ENT EXAM 2

Which of the following should entrepreneurs do to have proper justification for firing employees?

1)They must be diligent in their efforts to assist poorly performing employees 2)They must develop a paper trail regarding all employees.

Which of the following are excellent sources of information regarding regulatory requirements?

1. Local department of economic development 2. Small Business Administration 3. Chamber of Commerce 4. Small Business Assistant Centers

Which of the following is true regarding a board of advisors?

1. The group is formed at the discretion of the founder 2. The group is composed of individuals outside the business 3. The group advises the founder on key issues

__________ rewards employees based on their performance.

A bonus

Entrepreneurs should remember to __________ when writing an advertisement for a new hire.

Be concise and oriented toward the basic information needed

For tax purposes, all businesses must have a(n) __________

Employer identification number.

_____ theory argues that people judge how they are treated relative to how they see others being treated.

Equity

A Subchapter C Corporation has a __________ that is equal to the par value times the number of shares distributed.

Floor value

Which class of partner in a limited partnership is considered the manager of the firm and has unlimited liability for any debts or judgments against the firm?

General

_____ resources are the quantity and quality of human effort directed toward producing goods and services.

Human

Subchapter S and Subchapter C Corporations take their names from subchapters in the __________ Code.

Internal Revenue

What method of inventory control seeks to minimize excess capital investment in inventory by having it present only shortly before it is used?

Just-in-time inventory

Which of the forms of incorporation has recently become the most popular?

LLC (Limited Liability Corporation)

The Equal Pay Act requires employers

Not to discriminate in pay to men and women who do the same job.

A hybrid compensation system

Pays a salary along with a commission.

Which type of legal business organization is characterized by the fact that the person who owns the business and the business itself are treated as the same entity?

Sole proprietorship

Where does funding typically start for most new businesses?

The founder's personal resources.

The last step in the employee hiring process is

The job offer.

Business owners should provide the interviewee with a realistic preview of the job and company

To set appropriate expectations for the potential employee.

Which of the following is NOT a common example of a license or a permit?

Trademark permit

Unemployment compensation is financial assistance for some period for people

Who lose their job through no fault of their own.

A board of _____ is formed at the discretion of the founders and composed of individuals outside the business who advise the founders.

advisors

The government closely regulates...

children who work under the age of 16.

When someone provides funding in return for some ownership in the new business, it is referred to as a(n) __________.

equity investment

Banks have traditionally been a major source of funds for:

established firms.

A(n) _____ is simply money designed to help the new business begin operations with no expectation of repayment.

grant

A limited liability corporation (LLC) and a Subchapter S Corporation are similar in that they both __________.

have the limited liability feature

A(n) _____ is the amount that a business pays an employee per hour of work performed.

hourly wage

Which form of funding is used by a business to conserve cash and maintain the latest versions of whatever equipment is available?

Asset lease

In the United States, a _ is assumed to apply to anything that is your own original work (whether that original work itself is filed with the US government or not)

Copyright

__________ involves entrepreneurs making a pitch on an Internet site and letting potential investors know what they will receive for their funding, which might be equity but is more often a product, service, or a gift.

Crowdfunding

TRUE/FALSE: Workers' compensation insurance is considered a minor expense for a business.

FALSE

TRUE/FALSE: Prior to allowing any nonfounder to invest in a new business, the entrepreneur should have a fair and valid estimation of the value of his or her company.

TRUE

Which of the following is NOT a common form of debt for a new business?

Venture capital

A __________ consists of individuals who have a fiduciary responsibility to the shareholders of an organization.

board of directors

When accounts receivable are sold at a discount to another company to receive immediate cash, it is referred to as _____.

factoring

One means to limit liability concerns is through the effective application of

insurance

Which of the following are considered alternative sourcing tools for funding a business?

1)Crowdfunding 2)Crowdsourcing

Which of the following are examples of groups typically targeted for grants?

1)Women-owned businesses 2)Veterans

The __________ Act requires businesses to provide unfettered access to all disabled people.

Americans with Disabilities

Which law requires that there be no discrimination in the hiring, management, or dismissal of employees with disabilities?

Americans with Disabilities Act

A _____ is an agreement between two parties to perform certain activities for some consideration.

