Business Chapter 5

(T/F) A partnership continues even after on partner dies

False

(T/F) About one fourth of all new businesses fail within the first five to six years

False

(T/F) Businesses owned by one person usually have enough funds for emergency situations

False

(T/F) Corporations usually have a tax advantage over partnerships

False

(T/F) Most successful entrepreneurs start their businesses when they are about 30 years old

False

(T/F) New businesses do not usually fail for financial reasons

False

(T/F) Since a new business has not yet made a profit, a financial plan should not be included in the business plan

False

(T/F) The form of ownership selected does NOT depend on the financial responsibility the owner is willing to assume

False

(T/F) The most common form of business ownership is partnership

False

(T/F) A business plan helps entrepreneurs see the risks and responsibilities involved in starting a business

True

(T/F) A business with a balance sheet showing assets valued at $100,000 and capital valued at $100,000 is in weak financial position

True

(T/F) A disadvantage of a partnership that fails is that a partner can lose personal assets in addition to the amount of money invested in the business

True

(T/F) A partnership could be owned by as many as ten or more partners

True

(T/F) Financing the business is one of the responsibilities of the business owner

True

(T/F) If a partner enters into a contract against the wishes of the other partners, the other partners are legally responsible for the contract

True

(T/F) If one partner is unable to pay his or her portion of the business's debts, the other partner must pay it

True

(T/F) In a proprietorship, the owner is entitled to all profits earned by the business

True

(T/F) In a sole proprietorship, creditors have a legal claim to the business's assets before the owner

True

(T/F) It is difficult to withdraw from a partnership

True

(T/F) The trade name of a partnership could be an artificial name

True

(WD) Property owned by a business.

assets

(MC) In a partnership a. partners pay no personal income tax b. a federal income tax return is filed c. a tax is paid on all profits d. the business as taxed the same way a corporation is

b. a federal income tax return is filed

(MC) The business name "Carrera, Rivera & Co." indicates a. a sole proprietorship b. at least three partners c. two partners d. an artificial name

b. at least three partners

(MC) The process of starting a business begins with a a. lease b. business plan c. balance sheet d. contract

b. business plan

(WD) A statement of financial position.

balance sheet

(WD) A written document that describes how to achieve the goals of a business.

business plan

(MC) Approximately how many new business fail within the first five to six years? a. 5 percent b. 25 percent c. 50 percent d. 75 percent

c. 50 percent

(MC) Which one of the following statements is true about entrepreneurs? a. Entrepreneurs would rather work for others. b. Entrepreneurs prefer to assign the decision-making responsibility to employees. c. Entrepreneurs usually work hard and for long hours. d. Entrepreneurs usually give up quickly when their businesses are not immediately successful

c. Entrepreneurs usually work hard and for long hours

(MC) One feature of a sole proprietorship is a. business activities require many legal documents and formalities b. taxes are higher than for a corporation c. business activities can be begun or ended without legal formalities d. there is no payroll

c. business activities can be begun or ended without legal formalities

(MC) The trade name of a proprietorship a. cannot be listed as Gomez & Co. in any state b. cannot be an artificial name c. does not reduce the owners' liability to creditors d. does not have to be registered

c. does not reduce the owners' liability to creditors

(WD) Difference between assets and liabilities.

capital

(WD) Parties who have first claim against assets.

creditors

(MC) If assets are valued at $500,000 and capital amounts to $350,000, the liabilities of the business are a. $850,000 b. $500,000 c. $350,000 d. $150,000

d. $150,000

(WD) Money owed by a business.

liabilities

(WD) Each partner's liability is restricted to the amount of his or her investment.

limited partnership

(WD) A business owned by two or more people.

partnership

(WD) The owner of a business.

proprietor

(WD) All partners are fully responsible for all business debts.

unlimited financial liability

(E) A partner signs a partnership contract for television advertising while the other two partners are on vacation. Upon returning, the vacationing partners claim the partnership is not bound to the contract because both of them disapprove of television advertising. Is the partnership legally bound? Explain.

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(E) Describe how the U.S. government supports small businesses.

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(E) Describe what kinds of businesses are most suited to the proprietorship form of business ownership.

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(E) Explain how a good business plan will helps someone successfully open a new business

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(E) Explain the advantages of being a limited partner in a company.

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(E) Explain the types of situations in which a limited partnership would be most useful.

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(E) Explain why it is necessary for proprietorships and partnerships to register their company names with local authorities.

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(E) You have been working part-time and summers at a local service station. You have performed just about every task from pumping gas to repairing tires and even handling some of the bookkeeping. Discuss how your responsibilities as an employee will change if you become the owner of the station.

...

(E) Your friend follows your advice and writes a business plan to create a new business called Cookies To Go. She does not include a marketing plan, and you mention it. She says, "Everyone likes cookies. My prices depend on how much it costs to make each type of cookie. And there isn't a cookie store within three blocks of where I plan to locate my business. How could I go wrong?" List questions that should be answered in the marketing plan that would make your friend give more thought to her decision.

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(MC) In a sole proprietorship a. creditors have first claim against assets b. there are no employees c. assets are safe from creditors d. employees share in the liabilities

a. creditors have first claim against assets

(MC) In addition to capital, partners are often a source of a. goodwill b. debts c. profits d. red tape

a. goodwill

(MC) In which type of partnership is the liability of a partner limited to the amount of the partner's investment? a. limited partnership b. unlimited partnership c. restricted partnership d. unrestricted partnership

a. limited partnership

(MC) A business that would generally be better suited to the partnership form of ownership is a. one with multiple locations b. a personal service business c. one that sells on a small scale d. a seasonal market

a. one with multiple locations

(MC) The most common form of business organization is the a. proprietorship b. partnership c. cooperative d. corporation

a. proprietorship

(MC) One of the main reasons many proprietorships fail within a short time is that a. the owner lacks needed skills b. the owner lacks interest in the business c. proprietorships are not able to compete with corporations any longer d. proprietorships are not able to compete with partnerships

a. the owner lacks needed skills

(MC) Which of the following characteristics does not generally apply to entrepreneurs? a. They prefer consensus decision-making. b. They start businesses in fields they are experienced in. c. They are less interested in profit than in challenges. d. They rarely launch a new business after an unsuccessful start-up.

d. They rarely launch a new business after an unsuccessful start-up

(MC) In a limited partnership a. all partners must be general partners b. no partners are liable for any of the partnership's debts c. all partners must be limited partners d. at least one partner must be a general partner with unlimited liability

d. at least one partner must be a general partner with unlimited liability

(MC) The type of business that can be operated suitably as a proprietorship is one that a. requires a great amount of capital b. usually does not provide personal services c. usually operates on a large scale d. can be managed by the proprietor or by persons hired by the proprietor

d. can be managed by the proprietor or by persons hired by the proprietor

(MC) In what kind of partnership is each partner personally liable for all the business's debts? a. limited partnership b. unrestricted partnership c. restricted partnership d. general partnership

d. general partnership

(MC) The terms capital, net worth, and equality are a. interchangeable and are defined as assets less capital b. not interchangeable and are defined as assets less capital c. interchangeable and are defined as assets plus capital d. interchangeable and are defined as assets less liabilities

d. interchangeable and are defined as assets less liabilities

(MC) An advantage of partnerships when compared to proprietorships is a. if one partner disagrees with a change, the partnership cannot make the change b. all partners are bound by all contracts made by the partnership c. operations are usually less efficient because of shared management d. more capital is usually available

d. more capital is usually available