Small Business Management Exam 1
Which of the following statements is true about failure and small businesses?
A discontinuance may result from the apparent advantages of working for someone else.
Which of the following is the result of the trend in business to become more active globally?
A growing number of large and small U.S. businesses are or are becoming foreign owned.
Which of the following refers to an introspective personal analysis that can help a small business owner determine whether the combination of qualities he or she has will help him or her succeed as a small business owner?
Analysis of one's attitude
_____ nurture young firms and help them to survive and grow during the startup period when they are most vulnerable
Business incubators
A(n) _____ provides the protection of limited liability for shareholders, but its earnings are taxed at both the corporate and shareholder levels.
C corporation
_____ is the organized efforts of independent, government, and business groups to protect end users from undesirable effects of poorly designed and produced products.
Consumerism
_____ is defined as a percentage share of an expensive asset and is most often used for aircraft, sports cars, and real property.
Fractional ownership
Which of the following is true of a limited partnership?
General partners conduct the business.
Which of the following is a reason for the drastic changes in small business management trends?
Improvements in communications and computer technology
Which of the following is an advantage of a corporation?
It cannot make use of a business owner's personal property to pay the debts of the business
What does a buy-sell agreement do?
It details the terms by which stockholders can purchase each other's interest.
What is the purpose of the Uniform Partnership Act (UPA)?
It governs partnerships in the absence of other expressed agreements.
Which of the following is true about proprietorship?
It is the most popular form of business in the United States
Which of the following statements is true of police power?
It is the right to use the force of the state to promote the general welfare of citizens.
Which of the following is an advantage of a proprietorship?
It offers unique tax advantages.
Which form of business combines the advantages of a corporation with the benefits of a partnership?
Limited-liability company
which of the following features must a business have to be classified as small?
Management is independent, and the area of operation is primarily local.
Which of the following is an advantage of partnerships?
More capital can be raised since good credit may be available.
Which of the following factors should be considered while choosing the proper legal form for a business?
Nature of the business
Which of the following is true about the final stage of the typical growth pattern that small businesses tend to follow?
Owners hire managers to run the firms
Which of the following is the main goal of an incubation program?
Produce businesses that are financially viable and freestanding
Which of the following statements is true about the typical growth pattern of a small business?
Professional managers who work in small companies move from one company to another as they progress upward in rank and earnings.
Which of the following does a business incubator do to help small business owners succeed?
Provide management assistance and shared office services
Which of the following may be a good test for ethical behavior?
Rotary International's "Four-Way Test"
_____ is a business's obligation to set policies, make decisions, and follow actions that are desirable in terms of a society's values and objectives.
Social responsibility
Which of the following is a requirement of a successful fractional ownership?
The co-owners must be honest in their dealings.
Which of the following statements is true about small businesses?
The manager usually owns the business
Which of the following is a major reason for the increased interest in small business?
There is a growing trend toward self-employment.
What are articles of copartnership?
They are drawn up before the formation of a partnership to show the rights, duties, and responsibilities of each partner.
Which of the following is true of S corporations?
They are exempted from multiple taxations
Which of the following best describes one of the contributions of small businesses
They are sources of new ideas or services that larger businesses may be unable to provide
Which of the following best describes the purpose of articles of incorporation?
They are the instruments by which a corporation is formed.
Which of the following best describes the work carried out by the board members in a corporation?
They represent the stockholders in managing the company.
Identify a true statement about bankruptcy?
Under bankruptcy law, people or businesses can petition the courts to be relieved of the obligation to pay debts they cannot repay.
Which of the following is a problem faced by small businesses today?
Unexpected growth and financing issues
AMF Systems uses certain standards to judge the rightness or wrongness of its business's and its personnel's relations to others. These standards are called ____
business ethics
According to the Small Business Administration's (SBA) Office of Advocacy (www.sba.gov), only _____ tend to be dominated by larger businesses.
construction and personnel/supply services
_____ is the movement to protect the valid interests of consumers and is a major force in small business today.
consumerism
A business that is owned by and operated for the benefit of patrons using its services is called a _____.
cooperative
Mark opened a café in his neighborhood. Soon his café became very popular, and his revenues started increasing. Steve, the owner of a popular restaurant, saw Mark's success and asked him to join his restaurant. The financial incentive that Steve offered Mark was more than what he earned at his café. Moreover, Mark would not have to face the daily hassles of managing everything on his own. Mark decided to shut down his café and join the restaurant. This is an example of
discontinuance
_____ is a voluntary decision to terminate a business.
discontinuance
A disadvantage of a partnership is that:
each partner is responsible for the acts of every other partner
A buy-sell agreement states what a business can do and provides other organizational and financial information.
