Innovation and Entrepreneurship

What percentage of states has an unemployment compensation law?

100

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.

An example of a benefit a company can offer is 401(k) All of the answers are correct. sick leave. retirement plans.

All of the answers are correct.

Human resource management includes ________ employees. hiring inspiring managing All of the answers are correct.

All of the answers are correct.

In the context of proper accounting practices, identify a major difference between cash-based and accrual-based accounting systems. Cash-based systems are mostly used by publicly held corporations, whereas accrual-based systems are mostly used by privately held corporations. Cash-based systems are generally used with periodic inventory counting systems, whereas accrual-based systems are used primarily with perpetual inventory counting systems. Cash-based systems must be used by large businesses, whereas accrual-based systems must only be used by the smallest businesses. Cash-based systems recognize revenue as it is generated, whereas accrual-based systems record revenue only when it occurs.

Cash-based systems recognize revenue as it is generated, whereas accrual-based systems record revenue only when it occurs.

________ occur(s) in large companies that have excess resources such as equipment and employees.

Organizational slack

________ aid(s), counsel(s), assist(s), and protect(s) the interests of small business concerns.

The U.S. Small Business Administration

Identify a defining characteristic of venture capital start-ups.

They tend to develop operations in multiple locations very shortly after the initial investment.

True or False: A business can obtain liability insurance, which helps protect the business against lawsuit judgments.

True

True or False: A gap analysis identifies any differences between the demand by customers and the supply provided by firms currently in the market.

True

True or False: A profit and loss statement represents your business performance over time.

True

True or False: In the context of funding a business, crowdfunding refers to funds received by a business by soliciting a large number of very small investors, usually via the Internet.

True

Before establishing a new business, the first thing founders should do is

list their personal skill sets.

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

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

Microloans have been in existence for years; they are commonly made directly to _____ for self-development

women

True or False: Banks will lend money for the establishment and maintenance of inventory by arranging a revolving line of credit.

True

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

In the context of legal forms of business, identify a benefit of a Subchapter S Corporation over a Subchapter C Corporation. A Subchapter S Corporation has more potential for future expansion than a Subchapter C Corporation. A Subchapter S Corporation has no limitations in the number and type of shareholders unlike a Subchapter C Corporation. A Subchapter S Corporation pays for fringe benefits of the owners at its own expense unlike a Subchapter C Corporation. A Subchapter S Corporation can have a larger number of investors than a Subchapter C Corporation.

A Subchapter S Corporation has no limitations in the number and type of shareholders unlike a Subchapter C Corporation.

________ states that individuals make decisions that maximize their own individual benefits.

Agency Theory

True or False: An entrepreneurial business's resources are less constrained than those of a venture capital-backed business

False

When a small business owner pays a commission in addition to a basic salary, it is called ________.

a hybrid compensation system

James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n) ________.

draw

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 its 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

Threats to ________ are threats to the new business in financing its growth, including high development cost.

operational financing

Threats to ________ are threats to the success of a business regarding its opportunity to sell to too many customers and to obtain repeat business

sales generation schemes

Which of the following types of firms do business incubators work best with? tobacco products scientific firms retail stores restaurants

scientific firms

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 her or him.

Which of the following experiences can entrepreneurs evaluate when generating business ideas based on their education?

the courses they took that were particularly enjoyable

In a lease, a landowner can enter a business premises for all the following reasons EXCEPT whenever the landowner wants to. when the landowner wants to manage the rental property. when checking to see if anything is illegal. when the landowner wants to inspect it.

whenever the landowner wants to.

The Small Business Administration has set up which of these to advise individuals wanting to start a new business? Minority Enterprise Development Program Community Incubator Program Small Business Assistance Centers Service Corps of Retired Executives

Small Business Assistance Centers

Marsciva 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 the firm. Based on these characteristics, Marsciva Technologies is most likely a

Subchapter C Corporation

Which of the following laws states an employer cannot discriminate in pay to men and women who do the same job? The Americans with Disabilities Act The Social Security Act The Equal Pay Act The Affordable Care Act

The Equal Pay Act

In the context of risks to new businesses, identify a true statement about risk tolerance. Entrepreneurs can avoid a majority of the risks associated with new start-ups by allowing competitors to invest in their new businesses. What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances. In new markets, entrepreneurs must be willing to put up with risks that outweigh their personal risk tolerance. Risks must be determined by entrepreneurs based on the findings of focus groups with other entrepreneurs in the same industry.

What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances.

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

Of the key accounting reports that a new businessperson should be prepared to generate, which of the following tracks the work times of hourly employees and attendance for salaried employees? an expense account an accounts payable record a chart of accounts a payroll record

a payroll record

True or False: The third column in a gap analysis is where the potential owner should provide a realistic estimation of his or her present resources.

True

True or False: Workers' compensation laws are designed so that employees who are disabled or injured while on the job are provided with some type of compensation.

True

_____ lead(s) to a condition where a single firm making 100 percent of the product is the most efficient.

Economies of scale

Which personality test believes that a person is the result of all experiences in his or her life?

