final exam
in the context of legal forms, a general partner in a limited liability partnership
has unlimited liability for any debts or judgements against the firm
in general, the greater the debt a business owner is willing to take on, the ______ the risk tolerance
higher
which of the following statements is true of the civil rights act
it currently applies to all firms with more than 25 employees
in the context of proper accounting systems, which of the following best describes accrual-based accounting
it records expenses and revenues when they actually occur, regardless of when the cash is received
a company seeks to have inventory present only shortly before it is used. this method of inventory control is called
just-in-time inventory
what term is used to describe individuals or other organizations that impact the success of a business
stakeholders
Borealis Computing is a small start-up firm that needs to purchase essential equipment and supplies to begin operations. Gencent LLC, a larger firm, offers to finance Borealis Computing's purchases. Under their agreement, Borealis Computing will repay Gencent LLC overtime at a specified interest rate. In the context of nonequity funding, Gencent LLC's financing of Borealis Computing's purchases is an example of ________.
supplier credit
all of these are threats to business success EXCEPT a. profit margins b. deficit gaps c. operational financing d. sales generation schemes
deficit gaps
in the context of proper accounting techniques, the system that recognizes expenses when they are paid for and recognizes revenue as it is generated is known as __________
cash-based accounting
in the context of proper accounting practices, identify a major difference between cash-based and accrual-based accounting systems
cash-based systems recognize revenue as it is generated, whereas accrual-based systems record revenue only when it occurs
james and mary own a business. when they pay themselves an advance in salary or a bonus, its is called a(n) _________
draw
established businesses are willing to make ________ investments in other start-up firms
equity
Covore Inc., a start-up firm, receives the majority of the funds it requires to begin its operations from five individuals. In exchange for these funds, each individual receives a share of ownership in the firm. The funds provided to Covore Inc. by the individuals are an example of ________
equity investment
in the context of legal forms of business, identify an accurate statement about a general partnership
established partners can bring in new equity partners by surrendering a portion of their ownership position
Human resource programs for small companies are the same and have the same effects as large businesses.
false
a business that chooses to form a corporation must have a board of directors. in new small corporations, the board of directors and shareholders must be different individuals
false
a company can use personality testing, even though there is no direct link between the test and the skill set necessary for the job
false
a contract must always be in written form, and it must be signed by the parties involved
false
a grant, a form of nonequity funding, is expected to be repaid at a predetermined interest rate once a beneficiary firm begins to profit from its operations
false
any fines levied by the Occupational Safety and Health Administration (OSHA) are equal for entrepreneurial businesses with fewer than 25 employees as they are for large businesses
false
bonus systems are as well defined as profit sharing and the level of reward is independent of the discretion of an entrepreneur
false
founders cannot lend money to their own firm
false
human resource programs for small companies are the same and have the same effects as large businesses
false
in a small business, an owner needs to consider how much debt he or she wants to accumulate in the business. the greater the debt, the lower the risk tolerance
false
in the case of business failure, debt does not need to be repaid
false
the unlimited theory suggests that individuals act to maximize their own individual benefit
false
there is one crucial person in a large organization: the chief executive officer
false
incubators for small businesses include all of the following except
financial loans
all of the following are benefits of a subchapter C corporation EXCEPT
fringe benefits being treated as income
________ are special funds that are neither equity nor debt, that do not require repayment, and are designed to aid businesses in specific areas
grants
in the context of legal forms of business, identify a true statement about limited liability partnership (LLP)
in a limited liability partnership, limited partners can work at the firm but not be active in its management
which of the following is NOT a personality dimension of the big five test
individualist
which of the following statements is true of the commission compensation system
it creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm
which of the following statements is true of the Fair Labor Standards Act (FLSA)
it requires that all nonexempt employees who work over 40 hours a week should be paid at a rate of time and a half
carla and john enter into a partnership and form a business. under the partnership agreement, carla is directly responsible for the management of the firm and it's liabilities. john has a minor financial stake in the firm and works there, but he is not held responsible for the taxes and debts owed by the firm. in the context of the legal forms of business, carla and john have formed a _________
limited liability partnership
