ENTR-187 EXAM #2
Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case? A. It will convert Bradham Corporation into a separate legal entity. B. It will dissolve the corporation into a sole partnership under Bradham. C. It will change Bradham's liability in the business to one that of a limited partner. D. It will hold that Bradham has no personal liability for Bradham Corporation's debt.
It will dissolve the corporation into a sole partnership under Bradham.
Which of the following statements is true of an elevator pitch? A. It is shorter than a vision statement or tagline. B. Its goal is to sell the idea of a business to another. C. It does not sound like a sales pitch. D. It is a summary of the business, its business models, and immediate goals.
Its goal is to sell the idea of a business to another.
Which of the following is a tactical action? A. New distribution channels B. Mergers C. New product introductions D. Entering new markets
New distribution channels
Which of the following forms of business requires no government permission to set up? A. Limited partnerships B. C Corporation C. Professional corporation D. Sole proprietorship
Sole proprietorship
A niche market is a narrowly defined segment of the population that is likely to share interests or concerns. T/F
TRUE
A sole proprietorship is not considered as a separate legal entity from its owner. T/F
TRUE
The business-to-consumer (B2C) contract is an example of an Internet contract. T/F
TRUE
Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____. A. articles of organization B. contracts of partnership C. articles of association D. articles of partnership
articles of partnership
Standard industrial classification system (SIC) codes have _____ digits. A. four B. six C. seven D. nine
four
As a new entrepreneur, Anthony's magic number for 2013 is $42,000. If the current tax rate for his business is 30 percent, calculate the amount that Anthony's firm would need to sell for him to get his magic number. A. $50,000 B. $50,495 C. $60,000 D. $60,854
$60,000
The rule of thumb is that perks should take no more than _____ of the annual personnel budget. A. 3 percent B. 15 percent C. 50 percent D. 75 percent
3 percent
Which of the following statements is true of a vision statement? A. An overview of a business and its immediate goals form a vision statement. B. A vision statement describes a firm's goal and its competitive advantages. C. A tagline or a slogan is a good way to present vision statements. D. A vision statement gives more detail about a business than an executive summary.
A tagline or a slogan is a good way to present vision statements.
Ted, a 46-year-old IT professional, recently attended a job interview at Acton Org. He was not offered the job. Ted tried to find the reasons for his disqualification and the company could not provide a satisfactory explanation. He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college. Which of the following laws protect Ted from such discriminations? A. ADA B. OSHA laws C. Sarbanes-Oxley Act D. ADEA
ADEA
_____ is a strategic action. A. Increasing marketing efforts B. Using new distribution channels C. Acquiring a competitor D. Increasing prices
Acquiring a competitor
If Connie gets her family and friends involved as investors, which of the following is most likely to be their concern? A. Cash flow and cash cycle B. Intellectual property protection C. Monitoring compliance D. Amounts and schedules for returns
Amounts and schedules for returns
According to the six factors most valuable to employees, which of the following is a reason employees leave a company? A. Being put through different types of training B. Being asked to make on-the-spot decisions for the companies' best interest C. Being shown that the decisions employees make and the work they perform have a direct impact on the product or service provided D. Being denied professional development and learning opportunities to expand their job responsibility
Being denied professional development and learning opportunities to expand their job responsibility
In Connie's business plan, which of the following components is most likely to be of interest to Mr. Johnson? A. Cash flow and cash cycle B. Growth rate C. Competitive advantage D. Amounts and schedules for returns
Cash flow and cash cycle
Which among the following is an example of an on-the-job training method? A. Lectures B. Case studies C. Coaching D. Role playing
Coaching
_____ is the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the market. A. Industry analysis B. Competitive advantage C. Resource distribution D. Market relinquishment
Competitive advantage
Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business? A. Creating provisions for subcontracting work B. Developing an informal code of ethics for all employees to follow C. Ensuring that all employees have easy access to all assets D. Securing valuable assets from low-level employees
Creating provisions for subcontracting work
Which of the following statements is true of business plans? A. Firms without a business plan are less likely to close down than firms with plans. B. External legitimacy for a firm is best established by creating business plans. C. Typically, the higher-performing firms in any industry tend to be those who do not have any business plan. D. Having a business plan guarantees higher profits.
External legitimacy for a firm is best established by creating business plans.