Contract

Which form of debt is almost always tied personally to the founders, thus exposing them to personal bankruptcy?

Credit cards

TRUE/FALSE: Entrepreneurs typically don't have the right to fire employees.

FALSE

TRUE/FALSE: Issues surrounding succession are never a problem in a family run business.

FALSE

TRUE/FALSE: There is no need to treat a loan from family as a contractual agreement.

FALSE

Some major cities pay what has been called a _____ wage that is indexed to what someone who works 40 hours per week needs to stay above the poverty line.

Living

Promoting a drug-free workplace may be made more difficult in states like Colorado or Washington where

Marijuana laws and drug-free workplace programs may conflict.

Which form of intellectual property protection is the most complex and expensive and covers a specific innovation?

Patent

Business owners who offer profit sharing

Pay employees a small salary but offer a percentage of the profits that the company earns.

_____ insurance obtained by an entrepreneurial business primarily covers the building, fixtures, and inventory in all of the buildings in which the business has a function.

Property

_____ credit is a form of nonequity funding for physical assets as well as the actual supplies purchased.

Supplier

TRUE/FALSE: Both a check register and a petty cash register are required by an entrepreneur to form an annual record of all expenses.

TRUE

TRUE/FALSE: When considering funding, a firm needs to evaluate not only the amount provided but also the sources of that funding.

TRUE

Which of the following statements about the FLSA requirements regarding nonexempt employees are correct?

1)Firms that pay employees on a weekly basis cannot use compensatory time 2)Compensatory time is not typically allowed from one pay period to the next 3)Nonexempt employees who work over 40 hours per week must be paid time and a half.

What are the two broad categories of partnerships?

1)General 2)Limited

Which of the following typically issue grants?

1)Private founders 2)Government

A _____ is a set amount of compensation for a given time period.

salary

Accepting __________ can limit a firm's ability to shop around for a cheaper source.

supplier's credit

Which of the following are characteristics of credit cards as a form of nonequity investment?

1)They are generally tied to a much higher interest rate than that of a bank loan 2)They typically have a set upper limit.

A separate accounts _____ record should be maintained for each creditor.

payable

Commission compensation systems can be abused and

May be a source of frustration for both employees and the employer.

Which of the following describes the roles that human resources management plays in business?

1)Inspiring employees 2)Hiring new employees 3)Managing employees

Which of the following industries would be highly regulated by the government?

1)Medical-related industries 2)Industries involving alcohol 3)Military-related businesses

Employers may ask job candidates about their __________ but not their __________.

1)Prior convictions 2)Arrest record

Which of the following are three basic types of legal business organization?

1)Sole Proprietorship 2)Corporation 3)Partnership

Identify the typical advantages of having suppliers invest in a new business.

1)Suppliers do not aim to take the business over if it does particularly well 2)Suppliers refrain from trying to run the business.

Which of the following are drawbacks of a sole proprietorship?

1)The lack of legitimacy with suppliers and customers 2)The formation is limited to a single founder 3)The liability of the business is the responsibility of the single owner.

Identify the issues a new business uses to determine the quality of accounts receivable.

1)The size of the transaction 2)The debtor's credit rating.

Which of the following are low- or no-cost means of advertising a job opening?

1)Word of mouth 2)Trade association 3)College placement office

Which type of funding involves a contractual agreement whereby the business receives some amount of money that must be repaid over a specified period of time at a specified interest rate?

Loan

The _____ process ends when the candidate returns a signed original offer letter.

hiring

Which accounting record tracks time for hourly workers and attendance for salaried employees?

payroll

Which of the following questions are examples of questions that employers may not ask?

1)Age 2)Gender 3)Religion

Which of the following large firms have been a leading source of venture capital in the United States?

1)Cisco 2)Intel 3)Microsoft

Which of the following are likely to affect a small business when an employee becomes a problem?

1)The problem may cause other employees to have problems 2)The owner loses time dealing with the situation 3)The organization does not fully benefit from an unhappy employee.

Two related entities that can help the new business owner foresee potential legal liabilities are:

1)A board of advisers 2)A board of directors

A sole proprietorship is very popular among individuals who:

1)Are unsure of their business idea 2)Have a very small business 3)Have a business where costs and risks are low

Which of the following statements about succession are true?

