ENT 2113 final

Identify a legal question that an employer can ask during an interview.

"Do you have a Social Security number?"

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.

A small business start-up is typically oriented toward the personal goals of venture capitalists.

False

Whether hiring for a line worker or a first line manager, an owner should devote the same amount of time in checking references.

False

he Americans with Disabilities Act regulates firms with how many employees?

15 or more employees

What percentage of U.S. millionaires are self-employed?

66.7

Currently under the _____, firms with more than 50 employees are required to offer their employees insurance.

Affordable Care Act

Accrual-based accounting is a system where expenses and revenues are recorded when they occur.

True

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

True

One advantage that a large firm has over a small firm is economies of scale.

True

Some small business owners find a patent, and then get permission from the owner to develop marketable products based on it.

True

_____ is a fund that is organized as a limited partnership.

Venture capital

In the context of entrepreneurship, which of the following is a typical trigger for starting a new business? a. Being laid off from established employment b. Getting recruitment offers from established places of work c. Having a secure financial base d. Migrating from one city to another

a. Being laid off from established employment

Which popular personality test assumes there are five components or types of an individual's personality? a. Big Five b. Myers-Briggs c. Enneagram d. Insights

a. Big Five

Which of the following terms means a set amount of compensation for a given time period? a. Salary b. Commission c. Paycheck d. Hourly wage

a. Salary

Investors can be a. all of these. b. active. c. a minority. d. passive.

a. all of these

The development and implementation of a new business is part _____ and part _____.

art; science

Which of the following information should be obtained in the application/interview process? a. Education and training b. All of these c. Social Security number d. Work history

b. All of these

Which of the following is NOT a personal motivator to start a business? a. Being proactive b. Taking a defensive position c. Feeling driven to achieve goals d. Willing to make career-changing moves

b. Taking a defensive position

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

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

A small business owner must possess all of the following EXCEPT a. passion for starting a business. b. a sequential formula. c. necessary skills to run the business. d. an in-depth understanding of the market.

b. a sequential forumla

Incubators for small businesses include all of the following EXCEPT: a. legal expertise. b. financial loans. c. common receptionist. d. space.

b. financial loans.

Job advertisements written for a new hire should

be kept concise and should communicate the culture of the firm.

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

When conducting a gap analysis, the first column should include the _____.

business ideas

All of these are potential issues for an owner in a family business EXCEPT: a. reprimanding a family member. b. firing a family member. c. all of these. d. promoting a family member.

c. all of these

The founders of a small business need to be involved in which of the following tasks when starting the new business? a. Operating b. Design c. Funding d. All of these

d. All of these

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

d. All of these

Which of the following statements is true of the Fair Labor Standards Act (FLSA)? a. It includes all workers, including workers on small farms and administrative employees. b. It provides that each and every business must provide unfettered access to all disabled people. c. It allows an entrepreneur to employee children under the age of 15 years if he or she can establish the safety of the working environment. d. It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half.

d. It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half.

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

draw

In an interview, an interviewer can ask questions about

prior convictions

An employee cannot sue a small business owner for injury, if the individual accepts _____.

workers' compensation

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.

Sonor Designs is a small business that makes greeting cards. Because of the small scale of the firm's operations, it cannot afford to purchase the expensive printers it needs to make greeting cards. Instead, it rents the printers from another organization. In the context of business financing, Sonor Designs renting essential business equipment from another company is an example of

asset leasing

Which personality test believes that a person is the result of all experiences in his or her life? a. Big Five b. Myers-Briggs c. Insights d. Enneagram

d. Enneagram

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

John reviews Michael's performance on the goals and outcomes that were set 12 months ago. This is called a goal review.

False

Patents are inexpensive and easy to obtain and maintain.

False

Qualitative gap analysis charts require extensive research into markets and business practices to complete.

False

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.

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.

Which of the following was the outcome of the Great Depression of the 1930s? a. It led to the initial development of a large industrial base in the United States. b. It was harder on larger more mature businesses than on entrepreneurial businesses. c. The government deregulated all small- and medium-sized enterprises. d. Entrepreneurial business as a percentage of the U.S. economic output began to decline.

d. Entrepreneurial business as a percentage of the U.S. economic output began to decline.