a(n) _________ is an index wage that requires the minimum wage to be at least what someone who works 40 hours a week needs to stay out of poverty
living wage
in the context of business designs, one of the advantages of a corporation is that when it suffers losses, the founders will
lose only their investment in the business rather than their life's savings
which of the following entrepreneurial firms needs to pay special attention to OSHA guidelines regardless of their size
manufacturing firms
the success of entrepreneurial businesses occurs partially because they are __________
more focused than their large corporate counterparts
which personality test indicates the different ways individuals deal with other people and their environments
myers-briggs
human resources, as defined in economics, is the ________ and ________ of human effort directed towards producing goods and services
quantity; quality
sea waves tours and avis travels enter into a formal agreement with each other. under this agreement, over the next years, sea waves tours will recommend avis travels to all its customers. avis travels will pay a small commission for every new customer they gain as a result of this recommendation. in this scenario, sea waves tours and avis travels have
signed a contract with each other
marscivia technologies is an emerging business. the firm considers the owners to be employees of the firm and therefore pays them salaries and bonuses. to reduce corporate tax, the owners of marsciva technologies pay themselves nearly all the profits generated so that very little actual profits are reported by firm. based on these characteristics, marsciva technologies is most likely a
subchapter C corporation
which of the following can be a threat to operational financing a. swift expansion plans b. low inventory needs c. a team with a high asset base d. low development costs
swift expansion plans
which of the following is NOT a personal motivation for an individual to start a business
taking a defensive position
in contrast to the role of leadership in a typical large organization, the founder of a new entrepreneurial business tends to play a very critical role because
the concentration of knowledge tends to be with him or her
which of the following statements is true of a performance review in an entrepreneurial business
the formal conversation with a worker who is doing a good job and appreciating his or her work is a form of compensation
identify a true statement about the potential founder of a new business
the founder of a new business needs to be intimately involved in its designing, funding, and running
the break-even point is defined as
the level where revenue coming into the firm is sufficient to cover expenses
identify a true statement about a large firm that has organizational slack
the loss of an employee barely affects the abilities of its workforce
in the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships
the possibility of bringing in new equity partners
in the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships
the possibility of brining in new equity partners
the Americans with Disabilities Act regulates firms with how many employees
15 or more employees
the government regulates the employment of children under the age of ________
16
what percentage of U.S. millionaires are self-employed
50%
which of the following personality tests is popular in universities and is composed of factors that are considered by many researchers to be the key components or types of an individuals personality?
Big five
in the context of legal forms of business, identify a benefit of a subchapter S corporation over a subchapter C corporation
N/A
what does OSHA stand for
Occupational Safety and Health Administration
which of the following statements is true of a family business
a family business is generally run by and for the benefit of a particular family
in the context of entrepreneurial businesses, which of the following is an advantage that small businesses have other big businesses
ability to produce small niche products
currently under the ________, firms with more than 50 employees are required to offer their employees insurance
affordable care act
identify a true statement about the process of generating business ideas
after analysis, entrepreneurs may change their ideas even if they initially thought that their ideas would be successful
an example of a benefit a company can offer is __________ a. retirement plans b. sick leave c. 401(k) d. all of the answers are correct
all of the answers are correct
when forming a sole proprietorship or partnership, the business debts are
the responsibility of the owners
the first column in a gap analysis is devoted to various business ideas
true
the success of entrepreneurial firms pursuing new opportunities requires a number of deliberate actions by the business founder concerning human resources issues
true
a potential business owner needs to convey his or her business idea to a prospective investor or lender in ________ minutes
two
what is the difference between venture capital funds and business angels
venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses
in the context of risks to new businesses, identify a true statement about risk tolerance
what constitutes a risk is determined by an entrepreneur by observing his or her own tolerances
the largest group of new business owners is
women
an employee cannot sue a small business owner for injury if the individual accepts ____________
workers' compensation
According to the equity theory, employees are happy and satisfied when they feel that their compensation—given their performance—is equal to that of other employees in the firm or other individuals in similar situations.