Everyone responds differently to risk. When it comes to business risk, small business owners are mostly risk seeking rather than risk averse. T/F
FALSE
Imitation minus one degree of similarity is the business equivalent of an innovative strategy. T/F
FALSE
In a negotiation process, proposing solutions that provide value and balance for all parties involved is considered the easiest step. T/F
FALSE
In employee leasing, the leased employees actually work for the hiring company rather than the leasing company. T/F
FALSE
In the context of employee rewards, if entrepreneurs work based on an open-book policy and the company hits a downturn and promises cannot be met, employees are more likely to react badly since they have little or no understanding of the firm's situation. T/F
FALSE
It is preferable to hire a moderately qualified person if there is an immediate need for someone. T/F
FALSE
On-the-job techniques include orientations, job instruction training, lectures, and case studies. T/F
FALSE
Reviewing employees' performance is a one-time process done after the probationary period. T/F
FALSE
Small businesses typically use the strategy of innovativeness rather than imitativeness. T/F
FALSE
The Family and Medical Leave Act applies to all employers. T/F
FALSE
The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act. T/F
FALSE
The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights. T/F
FALSE
The first step of the strategic planning process for small businesses is considering your customers and the benefits you want to offer them. T/F
FALSE
Your magic number is the number of customers you can comfortably provide with your product or service. T/F
FALSE
he ADA Technical Assistance Program provides inspection and affirmation services to help small businesses. T/F
FALSE
Which of the following statements is true of the financial statements and reports found in a business plan? A. The financial statements include the balance sheet, cash flow, and expense accounts. B. The assumptions accompanying the financial statements are not as important as other components of the financials. C. For all types of business plans, a set of financial reports or projections are the central component of the Appendix. D. The assumptions are simply what you assume will happen in the first year.
For all types of business plans, a set of financial reports or projections are the central component of the Appendix.
_____ are classic strategies for businesses of all types and they include differentiation, cost, and focus. A. Personalization strategies B. Altruistic strategies C. Retrenchment strategies D. Generic strategies
Generic strategies
Which of the following statements is true of a business plan presentation? A. Typically, a business plan presentation does not follow the content of a business plan. B. The content of a business plan presentation remains the same for different audiences. C. Handouts are mailed or distributed when the business plan changes frequently. D. Listeners check presentations for the content and not for the professionalism and passion of the presenter.
Handouts are mailed or distributed when the business plan changes frequently.
Which of the following explains the difference between limited partnership and general partnership? A. In limited partnerships, all partners are equally liable to the firm's debt unlike general partnerships. B. In limited partnerships, partners incur single taxation on earnings unlike general partnerships. C. In general partnerships, whenever the mix of partners is changed, that partnership is dissolved unlike limited partnerships. D. In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.
In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.
There are two points in the presentation where your listeners will be giving you value. Which of the following are those two points? A. In the contacts you make and the experience you gain. B. In the questions they ask and the contacts you make. C. In the questions they ask and the feedback they give. D. In the feedback they give and the experience you gain.
In the questions they ask and the feedback they give.
Which of the following is most likely to be the key information that joint venture partners seek in a business plan? A. Asset or collateral base B. Cash flow and cash cycle C. Intellectual property protection D. Stability of firm
Intellectual property protection
Michael Porter identifies five different threats of competition for any business. Which of the following choices is not one of Michael Porter's five threats? A. Rivals B. Suppliers C. Substitutes D. Investors
Investors
Which of the following is true of partnerships? A. It does not get terminated upon the death of one or more partners. B. It does not allow one partner to obtain bonding protection against the acts of the other partner(s). C. It cannot obtain financial resources from more than one person. D. It does not incur unlimited liability on its partners for the firm's debt.
It does not allow one partner to obtain bonding protection against the acts of the other partner(s).
Which of the following statements is true of joint ventures? A. It requires both partners involved to allocate revenues and expenses equally between them. B. It is not considered a separate entity from any of the partners that own it. C. It does not require its partners to lose more than what each partner has invested in it. D. It is never taxed as a partnership.
It does not require its partners to lose more than what each partner has invested in it.
Which of these is a disadvantage of a corporation? A. It incurs relatively high incorporation fees and high taxes. B. It requires its owners to have unlimited liability to the firm's debt. C. It is considered a separate, legal entity from its owner. D. It is automatically terminated upon the death of its owner.
It incurs relatively high incorporation fees and high taxes.
Which of the following is true of a private placement memo? A. It provides information to potential licensees. B. It is a complex legal document and should be drafted by a lawyer. C. It is a special form of informational plan posted on the Internet. D. It is designed to be used internally for management purposes.
