financing -equity financing

debt financing

The stock of Old Germany Brewery is totally owned by the Prechter family. When the family elected to move from a sole proprietorship to a corporation, the greatest concern was ________. -double taxation -how to limit liability -choosing work assignments -there might be family squabbles

double taxation

Dina is a single mother who is required to work evenings and weekends at a local retail store. She is thinking of starting a consulting business primarily so she can ________. -guarantee her financial success -enjoy a higher quality of life -increase her job security -become her own boss

enjoy a higher quality of life

Information technology can help entrepreneurs in all of the following ways EXCEPT: -provide improved customer service. -ensure financial success. -project a professional image. -work quickly and efficiently.

ensure financial success.

Jada is opening her own bakery. Jada is an example of a(n) ________. -minority executive -manager -entrepreneur -venture capitalist

entrepreneur

True or false: A corporation operating outside its state of incorporation is known as a domestic corporation.

false

True or false: Entrepreneurs enjoy guaranteed job security because no one can fire them.

false

True or false: Joint ventures are not ideal for international companies due to logistics and conflicting business laws.

false

True or false: Most of the small businesses today are run by Caucasian males.

false

True or false: Most small businesses turn a profit within the first year

false

Corporations have all of the following advantages EXCEPT ________. -favorable tax treatment -limited liability -expanded financial capacity -unlimited life

favorable tax treatment

Anita established a corporation in Nebraska, but she recently moved to Colorado where she now conducts her business. What type of corporation does Anita own? -foreign corporation -domestic corporation -alien corporation -national corporation

foreign corporation

Small-business owners want to determine whether their companies meet the standards for small-business designation because: -banks are more likely to grant them loans. -incorporation is easier for them. -they do not have to pay taxes on their profits. -government agencies offer benefits designed to help small businesses compete with larger firms.

government agencies offer benefits designed to help small businesses compete with larger firms.

All of the following are duties of the board of directors of a corporation EXCEPT ________. -authorizing major transactions of the corporation -electing its own officers -guaranteeing the payment of cash dividends every year -hiring the corporation's chief executive officer

guaranteeing the payment of cash dividends every year

The joining of Chemical Bank and Chase Manhattan Bank was an example of a ________. -joint venture -conglomerate merger -vertical merger -horizontal merger

horizontal merger

United Airlines' purchase of Continental Airlines combines the resources and capabilities of both firms to create the world's largest airline. The newly formed company is an example of a _____________. -conglomerate merger -joint venture -horizontal merger -vertical merger

horizontal merger

Which type of merger results in decreased competition within the same industry? -vertical merger -horizontal merger -conglomerate merger -joint venture

horizontal merger

Many businesses fail during the early years because of ________. -poor planning -unmotivated owners -inadequate financing -niche marketers

inadequate financing

Michael is a successful financial advisor looking to invest money directly into a new consulting business in return for equity in the company. Michael is an example of a(n) ________. -entrepreneur -angel investor -aerial entrepreneur -intrepreneur

angel investor

The Small Business Administration (SBA) provides all of the following EXCEPT: -loan guarantees -advice from retired executives -access to venture capitalists -business incubators

business incubators

The ________ is most likely an example of public ownership. -city sewer system -television company -movie theater -trucking company

city sewer system

Assume that Microsoft decides to invest some of its excess cash by acquiring fellow Seattle-based Starbucks Coffee. This would be a ________. -vertical merger -conglomerate merger -horizontal merger -joint venture

conglomerate merger

Ben is the owner of a small mushroom farm in Pennsylvania. Ben would like to join with other growers to create an organization that will promote and distribute mushrooms. The form of ownership that would be most suited for the growers is the ________. -open corporation -government-owned collective -joint venture -cooperative

cooperative

If business owners in a partnership wish to limit liability, they have the option to ________. -withhold funds -pledge funds -set up a limited partnership -divide into sole proprietorships

set up a limited partnership

Louis works as an artist for a major textile company and created an innovation for producing designs. The company will implement Louis's idea as part of its ________ strategy. -angel investment -seed capital -skunkworks -entrepreneurship

skunkworks

Although the average farm size has increased in recent years the majority of farmers operate as ________ businesses. -small -government owned -large -partnerships

small

________ are pioneers of innovations that benefit humanity. -change agents -classic entrepreneurs -social entrepreneurs -atypical entrepreneurs

social entrepreneurs