Chapter 5 Multiple Choice
What percentage of American businesses is considered small businesses?
99.7
With set-aside programs for small businesses, up to ___ of certain government contracts are designated for small businesses.
23 percent
What percentage of small business survives the first five years of operations?
50 percent
Most Manufacturing businesses are considered small if they employ fewer than ____ workers
500
Which of the following is not a benefit to the franchisor in a franchise agreement?
A franchisor is in control of the daily operations of a much larger business.
Which of the following is most likely to be a cooperative business operation? A limited-liability corporation 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
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.
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?
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 business? 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.
A(n) _____ consists of two or more firms combined to form one company
Merger
Which of the following is not one of the customary services of the Small Business Administration?
Providing direct loans
Which of the following does not grant direct loans to small businesses?
Small Business Administration
Which is the most common form of business ownership? Corporation Partnership Public Ownership Sole proprietorship
Sole proprietorship
Which of the following is a major draw-back of family-owned businesses? Having full control of business operations Double taxation on income Financially benefiting from own ideas/ efforts Succession
Succession
Who owns the corporation?
The shareholders
Small businesses are more likely than large ones to hire:
The youngest workers.
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
Which best describes the contribution of U.S. small businesses in world markets?
They export nearly a third of all U.S. products each year.
Which of the following is true of S Corporations? They limit owner's liability They help owners avoid double taxation They have fewer than 100 shareholders All of these answers are correct
They have fewer than 100 shareholders
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 buy only a residual claim on the firm's assets they make most of the major decisions
They have voting rights buy only a residual claim on the firm's assets
___ out of every three new jobs are created by small business.
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 legal organization with assests and liabilities separate from those of the owner is called:
a corporation
An effective business plan should include: the vision of the founder(s) and its mission a description of potential competitors a description of what makes the company unique all of these answers are correct
all of these answers
Small businesses often fail due to: all of these answers are correct management shortcomings difficulty dealing with government regulations inadequate financing
all of these answers are correct
Cooperatives allow members to: share equipment benefit from group purchasing discounts share in other efforts such as marketing do all of these
do all of these
A corporation that does business in states other than the state in which it filed incorporation papers is called a(n):
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
Small-business loans often used to buy equipment or operate a business are called:
microloans
Amtrak is an example of: a partnership a limited liability corporation private ownership of a for-profit corporation a non-for-profit franchise
private ownership of a for-profit corporation
The primary purpose for developing a business plan is:
to obtain financing for the business
A merger between two companies in different levels of the production and marketing of a product is called a(n) ______ merger
vertical