Enneagram

In the context of legal forms of business, identify an accurate statement about a general partnership. A single partner operates as the firm's manager and is directly responsible for any debts owed by the firm. The partner with the largest equity stake makes decisions about the firm's operations. Owners report their shares of losses or profits independent of their interest in the firm. Established partners can bring in new equity partners by surrendering a portion of their ownership position.

Established partners can bring in new equity partners by surrendering a portion of their ownership position

True or False: According to Thomas Stanley and William Donko in their book "The Millionaire Next Door," 50 percent of the millionaires in the United States are self-employed

False

True or 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

True or False: Human resource management is not important in family businesses.

False

True or False: In an entrepreneurial business, a job description document is meant to be a formal, highly structured document as it might be in a large corporation.

False

True or False: In most large corporations, there is no difference between owners and managers.

False

True or False: It is illegal for sole proprietors to run their business by deducting business expenses from their business incomes.

False

True or False: Patents are inexpensive and easy to obtain and maintain.

False

True or False: The first step in developing a quality business idea is to analyze the market.

False

True or False: When performing a gap analysis, an entrepreneur must describe business ideas in detail in the first column.

False

True or False: When using a harvest plan, small companies are organized to grow rapidly, and they have no debt.

False

Which of the following is true of robber barons in the context of the history of entrepreneurial businesses in the United States? They failed to take advantage of the economies of scale. They indulged in great abuses in order to succeed in their business. They were responsible for the failure of several small businesses. They dominated those industrial sectors that were already well-established.

They indulged in great abuses in order to succeed in their business.

True or False: A small business owner should be diligent in documenting the performance of employees over time. This helps the owner to terminate an employee for poor performance and also efficiently handle any legal issues that may arise.

True

True or False: An advantage of a sole proprietorship is that the owner reaps the benefits and doesn't have to share the equity.

True

True or False: As a Subchapter S Corporation, one of the advantages is having legitimacy in the market as a more established form of business.

True

True or False: 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

True or False: 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

True or False: Entrepreneurial orientation relies on an owner's prior work experience

True

True or False: 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

True or False: Future business owners need to understand how their own version of rationality affects their decision making.

True

True or False: In a small family business, the most important support group is the family.

True

True or False: In the context of the triggers that encourage new business formations, circumstance motivators tend to result in more of a defensive positioning.

True

True or False: John takes out a loan for a necessary machine in his business. This type of loan would be called asset-based lending.

True

Which of the following statements is true of a family business? Managing family members is quite easy as the individuals know each other well. A family business gives no importance to human resource management. A family business is generally run by and for the benefit of a particular family. Issues of discrimination within a family business are eliminated if the firm is large.

A family business is generally run by and for the benefit of a particular family.

Identify a true statement about the process of generating business ideas. Frequently, entrepreneurs end up finding an opportunity that matches their business concept exactly. After analysis, entrepreneurs may change their ideas even if they initially thought that their ideas would be successful. Entrepreneurs should limit themselves to generating business ideas based on their education and work experience. Individuals should quickly exploit opportunities they identify before competitors can identify the same gaps.

After analysis, entrepreneurs may change their ideas even if they initially thought that their ideas would be successful.

Which of the following represents the impact of a poor employee on the functioning of a small business? All of the answers are correct. The problems may bleed over to other employees. The organization does not fully benefit from the employee. The owner's time is lost.

All of the answers are correct.

What does a potential entrepreneur need to consider when starting a new business? personality orientation prior experience risk tolerance All of these choices are correct

All of these choices are correct

Identify an accurate statement about the hybrid compensation system. An entrepreneur should provide bonuses in a timely manner that is relevant to the individuals in the firm and within the realities and constraints of the business. An entrepreneur should not differentiate the level of rewards among his employees and should maintain a well-defined structure. An entrepreneur need not consider the industry standards in developing a compensation system. An entrepreneur needs to visualize a quarter as a relevant time frame, whereas workers need to visualize weekly feedback on their performance through a bonus.

An entrepreneur should provide bonuses in a timely manner that is relevant to the individuals in the firm and within the realities and constraints of the business.

True or False: The United States Small Business Administration (SBA) provides a wealth of information and assistance at all level or organizational development and management for new entrepreneurial businesses

True

________ have traditionally been a major source of funds for established firms but are quite restrictive in their lending to start-up firms, as the risk is perceived to be too high.

Banks

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. All partners in a limited liability partnership are jointly responsible for any debts or judgments against the firm. IncorrectLimited partners in a limited liability partnership must be external advisors who do not have a stake in the ownership of the firm. General partners in a limited liability partnership are indirectly responsible for federal taxes owed by the firm.

In a limited liability partnership, limited partners can work at the firm but not be active in its management.