true
Debt, a source of nonequity funding, allows a new business to handle the disparity between when goods must be purchased and when money will be received from a customer to pay for those goods.
true
Large firms can absorb bad employees easier than small businesses because they have organizational slack.
true
The time period for which profit sharing or bonuses are given should be relevant to the individuals in a firm and within the realities and constraints of the business.
true
a business can obtain liability insurance, which helps protect the business against lawsuit judgments
true
a copyright is good for the life of the author plus 70 years
true
a difference between copyrights and patents is that copyrights apply to creative materials generated while patents cover specific innovations that are generally industrial or process-based
true
a loan involves a contractual agreement where a business receives some amount of money that must be repaid over a specified period of time at a specified interest rate
true
a persons past work experience is a source of skills and ideas for new business
true
assume that an opportunity exists in northern minnesota. a customer needs a "hand warmer" packet. mary, a new business owner, decides she has the ability to address this gap because she knows how to produce hand warmer packets. this process is called gap analysis
true
each business plan, like every business, should have its own voice, feel, and style
true
every business that has been documented in the Fortune 500 list began as a new venture by a single individual or a small group of people
true
extra expenses, not counted on in the planning stage of a new business, can quickly eat up cash intended to grow the business
true
if a new business deals with toxic waste such as asbestos, it can expect to be subject to significant regulation, regardless of the size of the firm
true
in a subchapter C corporation, it is possible to have a double taxation situation
true
potential entrepreneurs must determine the level of risk that they are able to tolerate
true
shrinkage of a firm's inventory can result from either employee or customer theft
true
supplier credit is typically offered on both physical assets and actual supplies of inventory purchased by a business
true
the Americans with disabilities act requires that there should be no discrimination in the hiring, management, or dismissal of employees with disabilities
true
the federal general accounting office did an analysis of the impact of the closure of military bases and discovered that in the areas where military bases closed, the unemployment rate was less than the national average. this is because of the starting up of new small businesses in the areas.
true
identify a legal question that an employer can ask during an interview
"do you have a social security number?"
what is the major difference between a board of directors and a board of advisors
a board of directors has fiduciary responsibility, whereas a board of advisors advises the firm
carla is a high-net-worth individual who was once an entrepreneur. she now financially invests in small start-ups and businesses. though carla funds their initial operations and advises them on the best way to develop their operations, she rarely interferes with their day-to-day operations. in the context of the various forms of equity funding, carla is most likely
a business angel
when a small business owner pays a commission in addition to a basic salary, it is called _______
a hybird compensation system
in the context of good accounting practices, the organizational fund used for expenses too small to write a check for is known as
a petty cash fund
a small business owner must possess all of the following EXCEPT a. a sequential formula b. necessary skills to run the business c. passion for starting a business d. an in-depth understanding of the market
a sequential formula
in the context of legal business forms, identify a benefit of a subchapter S corporation over a subchapter C corporation
a subchapter S corporation has no limitations in the number and type of shareholders unlike a subchapter C corporation
Several successful businesspeople establish a partnership with each other. They combine their financial resources and use the resultant pool of resources to make equity investments in various high-growth new undertakings. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as
a venture capital fund
several successful business people establish a partnership with each other. they combine their financial resources and use the resultant pool of resources to make equity investments in various high-growth new undertakings. in the context of equity funding, the partnership and the pooled resources of the business people are best described as
a venture capital fund
what are the advantages of leasing equipment for a new business a. no hassles of an aging asset b. all of the answers are correct c. beginning operations with a minimum cash outlay d. ability of the business to trade up as newer high-quality machines become available
all of the answers are correct
which of the following is a key report that a new business owner should be prepared to generate a. a check register b. an expense account c. a chart of accounts d. all of the answers are correct
all of the answers are correct
