bmgt chap 4 and 5 quiz
limited partnership
A business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business.
private corporation
A corporation owned by just one or a few people who are closely involved in managing the business.
public corporation
A corporation whose stock anyone may buy, sell, or trade.
partnership
A form of business organization defined by the Uniform Partnership Act as "an association of two or more persons who carry on as co-owners of a business for profit."
board of directors
A group of individuals, elected by stockholders to oversee the general operation of the corporation, who set the corporation's long-range objectives.
corporate charter
A legal document that the state issues to a company based on information the company provides in the articles of incorporation.
corporation
A legal entity, created by the state, whose assets and liabilities are separate from its owners.
franchise
A license to sell another's products or to use another's name in business, or both.
joint venture
A partnership established for a specific project or for a limited time.
general partnership
A partnership that involves a complete sharing in both the management and the liability of the business.
franchisee
A person who buys a franchise
business plan
A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals.
leveraged buyout (LBO)
A purchase in which a group of investors borrows money from banks and other institutions to acquire a company (or a division of one), using the assets of the purchased company to guarantee repayment of the loan.
preferred stock
A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.
sharing economy
An economic model involving the sharing of underutilized resources
Small Business Administration (SBA)
An independent agency of the federal government that offers managerial and financial assistance to small businesses.
cooperative (co-op)
An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization.
small business
Any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.
sole proprietorships
Businesses owned and operated by one individual; the most common form of business organization in the United States.
S corporation
Corporation taxed as though it were a partnership with restrictions on shareholders.
quasi-public corporations
Corporations owned and operated by federal, state, or local government.
nonprofit corporations
Corporations that focus on providing a service rather than earning a profit but are not owned by a government entity.
microentrepreneur
Entrepreneurs who develop businesses with five or fewer employees
limited liability company (LLC)
Form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members.
Nadim wants to start a small moving company. He has enough funds to start the business, but not enough to run it effectively. What is one thing he can do to provide working capital to his company?
He can refrain from drawing a full salary.
Which of the following is a difference between high technology businesses and other small businesses?
High technology businesses require greater capital and have higher initial startup costs than other small businesses.
intrapreneurs
Individuals in large firms who take responsibility for the development of innovations within the organizations.
social entrepreneurs
Individuals who use entrepreneurs to address social problems.
Which of the following is an advantage that corporations provide as a form of business ownership?
It is easy to transfer ownership in corporations.
Which of the following is a difference between limited liability companies (LLCs) and S corporations?
LLCs are very simple to run, whereas S corporations are not.
articles of partnership
Legal documents that set forth the basic agreement between partners.
venture capitalists
Persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock.
dividends
Profits of a corporation that are distributed in the form of cash payments to stockholders.
Samar has started a new zip-line business in Jamaica. What is the most important source of funds for this new business?
Samar, the owner
initial public offering (IPO)
Selling a corporation's stock on public markets for the first time.
stock
Shares of a corporation that may be bought or sold.
common stock
Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.
merger
The combination of two companies (usually corporations) to form a new company.
undercapitalization
The lack of funds to operate a business normally.
entrepreneurship
The process of creating and managing a business to achieve desired objectives.
acquisition
The purchase of one company by another, usually by buying its stock.
Which of the following is true of the distribution of profits earned by a partnership?
They are distributed in the proportions specified in the articles of partnership.
Which of the following statements is true of baby boomers?
They are not actively pursued by many small businesses.
A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as
a business plan.
North Farm Society is an association of farmers from rural communities. Its agenda is not to make profits but to help its members market their produce and purchase large quantities of fertilizer, seeds, and other supplies at discounted prices. Thus, North Farm Society is an example of
a cooperative.
In the context of corporations, what is a white knight?
a more acceptable firm that is willing to acquire the firm threatened by a hostile takeover
Which of the following forms of business ownership requires owners to perform the most functions and possess diverse skills to make decisions?
a sole proprietorship
Catalina owns a small restaurant and is solely responsible for its debts and liabilities. She is also entitled to all the profits the restaurant makes after paying off taxes and other expenses. Her business is an example of
a sole proprietorship.
When a corporate raider wants to acquire or take over another company, it first offers to buy some or all of the other company's stock at a premium over its current price in
a tender offer.
Mi Sun is a taekwondo expert who starts her own martial arts training academy. She conducts taekwondo classes for women and teaches them the art of self-defense. Mi Sun can be regarded as
an entrepreneur.
Alan, Jason, and Greg want to incorporate their small roofing business. To do so, they must file legal documents with the appropriate state office. What are these legal documents called?
articles of incorporation
While Beau attends college, he is working part-time for a life insurance company. He goes door to door and offers consumers face to face presentations in their homes. This is an example of
direct selling.
Bart is a human resource manager at a large multinational company. After a drastic drop in revenue, his company needed to correct the situation. At a meeting with the top management, the CEO suggested that the company should reduce its workforce by 20 percent. This move would help the company cut costs and continue functioning on the current projects. In this scenario, which of the following strategies is Bart's company planning to use?
downsizing
Sole proprietorships are typically small businesses that
employ fewer than 50 people.
It has often been said that the greatest impediment to the success of a small business is the
entrepreneur.
