Principles of Entp Chapter 7

Which of the following is NOT one of the four factors identified in the textbook as critical in selecting a form of business ownership? The cost of setting up and maintaining the legal form Tax considerations The extent to which personal assets can be shielded from the liabilities of the business The number and types of investors involved Accounting considerations

Accounting considerations

Which of the following is NOT one of the standards that a business must meet to qualify for status as a subchapter S corporation? The business must be a subsidiary of another corporation. The shareholders must be U.S. citizens. All shareholders must agree to have the corporation formed as a subchapter S corporation. It can have no more than 100 members (husbands and wives count as one member). It can have only one class of stock issued and outstanding.

The business must be a subsidiary of another corporation.

Which of the following is NOT an advantage of a general partnership? Business losses can be deducted against the partners' other sources of income. It is not subject to double taxation. Creating one is relatively easy and inexpensive compared to a C corporation or limited liability company. The skills and abilities of more than one individual are available to the firm. The liquidity of each partner's investment is low.

The liquidity of each partner's investment is low.

A disadvantage of C corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns. double taxation dual harm dual toll double duty double assessment

double taxation

The advantage of having a code of conduct is that it provides specific guidance to entrepreneurs, managers, and ________ regarding expectations of them in terms of ethical behavior. lenders suppliers outsiders customers employees

employees

According to the textbook, the single most important thing the founders of an entrepreneurial venture can do is ________. select a limited liability corporation as opposed to an S-corporation establish business partnerships make money start a board of advisors establish a strong ethical culture for their firms

establish a strong ethical culture for their firms

Most businesses that plan to use a fictitious name, which is any name other than the business owner's name, need a(n) ________ permit. invented business name fabricated business name fictitious business name conjured business name unreal business name

fictitious business name

A(n) ________ is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founder will have to remain with the firm for their shares to fully vest. entrepreneurs' agreement initiators' agreement founders' agreement originators' agreement creators' agreement

founders' agreement

In which form of business ownership are the owners called "members"? C corporation subchapter C corporation limited partnership general partnership limited liability company

limited liability company

The ________ is a form of business organization that is rapidly gaining popularity in the United States. The concept originated in Germany and was first introduced in the United States in the state of Wyoming. limited liability company C corporation limited partnership subchapter S corporation general partnership

limited liability company

Billy Goat Ice Cream, the company profiled in the opening feature in Chapter 7, is a ________. Schedule S corporation sole proprietorship Schedule C corporation partnership limited liability corporation

limited liability corporation

According to the textbook, ________ are common in real estate development, oil and gas exploration, and motion picture ventures. sole proprietorships subchapter S corporations limited liability companies limited partnerships general partnerships

limited partnerships

Steven Diaz just took a job with Harley Davidson. As part of his employment agreement, Harley Davidson required Steven to sign an agreement, which states that if he leaves Harley Davidson, he will not work for a firm that competes against Harley Davidson for at least two years. The agreement that Steven signed is called a ________ agreement. noncompete nonparticipate nondisclosure noncontend nonchallenge

noncompete

Jessica Marsh just took a job with Instagram. As part of her employment contract, Jessica signed an agreement that states that she will not disclose any of Instagram's trade secrets. The agreement that Jessica signed is called a(n) ________ agreement. non breach-of-trust nondisclosure binding confidentiality legitimacy ethics

nondisclosure

A(n) ________ agreement binds an employee or another party to not disclose a company's trade secret. A ________ agreement prevents an individual from competing against a former employer for a specific period of time. non breach-of-trust; nonchallenge ethics; nonparticipate binding confidentiality; noncompete voluntary truth; nonparticipate nondisclosure; noncompete

nondisclosure; noncompete

If the owners of a corporation don't file their annual paperwork, neglect to pay their annual fees, or commit fraud, a court could ignore the fact that a corporation has been established and the owners could be held personally liable for the actions of the corporation. This chain of events is referred to as ________. surrendering the corporate shield capitulating the corporate doctrine vacating the corporate status yielding the corporate privilege piercing the corporate veil

piercing the corporate veil

Corporations that trade their stock on organized exchanges like the New York Stock Exchange and the NASDAQ are called ________ corporations. public premier civil national common

public

The simplest and most common form of business entity is the ________. limited liability company sole proprietorship subchapter S corporation C corporation general partnership

sole proprietorship

All of the following are advantages of a sole proprietorship except ________. business losses can be deducted against the sole proprietor's other sources of income creating one is easy and inexpensive it is not subject to double taxation unlimited liability the owner maintains complete control of the business

unlimited liability

According to the 2016 Global Business Ethics Survey, a total of ________ percent of U.S. employees surveyed report observing misconduct. 15 30 47 7 24

30

The Savvy Entrepreneurial Firm feature in Chapter 7 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff. 36 months to 48 months 24 months to 36 months 12 months to 24 months 12 months 48 months to 60 months

36 months to 48 months

Large firms like Apple, Facebook, General Electric, and Microsoft, that trade on organized stock exchanges, are ________. general partnerships limited liability companies limited partnerships subchapter S corporations C corporations

C corporations

According to the 2016 Global Business Ethics Survey, ________ percent of U.S. respondents indicated that they reported observed misconduct in their workplace. A) 52B) 67C) 76D) 81E) 94

C. 76

Which of the following statements is incorrect regarding common stock? Common stock is the form of stock that most shareholders of a corporation own. The common stockholders have voting rights. The common stockholders get paid after the creditors in the event of the liquidation of the corporation. Common stock is issued more narrowly than preferred stock. The common stockholders elect the board of directors.

Common stock is issued more narrowly than preferred stock.

Which of the following is the most important thing that an entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization? Write a code of conduct Write a mission statement Implement an ethics training program Hire an ethics compliance officer Lead by example

Lead by example

________ are a special form of incentive compensation. These plans provide employees the option or right to buy a certain number of shares of their company's stock at a stated price over a certain period of time. Corporate options Share plans Collective plans Stock options Dividends

Stock options

A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation. a certificate of intent to incorporate articles of business a corporation permit corporate credentials articles of incorporation

articles of incorporation

In a ________ corporation, the voting stock is held by a small number of individuals and is very thinly or infrequently traded. private closely-held cautious public narrow public

closely-held