Key Terms/Concepts Quiz 3

All of the following are characteristics of an entrepreneurial personality EXCEPT:

the willingness to be a follower rather than a leader

A business plan: describes in detail the idea for the new business and how it will be carried out is used to persuade lenders and investors to finance the venture serves as the first operating plan for a new business is accurately described by all of the above

is accurately described by all of the above

A _____ offers the same liability protection as a corporation but may be taxed as either a partnership or a corporation.

limited liability company

Thom Georges wants to open a store where he sells nothing but antique architectural features that he can salvage from old houses being torn down to make way for progress. He has an eye for the kind of doors, windows, mantels, and so forth that decorators want, but he does not have all the funding he needs to get started. He has invited his parents to invest $40,000 in the enterprise. He has told them that if they do invest, they would have liabilities in the firm equal to but no greater than their investment. Georges is trying to get them to form a _____ with him.

limited partnership

The combination of two companies that join to form one company is called a:

merger

A well-written business plan should contain: executive summary or company overview a marketing plan a vision and mission statement a management plan All of the above

All of the above

Hannah Li wants to quit her job as a legal secretary and start her own small business. She knows that she will be successful if she can find the right idea. Where can Li look for ideas for her new business? Problems she noticed in her old job Her interest in the history of art Other businesses in other regions of the country All of the above

All of the above

_____ are individual investors or groups of experienced investors who provide funding for start-up businesses.

Angel investors

Which of the following is an advantage of sole proprietor ownership?

Freedom from government regulation

In buying an existing business, the prospective buyer should ask questions about the operation of the business. Which of the following would be an appropriate question to ask? Choose all that apply. Is the business operating at a profit? What are you going to do with the down payment? Will the customers stay with the business? Why are you selling?

Is the business operating at a profit? Will the customers stay with the business? Why are you selling?

Which of the following statements about a general partnership is true? General partnerships are usually "double-taxed". A general partnership is the most popular form of business ownership. A general partnership is an entity separate from its owners. Partners in a general partnership co-own the company's assets.

Partners in a general partnership co-own the company's assets

The _____ is an agency of the federal government that offers both managerial and financial assistance to small businesses.

Small Business Administration

_____ is financing obtained from investment firms that specialize in financing small, high-growth companies and receive an ownership interest and a voice in management in return for their money.

Venture capital

Jill Hansom borrowed $40,000 from a credit union to start a company that makes and sells peach salsa. Hansom used _____ financing.

debt

The two forms of business financing are _____ (borrowed funds) and _____ (ownership funds).

debt; equity

The person who takes the risk of starting and managing a business to make a profit is called a(n):

entrepreneur

Which of the following is a trend that is changing the face of entrepreneurship and small business ownership?

entrepreneurial diversity

One of the advantages of owning a small business is:

flexibility

North American Van Lines and Allied Van Lines combined in a _____ merger that will create the world's largest moving company. Prior to the merger, North American was the leading company in moving high-end merchandise such as computer and hospital equipment, while Allied specialized in households.

horizontal

_____ is at the core of most business failures.

inadequate planning

When Linda McAnem began Stirya, a New York-based computer services company, she ran it as a sole proprietorship. As the business grew, she realized that she did not want to be personally liable for the business's debts and wanted her business accounts to be separate from her personal accounts. Therefore, she should have:

incorporated Stirya

Which of the following elements does NOT typically appear in a well-prepared business plan?

names of all employees

The fact that a corporation has limited liability means:

owners' liabilities are limited to the amount invested

Which of the following is a reason why small business thrives in the United States? the ability to avoid outsourcing regular working hours guaranteed profits rapidly changing technology

rapidly changing technology

An S corporation is generally set up to:

reduce tax burdens