1)When the parent retires, he or she should let the child run the business on his or her own 2)Parents often wait too long before creating a formal succession plan 3)A successor should be selected and the person should be prepared early.

Under the __________, businesses with more than 50 employees must provide insurance for their employees.

Affordable Care Act

Which of the following key reports is the master system for tracking the activity of the business?

Chart of accounts

Which of the following is NOT true with regard to managing the flow of data?

Data measurement methods must be complex

Business owners will want to conduct a second interview after checking references to

Make sure that the applicant is right for the firm and the firm is right for the person.

An important goal when writing a job advertisement is to

Provide potential applicants with important information so that they can evaluate their qualifications for the position.

The accounting system and the data flow management provide information on how the _____ will be used by the business.

funding

A(n) _____ description describes the skills and capabilities that a candidate should have.

job

Which of the following are the characteristics of a Subchapter C Corporation?

1) It does not have any limits on shareholder participation 2) It does not provide any protection for the owners beyond their equity investment.

Ways that entrepreneurs can ensure that they avoid discrimination or the appearance of discrimination are to do which of the following?

1)Advertise jobs widely to include many potential groups 2)Give everyone an equal opportunity to be considered 3)Write job descriptions so they do not include terms such as "salesman," "handyman," "young," or "counter girl."

Which of the following are elements of human resources?

1)Dealing with difficult employees 2)Hiring employees 3)Retaining employees.

Which of the following are sources of nonequity capital to start a business?

1)Debts 2)Grants

Which of the following should an advertisement ask an applicant to submit?

1)List of references 2)Resume

Which of the following statements are true about the Affordable Care Act?

1)The Act provides tax incentives for small entrepreneurial firms to encourage them to offer health insurance to their employees 2)One of the biggest beneficiaries of the Act are the entrepreneurs in a business that employs only themselves and their family.

A(n) _____ _____ fund is a fund that is usually organized as a limited partnership and is organized to make significant equity investments in high-growth new ventures.

1)Venture 2)Capital

The __________ of a firm is a powerful asset that should be used as a fine-grained tool to provide data about when and how inventory is needed.

Accounting system

What type of lending involves the bank estimating the residual value of the equipment if the bank had to repossess the equipment and then lend the business a percentage of the difference between that number and the sale price?

Asset-based lending

The critical issues of personal liability and the desire to limit exposure to the original equity investment led to the development of corporations. A corporation addresses both drawbacks by __________.

Considering the business and the individual separate entities.

What is the generic term used to describe any type of nonequity funding tied to the business?

Debt

_____ is a major source of nonequity financing and can come from banks, credit cards, or suppliers.

Debt

A board of _ is required of corporations, but a board of _ is optional regardless of the legal form

Directors; advisors

Which form of business involves two or more individuals sharing unlimited liability in a business venture?

General Partnership

__________ are the least expensive corporation types to form.

LLC (Limited Liability Corporation)

Which form of incorporation is required to pay an income tax?

Subchapter C

TRUE/FALSE: In the case of business failure, a debt must be paid back prior to any equity investors receiving a distribution.

TRUE

A ______ patent is for a new process, machine, article of manufacture, or composition of matter, or any new and useful improvement of those.

utility

Which of the following questions should be considered by a new business owner before entering into a lease contract?

1)Who is responsible for maintenance and other facilities issues? 2)Can the business owner renew the lease after the term expires? 3)Who would be responsible for making improvements to the facility? 4)Who has to carry the liability insurance and at what level?

Which of the following statements regarding equity theory are correct?

1)Employees judge the fairness of their compensation based on another's in a similar situation 2)Employees will accept that someone who has been with the company longer may earn more 3)Employees need a clear understanding of how their compensation compares to peers'.

Which of the following statements regarding changing the commission system as the company grows are correct?

1)Existing salespeople do not like changes to compensation systems that decrease commissions 2)Business owners need to think about the sales commission long term when creating it 3)New hires do not think it is fair to be paid a lower commission than older sales staff.

Which of the following elements are required when forming a Subchapter C or a Subchapter S Corporation?

