ENT TEST 2

It is important to record and balance the company account on at least a _____ basis.

monthly

The new business should employ all ______ funding mechanisms available before seeking _____ funding.

nonequity; equity

A company's compensation system is _____.

of the highest importance for employees

General and limited are two broad categories of _______

partnership

A hybrid compensation system _____.

pays a salary along with a commission

A copyright can be claimed on creative materials generated. Identify the examples of such materials. (Check all that apply.)

- Advertising copy - Books and magazines

Which of the following items should be included on the payroll record? (Check all that apply.)

- Benefit deductions - Base pay and overtime pay rate - Taxes - Number of hours worked

Which of the following are benefits of a Subchapter S Corporation? (Check all that apply.)

- Consolidation of business and personal income for tax benefits - Relatively easy to form compared with Subchapter C - Limited liability for the owners - Legitimacy in the market as a more established form of business

Which of the following are true with regard to managing the flow of data in the context of businesses? (Check all that apply.)

- Data are obtained in a timely manner. - Data are tied to the strategic needs of the business.

In which of the following business forms do the business debts flow directly to the owner(s)? (Check all that apply.)

- General partnership - Sole proprietorship

Which of the following typically issue grants? (Check all that apply.)

- Government - Private foundations

Identify the true statements about equity investment. (Check all that apply.)

- In the case of dissolution, each investor is entitled to the percentage of the break-up value equal to their investment percentage. - Equity investment involves selling a percentage of the business to an outside party.

Which of the following is a human resources issue for family firms? (Check all that apply.)

- It is more difficult to fire or discipline a family member. - Family members may make another angry, since they know that member's "hot buttons."

Which of the following statements about a job description are correct? (Check all that apply.)

- It states the skills and capabilities that the employee needs. - It describes the job that is to be filled. - It provides information on benefits.

Which of the following are true statements about a C corporation? (Check all that apply.)

- Profits that are not paid out for such items as salaries are retained for future expansion. - It considers the owners as employees and pays them salaries and bonuses.

Which of the following statements regarding bonus systems are correct? (Check all that apply.)

- They are not as well defined as profit sharing. - They are based on the employee's performance. - They are similar to profit sharing.

Which of the following are true about loans as a source of funding for new businesses? (Check all that apply.)

- They are often repaid monthly from cash flow. - They are secured by assets or a personal guarantee.

Identify the questions that should be considered by a new business owner before entering into a lease contract. (Check all that apply.)

- Who has to carry the liability insurance and at what level? - Who would be responsible for making improvements to the facility? - Who is responsible for maintenance and other facilities issues? - Can the business owner renew the lease after the term expires?

Which of the following are low- or no-cost means of advertising a job opening? (Check all that apply.)

- Word of mouth - Trade association - College placement office

An inventory record will include: (Check all that apply.)

- a description of the item - a unit and total cost - the quantity of the item - an item number

One disadvantage of the Subchapter S Corporation is the limitation to the number of shareholders, which is currently set at a maximum of ____ shareholders.

75

Which form of incorporation is required to pay an income tax?

A C corporation

______ rewards employees based on their performance.

A bonus

The last step in the employee hiring process is ______.

the job offer

Match the types of accounting systems a new businessperson uses (in the left column) with their features (in the right column). Instructions

A cash-based accounting system > It recognizes expenses as they are paid and recognizes revenue as it is generated. An accrual-based accounting system > It is the more typical form of accounting used, with expenses and revenues recorded when they actually occur, regardless of when the cash is received.

A ______ is legal protection of the intellectual property that is associated with a specific business.

trademark

A poorly performing employee is said to have a ____ impact on the entrepreneurial firm.

triple

______ theory argues that people judge how they are treated relative to how they see others being treated.

Equity

Which of the following funding options traditionally involves selling a percentage of the business to an outside party?

Equity investment

True or false: According to the contract law, the term length of lease contracts involving new businesses must be more than two years.

False

True or false: Workers' compensation laws in the United States require the rates of workers' compensation insurance to be the same in all states.

False

Besides sole proprietorships, which of the following business forms requires the business debt to flow directly to the owner(s)?

General partnership

What are special funds that are neither equity or debt funds that are designed to aid businesses in specific areas?

Grants

Marc and James were hired at the same time. They graduated from the same school with the same grade point average. They both work in the same department doing similar jobs. During their last review, both received similar performance ratings. James is paid $500 more than Marc. According to equity theory, how would Marc feel if he found out?

He would feel that he is compensated unfairly in comparison to James.

An employee who earns a salary is paid _____.

a set amount of money that is paid without regard to how many hours worked in a given time period

Unlike a Subchapter C Corporation, a limited liability corporation (LLC) _____.

allows for the flexible treatment of profits from the organization

Employees who earn an hourly wage _____.

are paid only for those hours they perform work

Suppliers will generally provide _____ on both physical assets and the actual supplies purchased.

credit

For tax purposes, all businesses must have a(n) ________.

employer identification number

A(n) ______ investment is funds received by a business in exchange for a percentage ownership of the business.

equity

True or false: Entrepreneurs typically do not have the right to fire employees.

false

A limited liability corporation (LLC) and a Subchapter S Corporation are similar in that they both _____.

have the limited liability feature

One means to limit liability concerns is through the effective application of ______.

insurance

The effective application of ______ is one means to limit liability concerns of the new venture.

insurance

A commission _____.

is payment based on some percentage of sales

Which of the following is the next step in the hiring process after the job description has been created?