Which of the following is an advantage that family businesses enjoy over non family-owned businesses? Family businesses can afford to fill niches within markets that nonfamily-owned businesses cannot afford to fill. Family businesses are able to respond quickly to change around them, whereas nonfamily-owned businesses are often slow to react to changes. Family businesses have the ability to cheaply produce large numbers of a product, whereas nonfamily-owned businesses can only produce small volumes of a product. Individuals in family businesses are often willing to work at times and in conditions that employees in nonfamily-owned businesses would not accept.

Individuals in family businesses are often willing to work at times and in conditions that employees in nonfamily-owned businesses would not accept.

Which of the following statements is true of the commission compensation system? It creates a uniform system in a firm where every employee is paid the same amount as commission, and it is independent of their performance. It creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm. It creates a rigid compensation system where abuse is minimal, and it removes the frustration for employees and the entrepreneur. It creates an overall healthy environment within a firm when the salespeople are very focused on their commission.

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 is not a characteristic of a high-growth venture? It is designed to reflect the mission of the founder It usually hires a relatively large number of employees It often hires an experienced president to grow the company It has a well-developed organization structure

It is designed to reflect the mission of the founder

In the context of legal forms of business, identify a true statement about sole proprietorship firms. These firms can have multiple founders with equal stakes so long as a single individual is considered to be the owner. Because of the limited nature of the growth potential of such firms, any profits they make are exempt from federal taxation. Many communities discourage the formation of these firms because their operations are difficult to regulate. Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms.

Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms.

Identify a true statement about credit cards from the following. They have low interest rates. They are usually tied to a particular asset. None of the answers is correct. They do not have a set upper limit.

None of the answers is correct.

Which of the following is a defining characteristic of venture capital start-ups? The businesses are well-funded by angel investment. The business is oriented toward the personal goals of the founder. The management structure of the business is designed to take advantage of the skills of the founder. IncorrectThe development plan of the business is oriented around positive cash flow.

The businesses are well-funded by angel investment.

Which of the following statements is true of a performance review in an entrepreneurial business? A new firm should wait for a year to give feedback, and newer generations of employees are looking for such feedback. A complex form should be followed for all performance reviews that are given in writing to assure its validity. If a worker is not performing as expected, then the employer should give only positive feedback to boost the worker's morale. The formal conversation with a worker who is doing a good job and appreciating his or her work is a form of compensation.

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. An entrepreneur must quickly act on any opportunity he or she identifies to maximize profits. An individual who wishes to start a new business should not confine himself or herself to generating ideas based on skills he or she already has. An entrepreneur must avoid involving his or her family in a new venture, because such a partnership has a negative impact on the running of the business. The founder of a new business needs to be intimately involved in its designing, funding, and running.

The founder of a new business needs to be intimately involved in its designing, funding, and running.

Identify a true statement about a large firm that has organizational slack. The firm enjoys extreme financial flexibility and can survive huge annual losses if necessary. The loss of an employee barely affects the abilities of its workforce. The firm's knowledge is concentrated around a few key personnel. Each employee is crucial to the survival of the firm.

The loss of an employee barely affects the abilities of its workforce.

Identify a true statement about entrepreneurial firms. Such businesses tend to develop operations in multiple locations very shortly after the initial investment. The number of employees in such businesses is not expected to grow to more than 50 to 100. Such businesses generally hire an experienced president to grow the company. The organizational structure in such businesses is often well-developed.

The number of employees in such businesses is not expected to grow to more than 50 to 100.

Years ago, economists mistakenly predicted that small businesses would

be replaced by a smaller number of big businesses

In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business?

because it is not clear if the new business will be able to fulfill an order or service a product in the future

In the context of entrepreneurship, which of the following is a typical trigger for starting a new business? getting recruitment offers from established places of work migrating from one city to another having a secure financial base being laid off from established employment

being laid off from established employment

In the context of entrepreneurial orientation, the presence of ________ often leads young people to be pioneers in an area, as they are not limited by the restrictions of the past.

bounded rationality

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

While developing a quality business idea, what should potential business founders ideally do after evaluating their personal skill sets?

carefully analyze the market and look for a gap

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

Credit cards have all the following EXCEPT high interest rate. no set repayment schedule. equity investment. not being tied to a particular asset.

equity investment.

In the context of good accounting practices, ________ allow entrepreneurs to perform a monthly tracking of how much they spend and ultimately form an annual record of all business-related costs.

expense accounts

In the context of financial tools, a business can quickly generate cash in the short run by selling accounts receivable at a discount to another company. This is a technique known as ________.

factoring

The U.S. Census tracks employment by number of employees (among many other statistics), and the latest census reports indicate that ________.

firms with fewer than 99 employees represent 76 percent of all firms in the United States

In the context of legal forms of business, a general partner in a limited liability partnership

has unlimited liability for any debts or judgments against the firm

Brainstorming works well in ________ groups.

informal

The process of generating ideas should occur in a(n) ________ manner and not in a(n) ________ fashion.

interactive; linear

A type of gap analysis that compares the possibilities in the marketplace with an individual's competence to address those gaps is called

opportunity analysis

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

When forming a sole proprietorship or a partnership, the business debts are

the responsibility of the owners.