A company seeks to have inventory present only shortly before it is used. This method of inventory control is called

just-in-time inventory.

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

list their personal skill sets.

Zeus Cisterns is a large manufacturing firm with several employees. Many of the firm's employees are knowledgeable about the firm's various operations and requirements. Accordingly, the organization's functioning is barely affected when an experienced employee quits. Further, in an emergency, various employees can fulfill any critical role that needs to be handled immediately. Given these characteristics, Zeus Cisterns can be said to have _____.

organizational slack

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

Trilane Systems is a small business. Its owner, Myra, is also its only employee. She handles the business's operations herself and is responsible for all of the business's income and losses. In the context of the legal forms of business, Trilane Systems is a

sole proprietorship.

Accepting _____ ties a firm to the supplier and usually stops the firm from shopping around for a lower price.

supplier credit

Miriam starts a new boutique that specializes in fashionable clothing made from environmentally friendly materials. She prices her products competitively to attract customers. However, she discovers that the revenue earned from each piece of clothing the boutique sells barely makes back its labor and material costs. In this scenario, the threat to business success experienced by Miriam's boutique is

threat to profit margin.

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 is easier to form than a Subchapter C Corporation.

What is the major difference between a board of directors and a board of advisors?

A board of directors have fiduciary responsibility, whereas a board of advisors advise the firm.

One form of funding for new small businesses is grants from governmental and private foundation sources.

True

One of the advantages as a Subchapter S Corporation is having legitimacy in the market.

True

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 ventures. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as

a venture capital fund.

Which of the following personality tests is based on the philosophy of Carl Jung? a. Myers-Briggs b. Big Five c. Insights d. Enneagram

a. Myers-Briggs

Potential owners should examine all of these specific areas before choosing a business idea EXCEPT a. work experience. b. family history. c. education. d. financial history.

d. financial history

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

The "glass ceiling" refers to the practical reality that many working women face which prevents them from advancing beyond certain levels of corporate hierarchies.

True

The reason a business is called a family business is that the owner's family plays a critical role in the success of the business.

True

When a potential business owner has several ideas for a business, he or she needs to identify one on which to perform a due diligence analysis.

True

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

Which kind of business is NOT likely to be eligible for a microloan program? a. Telecommunication center b. Serving weaving baskets c. Meals delivery d. Washing clothes

a. Telecommunication center

In the context of non-equity funding, identify a true statement about loans.

Debt holders have a right to a firm's assets if the firm fails to pay off their loans.

A venture capital start-up is oriented toward the personal goals of the founder(s).

False

Entrepreneurs driven by circumstantial motivators are often more proactive than those with personal motivation for starting a business.

False

Entrepreneurs must quickly react to any business opportunities they identify to maximize their gains.

False

Large companies understand their customers more in the local area compared to a small firm.

False

One of the huge advantages of starting one's own business is that someone else can be the boss. Small business owners are motivated by two areas to start a business: the desire to be their own bosses and to set their own working hours.

False

You should start a business doing something you have a passion for because you will spend more time starting and running the business than if you start a business that does not excite you.

True

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

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

Identify a true statement about the history of entrepreneurial businesses in the United States. a. The Great Depression of the 1930s was harder on mature businesses than on entrepreneurial businesses. b. The Great Depression of the 1930s was harder on mature businesses than on entrepreneurial businesses. c. Steel and automobile manufacturing in the United States flourished in the late 1970s and early 1980s. d. Entrepreneurial businesses as a percentage of the U.S. economic output began to grow exponentially following World War II.

b. The Great Depression of the 1930s was harder on mature businesses than on entrepreneurial businesses.

Identify a true statement about the potential founder of a new business. a. 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. b. The founder of a new business needs to be intimately involved in its designing, funding, and running. c. 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. d. An entrepreneur must quickly act on any opportunity he or she identifies to maximize profits.