1)General name of the business 2)Location of corporate headquarters 3)Name, addresses, and titles of all founders

Which of the following are potential business angels?

1)Individuals with significant inheritances 2)High-income executives of large organizations 3)Entrepreneurs who have cashed out 4)Professionals such as doctors or lawyers.

Which of the following statements are true regarding liability insurance?

1)It covers the business for accidents 2)It helps protect against lawsuit judgments 3)It covers product negligence.

Why do companies invest in a new venture with the idea of ultimately purchasing the venture?

1)It is one of the least expensive means for companies to try out new ideas 2)It helps the companies maintain access to the latest thinking in the field.

Identify the typical requirements for a new business to obtain a city or county business license.

1)It should pay a set fee, which is usually less than $100. 2)It should agree to report basic information about its performance on a set schedule.

Which of the following is a human resources issue for family firms?

1)One family member may make another mad since they know that member's "hot buttons." 2)Placement of family members can create an environment of discrimination 3)It is more difficult to fire or discipline a family member.

Identify the important pieces of information that need to be considered by an entrepreneur who seeks to place an advertisement on a job-replacement website.

1)Readership and viewership of the website 2)Statistics on reply rates 3)Rates charged for placing the advertisement

Which of the following must be formally addressed by both Subchapter C and Subchapter S Corporations?

1)Reporting standards to local, state, and federal authorities 2)Authorization of more shares of stock 3)Holding annual board meetings.

Which of the following are compensation options that a small business owner may employ to pay employees?

1)Salary 2)Hourly wage 3)Commission

Which of the following statements regarding the minimum-wage requirements of the Fair Labor Standard Act (FLSA) are correct?

1)The Act does not work on small firms 2)States may set a minimum wage higher than set by the FLSA 3)The Act covers virtually all workers

Which of the following statements about record keeping are correct?

1)The company should keep track of all advertisements that have been run whether a physical publication or on the internet 2)The company should keep track of records in case someone alleges that the company discriminates in its hiring practices 3)The company should maintain a record of who responded and the job's criteria.

A key aspect of how the funding will be used is found in the information provided by the business, and that comes from:

1)The data flow management 2)The accounting system

Which of the following statements about recruiting companies are correct?

1)They generally provide employers with highly qualified employees 2)Fees can be a significant portion of the employee's first year's salary 3)They typically charge the company a fee

An entrepreneurial firm's package of benefits has __________ the compensation it offers to a job candidate.

As much of an impact as

A business owner hires a mechanic to work on cars owned by the customers. The mechanic makes a mistake that leads to significant and costly damage to a customer's car. Which type of insurance can be purchased to cover the damages?

Bonding

__________ insures businesses from damages caused by workers in the performance of their jobs.

Bonding

Which form of equity investors refers to high-net-worth individuals that invest widely in business?

Business angels

What form of debt financing allows for a unique positive cash flow situation by allowing up to a 25-day delay in payment?

Credit cards

Which funding option traditionally involves selling a percentage of the business to an outside party?

Equity investment

Besides sole proprietorships, which of the following business forms requires the business debt to flow directly to the owner(s)?

General partnership

__________ is one of the most expensive costs for any business and the most desired benefits for employees.

Medical care

Identify a characteristic of a general partnership that is different from that of a sole proprietorship.

Partners are generally held to be jointly liable for all debts incurred by the partnership.

Which account should be used when there is an expense too small to write a check for or when a check is simply inappropriate?

Petty cash register

True or False: A partnership will be governed by either the Uniform Partnership Act or the Revised Uniform Partnership Act if the partnership agreement is not developed and signed

TRUE

Which of the following is a disadvantage of factoring for a new business?

The business will not receive the full amount of debt that is due to it.

Business owners should

Write a job ad that sells the job and business honestly.

Which of the following is the first step in the hiring process?

Writing a job description

A corporation pays a tax on its profits; then those after-tax profits are paid as dividends to the owners, who then have to pay personal income taxes on the dividend income. This situation is referred to as __________.

double taxation

In the long run, the cost of capital for nonequity funding is generally __________ that of equity investment.

less than

It is important to record and balance the company account on at least a _____ basis.

monthly

Besides banks, finance companies, and friends and family, another source of nonequity loans come from:

the founders.