false
A cooperative is a business owned by two or more persons who have unlimited liability for its debt and obligations.
false
A limited partnership firm is managed by the concerned limited partners.
false
Employees in large workplaces have higher job satisfaction than those in smaller firms.
false
In formal failures, an owner who cannot succeed voluntarily terminates the business
false
Limited-liability companies are permissible only in a few states in the United States.
false
Most of the growing industries are dominated by large companies.
false
Once the choice of a legal form for a new business has been made, it cannot be changed until the business is dissolved or sold.
false
Partnerships account for significant revenues in services, trade, and construction.
false
The board of directors conducts the day-to-day operations of a business.
false
The owners of any corporation are usually the corporate officers.
false
With advances in technology, many tasks in the health care industry are now performed by highly paid and skilled workers.
false
in a corporation, personal property of the owners can be taken to pay the debts of the business.
false
in a limited partnership, the general partners have limited personal liability for the debts of the business.
false
The most common type of industry for a _____ is agriculture.
family limited partnership
The length of service of professional managers (as opposed to owner-managers) in small businesses tends to be relatively long
flase
The occupation with the fastest growth overall is ____
health care
Which of the following statements is true about small businesses?
inadequate management in small businesses creates problems for small business owners and entrepreneurs
A new small business owner's primary motive is usually ____
independence, that is, freedom from interference or control by superiors
An entrepreneurial venture is characterized by
innovative strategic practices and/or products
Which clause gives the U.S. Congress the right to "regulate commerce with foreign nations, and among the several states"?
interstate commerce clause
A disadvantage of a corporation is that:
it is subject to double taxation.
In an endeavor where neither party can achieve its purpose alone, a _____ becomes a viable option.
joint venture
Smaller firms tend to
keep larger firms competitive
A _____ is formed for civic, educational, charitable, and religious purposes.
nonprofit corporation
A partnership is a form of business that is
owned by two people who share ownership of a single business.
Which of the following is true about the first stage of the typical growth pattern that small businesses tend to follow?
owners manage the business and do all the work
_____ is defined as trying to prevent the contamination or destruction of the natural environment.
pollution control
____ law is administered between two or more citizens.
private
A corporation formed by a doctor for the sole purpose of providing his services for which he is licensed is called a(n) _____.
professional service corporation
The _____ form of business generates significant revenues in services, trade, and construction in the United States.
proprietorship
Small business owners prefer a proprietorship over other forms of business because it:
provides relative freedom of action and control.
_____ is the fundamental redesign of a business, often resulting in reduction in size and markets.
reinvention
refers to the process of reducing the number of employees to increase efficiency
rightsizing
A _____ is any business that is independently owned and operated and is not dominant in its field of operation.
small business
Which of the following is true of a limited liability partnership
states that recognize limited liability partnerships sometimes limit them to organizations that provide a professional service for which each partner is licensed.
Which of the following is a reason for starting a small business?
to satisfy personal objectives
A corporation is considered by law to be a unique entity, separate and apart from those who own it.
true
A proprietorship legally ends with the owner's death, and some legal action must be taken to restart it.
true
An advantage of a corporation is that large amounts of capital can be raised easily.
true
Articles of incorporation are the instrument by which a corporation is formed under the corporation laws of a given state
true
From a legal standpoint, in a proprietorship, a business and its owner are one and the same and cannot be separated.
true
In a corporation, the shareholders elect a board of directors to oversee major policies and decisions.
true
In a partnership, each partner is responsible for the acts of all the other partners.
true
In an S corporation, all shareholders involved in the firm must be individuals, estates, or some type of personal trust.
true
Not all small business owners and managers make a lot of money, nor do they all intend to
true
One of the causes of discontinuance or failure is that the amount of time and/or physical effort demanded of the small business manager was not recognized and/or planned for
true
Personal failures are more common than formal failures
true
Proprietorship is the oldest and most prevalent form of ownership in the United States.
true
Small business owners expect quick and concrete results from their investment of time and capital instead of engaging in the long-range planning.
true
The articles of copartnership should be drawn during the preoperating period and should show the rights, duties, and responsibilities of each partner.
true
The main disadvantage of a corporation is double taxation.
true
The reality that small businesses train people to become better leaders and managers and to develop their talents and energies more effectively has led more college graduates to seek full-time jobs with small businesses
true
Those interested in small business management need to understand what the challenge of being active globally is and what the rewards may be
true
Usually, income derived from a joint venture is taxed as if the organization were a partnership.
true
While the usual incubation period of a business is two to three years, 30 percent of incubator clients typically graduate each year.
true
With so much time, money, and energy devoted to the business, small business owners tend to have more zeal and devotion than do managers of big companies
true
the traditional form of a corporation is called a C corporation.
true