Obtaining money from venture capitalists to start a new business venture is an example of
equity financing
Sue and Christy are business partners, and their company manufactures portable solar panels. They initially started the business with their savings. However, now the company plans to expand its operations, and the required amount of capital cannot be raised through savings or by reinvesting profits. Thus, the partners have decided to sell stock in their business to family members, friends, and employees. Which of the following sources of capital have Sue and Christy planned to use for the expansion of their business?
equity financing
Derek borrowed $50,000 from his mother for his new business venture. He promised that she would be a partner in the business and would be entitled to a significant percent of profits from the business at the end of the year. This is an example of
equity financing.
Sarah is starting her own house painting company, Pickett Fence Painting. She is working on developing the company's business plan. Which of the following is something the business plan should accomplish?
estimating the business's income and expenses
Which of the following is an advantage of a partnership?
few regulatory controls
Due to a severe recession, GloboTech is struggling to operate and earn profits. In the current economic state, people don't have extra money to buy its televisions, stereos, and home theater systems. If these economic conditions continue, GloboTech will be forced to
file bankruptcy.
Abigail is an animal lover and vegetarian. Frustrated by trying to find vegetarian substitutes for commonly needed items, she has started her own vegetarian boutique. Her store sells vegetarian food, shoes, toiletries, and many other items. Which advantage of small-business ownership is this scenario most closely related to?
focus
Jason works for a large sporting goods corporation. He champions a new hockey helmet with advanced concussion protection. Jason is a(n)
intrapreneur.
All of the following are true of direct selling EXCEPT
it requires a large investment in inventory.
A _____ is a partnership established for a specific project or for a limited time.
joint venture
All of the following are keys to a successful partnership EXCEPT partners must
keep profit sharing equal regardless of contributions.
All of the following are ways technology has helped sole proprietors succeed EXCEPT
landline telephones allow them to make free long-distance calls to customers, suppliers, and others.
A ______ has at least one general partner, who assumes unlimited liability and at least one other partner, whose liability is limited to his or her investment in the business.
limited partnership
When Marco first moved from Mexico to the United States, he struggled to find and keep work because he couldn't speak English fluently. After learning English, he started a new business to help other Mexican Americans learn English and to help place them in jobs. Marco's business is a
minority-owned small business.
Xavier starts an investment management firm along with his friend Abdul. They decide to equally share the profits and have unlimited liability for the debts of their business. Such unlimited liability can be a distinct disadvantage for Xavier if he has
more financial resources than Abdul.
All of the following are advantages of franchising EXCEPT
more freedom in business decisions.
Neehara recently opened a premium bakery. She did not have enough savings, so she applied for a loan to obtain the additional funds required to start the bakery. She had to provide her house as collateral to obtain the loan. The type of financing obtained by Neehara can be regarded as a
mortgage.
Marcia is opening her own small retail store that sells women's purses and accessories. To start her business, she needs at least $50,000 in initial financing to do all of the following EXCEPT
pay off any debts so they don't affect her business.
Which of the following traits will help entrepreneurs succeed?
persistence
Which of the following articles of incorporation items is found in the Model Business Corporation Act issued by the American Bar Association?
provisions for the regulation of internal corporate affairs
A written authorization that assigns a stockholder's voting privilege to another is called
proxy.
GloboTron is a large company that produces home entertainment technology. GloboTron has stock that anyone can buy, sell, or trade, but since it is a large company, its stockholders are far removed from its management. However, it must disclose its financial information to the public under specific laws that regulate the trade of stocks and other securities. What type of business is this?
public corporation
Which of the following forms of business ownership is the easiest to establish?
sole proprietorships
franchiser
the company that sells a franchise
All of the following are areas that can cause friction in a partnership EXCEPT
the diverse skills of the partners.
Brad and Sean live and work in Texas, but they love vacationing in Hawaii. They go there as often as time and money will allow. Finally, they take the plunge and buy a vacation home in Hawaii. When they aren't there, they rent the property to other people for $1000 per week. This is an example of
the sharing economy.
Wilbur and Fred run a small farm stand on their property, selling vegetables, fruits, plants, and eggs to support themselves. During a particularly bad season, they tried to get financing from a small rural bank in their community. However, they were unable to obtain financing because
the small rural bank lacked the necessary assets to counter the risks involved with small-business loans.
The decision-making process in a partnership tends to be faster when
there are few partners and all of them are involved in the day-to-day activities of the business.
All of the following are true of 501(c)(3) organizations EXCEPT
they must answer to their shareholders.
Gerard started a business using the savings from his previous job. He planned to run his business on the revenue generated from sales. However, a few months later, he found it difficult to pay his staff, rent, and other expenses. Seasonal sales and inability to secure sufficient credit from local banks made it difficult for Gerard to operate the business normally. Which of the following causes of small-business failure does this scenario best illustrate?
undercapitalization
Kevin makes rustic wood furniture and home accessories. During a recent time of economic turbulence, when well-funded dot-coms were failing, Kevin continued to succeed, likely because he learned how to
use the Internet to promote himself and sell his products online.
Which of the following is the best definition of a merger?
when two companies combine to form a new company