A _____ is the legal protection of the intellectual property that is associated with a specific business.

trademark

The business owner should do which of the following to determine which candidates to interview?

1)Directly compare the applications with the job description 2)Focus first on those candidates who closely match the job description 3)Immediately reject those candidates who do not have the minimum position requirements.

Which of the following are advantages of asset leasing for a new business?

1)The business is able to acquire the assets that it needs to begin operations with a minimal cash outlay 2)The company is not stuck with an aging asset as the entrepreneur is able to trade up.

What are the key financial issues involved with starting a business?

1)The funding and the funding level of the firm 2)The establishment of an accounting system 3)The flow of information in the new business.

Identify the key issues that entrepreneurial businesses should consider when trying to retain employees who add value.

1)The means of reviewing the performance of the employees 2)The compensation and benefits offered to the employees.

Identify the true statements about workers' compensation laws in the United States.

1)They aim to provide some type of wages to employees who are disabled or injured while on the job 2)They provide workers' compensation insurance that is regulated by each state.

Which of the following are the characteristics of limited partners in a limited liability partnership (LLP)?

1)They are considered passive investors, and their liability is limited to their investment in the business 2)They are typically allowed to work for the firm.

Identify the characteristics of loans as a source of funding for new businesses.

1)They are often repaid monthly from cash flow 2)They are secured by assets or a personal guarantee.

Inventory should be taken at scheduled times during the year and an exact match should be completed between:

1)Units sold 2)Starting inventory 3)Ending inventory

Title VII of the Civil Rights Act applies to firms with more than _____ employees.

25

TRUE/FALSE: To calculate the maximum amount to obtain in outside financing, it is advisable for an entrepreneur to calculate the entire cash flow projection by adding in all equity investments.

FALSE

The __________ established a minimum wage for workers.

Fair Labor Standards Act (FLSA)

The __________ is charged with protecting the health of workers.

Occupational Safety and Health Administration

A company's compensation system is

Of the highest importance for employees.

A __________ examines an employee's goals and the outcome of those goals over a particular given period.

Performance review.

An important feature of a Subchapter C Corporation is that there are no limits to __________.

The number of shareholders that an organization can obtain.

Which of the following is the next step in the hiring process after the job description has been created?

Advertising the position

One of the most important differences between a typical entrepreneurial start-up and a family business are issues related to

Human resources due to some of the employees being family members.

A _____ is payment based on a percentage of sales.

commission

In the United States, a _____ is assumed to apply to anything that is your own original work (whether that original work itself is filed with the U.S. government or not).

copyright

Banks will lend money for the establishment and maintenance of inventory by arranging a revolving line of _____.

credit

Any form of capital infusion that must be paid back with interest is called _____.

debt

Negotiations are primarily a(n) _____

art

Which of the following is not considered a benefit but is mandated by law?

Unemployment insurance

A trademark is valid for _____ years and can be renewed as long as the firm or product is active.

10

An advantage of the subchapter S corporation is that...

It allows the owners to report their income or losses on their personal income tax returns, thus avoiding double taxation

Which of the following questions should be included on a job application?

1)Work history 2)Name, address, and telephone numbers 3)Social security number

One disadvantage of the Subchapter S Corporation is the limitation to the number of shareholders, which is currently set at a maximum of _____ shareholders.

75

An entrepreneur of a retail store looks to hire billing executives. The job requires the executives to greet and interact with a large number of customers every day. In this scenario, which of the following are perfectly acceptable to test the job candidates?

1)A personality test 2)A test on basic mathematics

Which of the following are potential outcomes of a poorly managed credit card?

1)An increase in the interest rate 2)Possible bankruptcy of a firm

Which form of business has at least two individuals who are partners in a venture but only one person declares a full pass-through of all income on his or her federal taxes and assumes unlimited liability?

Limited liability partnership

In new corporations, the stakeholders and board of _____ are often the same individuals.

directors

Business owners are guilty of _____ when they base hiring, dismissing, determining the level of pay, or promoting of an employee based on his or her race, color, gender, religious belief, or national origin.

discrimination