It is a complex legal document and should be drafted by a lawyer.
Which of the following is true of a differentiation strategy? A. It requires a firm to offer a combination of cost benefits that appeals to the customers. B. It is generally pursued by all small businesses. C. It is aimed at mass markets. D. It is used by businesses that pursue a very low cost operation.
It is aimed at mass markets.
Which of the following statements is true of an executive summary? A. It is written in an informal style for investors and lawyers. B. It gives fewer details about the business than an elevator pitch. C. It is the single most widely distributed written description of a business. D. It is typically put at the end of a business plan.
It is the single most widely distributed written description of a business.
Which of the following is true of the entry wedge of second sourcing? A. It occurs when business firms leave a market. B. It occurs because many big businesses have policies that provide for set-asides for purchases from small businesses. C. It offers the advantage of being globally based. D. It provides a competitive pressure to ensure that suppliers keep providing the best service and prices.
It provides a competitive pressure to ensure that suppliers keep providing the best service and prices.
Which of the following is true of the ADA Technical Assistance Program? A. It provides specific advice to a business concerning how to comply with the pertinent requirements. B. It provides inspection of the workplace to determine compliance. C. It provides affirmation services to all businesses. D. It provides its services only to large businesses that have more than 500 employees.
It provides specific advice to a business concerning how to comply with the pertinent requirements.
Which of the following would implicate employee empowerment? A. Providing learning opportunities at every level of the organization through training B. Letting employees make on-the-spot decisions for the companies' best interest C. Providing meaningful work for employees and keeping them occupied D. Showing appreciation for a job well done or giving credit to an employee who introduced a great idea
Letting employees make on-the-spot decisions for the companies' best interest
_____ means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard. A. Job basics B. Job metrics C. Benchmarking D. Line of appeal
Line of appeal
Which of the following is a management philosophy of selecting and promoting people based solely on their being the most capable person for the job? A. Nepotism B. Capitalism C. Meritocracy D. Democracy
Meritocracy
Which of the following is true about trade name? A. There can be only one business using the same name within a state. B. Assumed name is completely different from trade name. C. Most states allow several firms to use the same trade name, as long as the firms are in different lines of business. D. Most states allow several firms to use the same trade name even if they are in the same town and have received a service mark.
Most states allow several firms to use the same trade name, as long as the firms are in different lines of business.
Axion Inc. is a small business started by Robert. As the business grew, he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion. Which of the following techniques should he adopt to achieve this? A. Lay off employees who seem most likely to go into competition with Axion B. Groom other candidates to replace the employees currently working at Axion C. Cross train the employees to neutralize job specialization D. Negotiate contracts with key employees that limit their freedom to go into competition
Negotiate contracts with key employees that limit their freedom to go into competition
Which of the following should be included in an employee contract for a key employee? A. Offer rewards for providing adequate termination notice B. Specify that the employee must work at the organization for a minimum of two years C. Detail the consequences of insubordination within the workplace D. Encourage employees to poach clients from competitors
Offer rewards for providing adequate termination notice
Which of the following is a recommended fair personnel policy guideline across family and non-family members? A. Owners should compare the family member hired to the nonfamily member who was not hired for a given position. B. Owners should not hold expectations that their family should work longer and harder than anyone else, because it is the family's business. C. Owners should have clearly differentiated personnel policies for family and non-family members. D. Owners should let family and nonfamily members pick and choose from a set of privileges or benefits.
Owners should let family and nonfamily members pick and choose from a set of privileges or benefits.
Which of the following is a type of informational plan that solicits information on customer interests? A. Invention plan B. Proof-of-concept website C. Private placement memorandum D. Operational plan
Proof-of-concept website
Which of the following concepts is based on the perception that promises have been made in exchange for certain employee obligations such as giving of their energy, time, and technical skills? A. Open-book policy B. Work facilitation C. Psychological contract D. Autonomy
Psychological contract
Which of the following statements is not true of psychological contracts? A. Small business owners often implicitly or explicitly communicate conflicting terms when making psychological contracts. B. To avoid breaking a psychological contract, denote strict limits on what you promise employees. C. Putting a psychological contract in writing is unnecessary and ill-advised. D. A psychological contract refers to an employees' beliefs about the promises between the employee and the company.
Putting a psychological contract in writing is unnecessary and ill-advised.
Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations? A. Understate revenues and overstate deductible expenses B. Reconcile the cash register tape to the cash register contents every day C. Take cash from the businesses before it is recorded as revenue D. Borrow from tax money in order to make payments to creditors
Reconcile the cash register tape to the cash register contents every day
Martin, an employee at a boutique store, is required to handle store displays and also ensure that all the sales records tally at the end of each business day. However, he committed fraud by recording fake sales and then keeping the products to himself. Which of the following managerial concepts would have helped the store avoid this deception? A. Adverse possession B. Separation of duties C. Accession D. Rule against perpetuities
Separation of duties
Crux Inc. and Synapse Inc. are two competing businesses in the same city. They use the services of the same insurance company and have taken the same policy. Crux has a higher deductible than Synapse for the policy. Which of the following statements would be true in this case? A. Both companies are not paying any premium. B. Synapse pays a higher premium than Crux. C. Both the companies pay the same premium. D. Crux pays a higher premium than Synapse.
Synapse pays a higher premium than Crux.
Eventually, mature industries begin a decline stage. Some industries face death, while others find new life in a process called retrenchment. T/F
TRUE
Risk from loss of key personnel and former employees setting up competition against your business can be managed by negotiating employment contracts with those key employees. T/F
TRUE
Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer. T/F
TRUE
f the business is a corporation or an LLC, the owner can only lose what he or she has invested in the business. T/F
TRUE
Which of the following is true of insurance? A. All risks are insurable. B. An insurance company only charges a fee for large businesses with over 100 employees. C. Insurance companies make profits by requiring a relatively large fee compared to the amount of loss that is possible. D. The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
When writing your elevator pitch, remember that elevator pitches have four success factors. Which of the following is not one of those success factors? A. The length. B. The purpose. C. The delivery. D. The hook.
The length.
Which of the following statements is true of the company section of a business plan? A. The overall description of the business financials forms the core part of this section. B. The product/service subsection mentions any protection through a proprietary technology. C. The company background subsection includes information about the pilot sales efforts and the floor plans. D. The tagline and elevator pitch of the business form the subsections of company description.
The product/service subsection mentions any protection through a proprietary technology.
Which of the following is true of insuring the property of a business?A. All the value of a property has insurable value. B. The value of land is the most commonly insured property. C. The value of the historical significance of a building often cannot be insured. D. The lower the deductible, the lower the policy premium payments will be.
The value of the historical significance of a building often cannot be insured.
Which of the following represents the problem with legal protection methods for intellectual property? A. There is no governmental agency that will assist small business owners in maintaining their legal rights. B. The cost of legal protection for intellectual property is so high that it is practically useless for a small business owner. C. Legal protection methods for intellectual property are primarily "reserved" for large businesses. D. Legal protection methods can only be offered for tangible property and not intellectual property.E. Holding legal rights to intellectual property provides the owner solely with grounds to pursue lawsuits against infringement.
There is no governmental agency that will assist small business owners in maintaining their legal rights.
Which of the following is true of 401(k) plans? A. They refer to the leave policies which make no distinction between sick, vacation, and personal days and allow employees a set number of days off each year. B. They are compensation plans which take no more than 3 percent of the annual personnel budget. C. They allow the employee to have no control over the amount of their contribution and how the money is invested. D. They are typically easier to administer and are less expensive than traditional pension plans.
They are typically easier to administer and are less expensive than traditional pension plans.
What is the goal of appendixes? A. To inform customers and partners about a firm and its products B. To establish marketing strategies and identify major competitors C. To provide supporting information that helps detail the key selling points of a plan D. To explain the growth plan and competitive strategies
To provide supporting information that helps detail the key selling points of a plan
_______ is collected by the IRS and state agencies as a percentage of tax upon payroll. A. Liability insurance B. Workers' compensation insurance C. Malpractice insurance D. Unemployment insurance
Unemployment insurance
Which of the following statements is not true of target customers? A. Target customers are described in terms of demographics. B. What target customers are looking for should be based on discussions with potential customers. C. Hopefully the desires of your target customers closely match the value benefits your product offers. D. Usually you only have one type of target customer.
Usually you only have one type of target customer.
A(n) _____ is a one-page document on letterhead that introduces the business plan and owner to the recipient and indicates why the recipient is being asked to read the plan. A. executive summary B. cover letter C. appendix D. title page
cover letter
To treat family and nonfamily employees as similarly as possible in a business, it is important to: A. have separate personnel policies for family and nonfamily members. B. create career ladders for nonfamily members. C. provide favorable treatment to nonfamily members. D. guarantee the possibility of employee ownership.
create career ladders for nonfamily members.