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

In the context of entrepreneurship around the world, identify a true statement about microloans. a. The failure of such loans has resulted in a decreasing dedication of the U.S. aid budget to microloans for developing b. The success of such loans has been substantial, with great strides being made in many desperately poor nations. c. Such loans typically see much lower repayment rate than most types of loans d. The repayment rate on such loans is typically 50 percent.

b. The success of such loans has been substantial, with great strides being made in many desperately poor nations.

Which of the following is a difference between large organizations and entrepreneurial businesses? a. Unlike large organizations, entrepreneurial businesses are burdened by policies, procedures, corporate layers of management, and public stockholders. b. Unlike entrepreneurial businesses, large organizations will regularly ignore business opportunities if they fail to believe the results will generate high profits. c. Unlike large organizations, entrepreneurial businesses do things more efficiently because they are easily able to achieve economies of scale. d. Unlike entrepreneurial businesses, large organizations have a better understanding of the local community in which they conduct business.

b. Unlike entrepreneurial businesses, large organizations will regularly ignore business opportunities if they fail to believe the results will generate high profits.

All of the following are benefits of a Subchapter C Corporation EXCEPT a. owners being treated as employees of the company. b. fringe benefits being treated as income. c. no limit to the number of shareholders. d. health benefits paid by the corporation.

b. fringe benefits being treated as income.

The largest group of new business owners is _____.

women

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

Identify a true statement about the process of generating business ideas. a. Individuals should quickly exploit opportunities they identify before competitors can identify the same gaps. b. After analysis, the opportunity identified might be very different from the business idea initially conceived. c. Entrepreneurs should limit themselves to generating business ideas based on their education and work experience. d. Potential business owners must now become personally involved in their new ventures, and they should look at it as a purely financial endeavor.

b. After analysis, the opportunity identified might be very different from the business idea initially conceived.

What are the critical elements that an entrepreneur must solve for success? a. An effective sales generation model b. All of these c. Being properly financed d. Sustainable operating profit margins

b. All of these

_____ occur(s) in large companies that have excess resources such as equipment and employees. a. Unlimited boundaries b. Limited boundaries c. Organizational slack d. Organizational resources

c. Organizational slack

Which of the following is NOT included in the second column of labeled categories in a gap analysis? a. Time b. Nonfinancial resources c. Finances d. Inventory resources

d. Inventory resources

Successful new business ideas can come from a. hobbies. b. an individual's background. c. books and magazines. d. all of these.

d. all of these.

Women entrepreneurs are starting small businesses for all but one of the following reasons a. manage family needs. b. hit the glass ceiling. c. greater control of their lives. d. better ideas for small businesses.

d. better ideas for small businesses.

All of these are harvest plan strategies EXCEPT: a. participating in an IPO (public offering of stock). b. selling it to a group of investors. c. selling the business to another firm. d. franchising.

d. franchising

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

Funding for any new business starts with a(n) _____.

founder(s)

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

operational financing

A prospective small business owner wants a career playing sports, which is what he enjoys doing most. He might be drawn to try an entrepreneurial venture in order to realize:

personal fulfillment.

Sea Waves Tours and Avis Travels enter into a formal agreement with each other. Under this agreement, over the next year, 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.

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 non-equity 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.

A business plan should be a tool to think through a wide range of issues related to starting and growing a business.

True

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

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

Damage from floods and earthquakes is covered by a special form of insurance coverage. A small business owner, who chooses, may purchase it in addition to basic insurance.

True

Debt, a source of non-equity 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

Human resources has been defined in economics as the quantity and quality of human effort directed toward producing goods and services.

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 the context of legal forms of business, identify a true statement about limited liability partnership (LLP). a. Limited partners in a limited liability partnership must be external advisors who do not have a stake in the ownership of the firm. b. All partners in a limited liability partnership are jointly responsible for any debts or judgments against the firm. c. In a limited liability partnership, limited partners can work at the firm but not be active in its management. d. General partners in a limited liability partnership are indirectly responsible for federal taxes owed by the firm.

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