which of the following questions should a new business owner examine when considering leases a. who is responsible for maintenance and improvements? b. is there an ability to renew the lease? c. what exactly is the new business owner leasing? d. all of the answers are correct
all of the answers are correct
which of the following statements is true of worker's compensation a. once an employee accepts workers' compensation, he or she cannot sue the entrepreneur for the injury caused due to unsafe working conditions b. it is limited to partial wage replacement and medical bills acquired while treating the injury caused at the workplace c. all of the answers are correct d. it is given to an employee who qualifies for the compensation, regardless of the fault of the owner
all of the answers are correct
all of these are potential issues for a new owner in a family business except a. all of these choices are correct b. promoting a family member c. reprimanding a family member d. firing a family member
all of these choices are correct
in the context of legal forms of business, a subchapter S corporation
allows the owners to treat the income of the firm as part of their personal incomes
identify a true statement about the process of generating new business ideas
as a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful
a bank provides john money for the necessary hamburger maker for his business. this is called _________
asset-based lending
job advertisements written for a new hire should
be kept concise and should communicate the culture of the firm
years ago, economists mistakenly predicted that small businesses would
be replaced by a smaller number of big businesses
women entrepreneurs are starting small businesses for all but which one of the following reasons
better ideas for small businesses
when conducting a gap analysis, the first column should include the ___________
business idea
in the context of business risks, how can an entrepreneur identify competitors to a new potential business
by observing what potential customers do to satisfy their current needs or wants
credit cards have all of the following EXCEPT a. high interest rate b. equity investment c. no set repayment schedule d. not being tied to a particular asset
equity investment
entrepreneurial businesses fail to provide a means to meet the varied demands that individuals face in society
false
firms that have low initial capitalization have an opportunity to grow faster
false
in a sole proprietorship, all the income and losses are reported on schedule D of the 1040 tax form
false
in an interview, an owner can ask an applicant if he or she has ever been arrested for a crime
false
patents are inexpensive and easy to obtain and maintain
false
the business plan for a small business should be at lease 50 pages long
false
the excess resources that large companies tend to have to assist them are referred to as organizational redundancies
false
the founders of an entrepreneurial business must avoid personally lending money to the business, as such debts are considered to be unsecured investments that need to be paid back, should the business fail
false
the second column in a gap analysis is devoted to listing the market need
false
before establishing a new business, the first thing founders should do is
list their personal skill sets
in the context of business designs, one of the advantages of a corporation is that when it suffers losses, the founders will
lose only their investment in the business rather than their life savings
identity a true statement about credit cards from the following a. they are usually tied to a particular asset b. they have low interest rates c. they do not have a set upper limit d. none of the answers is correct
none of the answers is correct
threats to ________ are threats to the new business in financing its growth, including high development cost
operational financing
__________ occur(s) in large companies that have excess resources such as equipment and employees
organizational slack
which of the following is NOT a factor in a small business's success
other people's needs and wants are not as important as the small business owners
one of the accounting records maintained by visors inc. lists the number of regular work hours worked by its employees, the overtime hours worked by various employees, and the firm's overtime pay rate. this record also tracks salary checks issued to each employee. this record is most likely a(n) ___________
payroll record
a harvest plan for a small business means the owner is
planning to exit a small business
a job offer is finalized by ________
the candidate signing the offer
which of the following laws states an employer cannot discriminate in pay to men and women who do the same job
the equal pay act
the united states small business administration (SBA) was organized as part of
the small business act of July 30, 1953
which of the following is true of robber barons in the context of the history of entrepreneurial businesses in the United States
they indulged in great abuses in order to succeed in their business
in the context of the initial developments of the industrial base in the United States, which of the following statements is true about robber barons
they quickly came to dominate new sectors of the economy