The fourth step of a small business' strategic planning process involves: A. considering the customers and the benefits to offer them. B. refining the firm's capabilities in order to maintain a competitive advantage. C. determining the best strategic direction and strategy for the firm. D. studying the dynamics and trends of the industry.
determining the best strategic direction and strategy for the firm.
Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for. Trent, the accounts manager, accepts fake bills and assists Jacob in deceiving the company. They split the profits made this way. This is an example of theft by: A. adverse possession. B. employee collusion. C. employee nonfeasance. D. vendor fraud.
employee collusion.
Making ______ work requires giving employees permission to act, the knowledge to act, and the skill to act. A. nepotism B. training C. empowerment D. teamwork
empowerment
A(n) _____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions. A. noncompete clause B. exculpatory clause C. hold harmless clause D. power of sale clause
exculpatory clause
After determining an organization's compensation philosophy, the next step in developing a compensation plan is to: A. develop a job description. B. find comparison factors for salary. C. provide stock options or stock grants to employees. D. offer employer-sponsored health insurance.
find comparison factors for salary.
Arbitration differs from mediation in that arbitration: A. works outside the court system. B. is less costly than mediation. C. requires that both parties represent themselves. D. has limited appeal possibilities.
has limited appeal possibilities.
Most small businesses are more _____ than _____. A. cost-directed; profit-directed B. imitative; innovative C. profit-directed; cost-directed D. innovative; imitative
imitative; innovative
A business plan that provides information to potential licensees is referred to as a(n) _____ plan. A. screening B. invention C. operational D. concept
invention
Market scope is important because: A. it helps business owners in determining the size of the target market. B.it helps business owners to decide where to focus their sales and advertising efforts. C. it helps business owners in designing a product. D. it helps business owners in calculating their magic number.
it helps business owners to decide where to focus their sales and advertising efforts.
When your product or service already exists but your firm is the first of its kind in your market, it is considered a(n) _____ business. A. entry-level B. pioneering C. substitutive D. new entrant
new entrant
n _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings. A. check the box taxation B. double taxation C. single taxation D. pass through taxation
pass through taxation
According to the IRS, to be an independent contractor the person must: A. decide how the work must be done in consultation with an employer. B. have all his expenses paid for by an employer. C. perform a service that is not central to the operation of the business. D. not be employed for a distinct term or project.
perform a service that is not central to the operation of the business.
The first step of the strategic planning process for a small business is: A. performing a SWOT analysis. B. reviewing and confirming the goals that define the firm. C. mapping the prospective customers. D. studying the dynamics and trends of the industry.
reviewing and confirming the goals that define the firm.
In evaluating potential employees, a small business owner: A. should hire a moderately qualified person in case filling the position is an urgent requirement. B. should ensure that only a single interviewer meets with a candidate in order to avoid conflicting evaluations. C. should design interview questions such that "yes" or "no" answers are not applicable. D. should accept the candidate's word that he or she possesses a certain skill or knowledge base.
should design interview questions such that "yes" or "no" answers are not applicable.
Industry analysis is defined as the technique used to: A. determine the magic number in a particular industry. B. determine the extent to which a product is similar to another product. C. study the dynamics and trends of an industry.
study the dynamics and trends of an industry.
A(n) _____ is a type of contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform. A. exculpatory agreement B. subcontract C. unilateral contract D. option contract
subcontract
A _____ is an agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements. A. business interruption insurance B. credit insurance C. surety bond D. fidelity bond
surety bond
There are three elements to most aspects of business law - finding the right information, negotiating the specific outcome you want, and: A. choosing the right attorney. B. taking care of the paperwork associated with it. C. checking the law. D. come to an agreement about a particular outcome.
taking care of the paperwork associated with it.
The sales plan of a marketing strategy focuses on: A. the longer-term partnerships to be sought. B. the new markets to be pursued. C. the ways to leverage a firm's assets. D. the day-to-day specifics of how sales are achieved.
the day-to-day specifics of how sales are achieved.
A _____ is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive. A. copyright B. trade secret C. patent D. trademark
trade secret
Responsibility for the actions of another is referred to as: A. direct liability. B. limited liability. C. exculpatory clause. D. vicarious liability.
vicarious liability.