Advertising the position

Which form of funding is used by a business to conserve cash and maintain the latest versions of whatever equipment is available?

Asset lease

Which funding tool involves the leasing of equipment from manufacturers or a third-party reseller?

Asset lease

______ is a major source of nonequity financing and can come from banks, credit cards, or suppliers.

Debt

Which of the following elements is NOT required when forming a Subchapter C or Subchapter S Corporation?

Details of the social responsibility policy

The ______ established a minimum wage for workers.

Fair Labor Standards Act (FLSA)

True or false: Credit cards are a form of equity investment.

False

True or false: The founder should avoid personally lending money to the new business because it is an unsecured investment.

False

True or false: The greater the insurance coverage obtained by a new business, the lower the cost.

False

True or false: There is no need to treat a loan from family as a contractual agreement.

False

Which of the following statements about recruiting companies are correct? (Check all that apply.)

- Fees can be a significant portion of the employee's first year's salary. - They generally provide employers with highly qualified employees. - They typically charge the company a fee.

Identify the true statements about a C corporation. (Check all that apply.)

- It treats the owners and the business as interdependent entities. - It provides protection for the owners beyond their equity investment.

Which of the following describe the roles that human resources management plays in business? (Check all that apply.)

- Managing employees - Hiring new employees - Inspiring employees

Which of the following elements are required when forming a Subchapter C or Subchapter S Corporation? (Check all that apply.)

- Names, addresses, and titles of all founders - General nature of the business - Location of corporate headquarters

Which of the following questions should be included on a job application? (Check all that apply.)

- Social Security number - Name, address, and telephone numbers - Work history

Which of the following are types of corporations developed by the U.S. legal system? (Check all that apply.)

- Subchapter C - Subchapter S - LLC

Which of the following business forms are required to hold annual board meetings and file reports to local, state, and federal authorities? (Check all that apply.)

- Subchapter S Corporation - Subchapter C Corporation

Which of the following are considered sources of debt for starting a new business? (Check all that apply.)

- Suppliers - Credit cards - Banks

Identify the key issues that entrepreneurial businesses should consider when trying to retain employees who add value. (Check all that apply.)

- The compensation and benefits offered to the employees - The means of reviewing the performance of the employees

What are the key financial issues involved with starting a business? (Check all that apply.)

- The funding and the funding level of the firm - The flow of information in the new business - The establishment of an accounting system

Which of the following are likely to affect a small business when an employee becomes a problem? (Check all that apply.)

- The owner loses time dealing with the situation. - The organization does not fully benefit from the unhappy employee. - The problem may cause other employees to have problems.

Which of the following are true about the Uniform Partnership Act and the Revised Uniform Partnership Act? (Check all that apply.)

- Their provisions do not cover issues like noncompete agreements. - They are an effective means to handle the basics of partnership.

Which of the following should entrepreneurs do to have a proper justification for firing employees? (Check all that apply.)

- They must develop a paper trail regarding all employees. - They must be diligent in their efforts to assist poorly performing employees.

Two related entities that can help the new business owner foresee potential legal liabilities are: (Check all that apply.)

- board of directors - board of advisors.

Which of the following are sources of nonequity capital to start a business? (Check all that apply.)

- debt - grant

Grant funding typically comes from: (Check all that apply.)

- the government. - a nonprofit agency.

A chart of accounts is simply a listing of each type of activity and each type of asset within the company. Rank the categories of accounts from first to last associated with a chart of accounts.

1. Income category 2. Expense category 3. Asset category

A Subchapter C Corporation has a _____ that is equal to the par value times the number of shares distributed.

floor value

A(n) ______ is simply money designed to help the new business begin operations with no expectation of repayment.

grant

A(n) ______ is the amount that a business pays an employee per hour of work performed.

hourly wage

Equity theory states that employees judge _____.

how well they are treated in the context of how well others are being treated

A ______ is where a sales commission is paid in addition to a basic salary.

hybrid compensation system

It is perfectly acceptable for companies to test their job candidates _____.

if there is a direct link between performance on the test and the skills required for success on the job

In the long run, the cost of capital for nonequity funding is generally ______ that of equity investment.

less than

A(n) ______ involves a contractual agreement whereby the business receives some amount of money that must be repaid over a specified period of time at a specified interest rate.

loan

The three key issues involved with starting a business include the funding of the firm, the creation of an accounting system, and _________.

the flow of information in the new business

What report creates a listing of all checks that have been written and all that have cleared through the bank?

Check register

What is the generic term used to describe any type of nonequity funding tied to the business?

Debt

An important feature of a Subchapter C Corporation is that there are no limits to _____.

The number of shareholders that an organization can obtain

Why are banks often quite restrictive in their lending to start-up firms?

The risk is perceived to be too high.

Which of the following is not considered a benefit but is mandated by law?

Unemployment insurance

The details of the ______ should be developed prior to the conversation with the candidate.

job offer

A more complex business form that has two or more people sharing unlimited liability in a new business venture is called a general _______.

partnership

Business owners who offer profit sharing _____.

pay employees a small salary but offer a percentage of the profits that the company earns

A ______ examines an employee's goals and the outcome of those goals over a particular given period.

performance review

A ______ is a set amount of compensation for a given time period.

salary

Besides banks, finance companies, and friends and family, another source of nonequity loans comes from:

the founders.

Which of the following are excellent sources of information regarding regulatory requirements? (Check all that apply.)

- Chamber of Commerce - Small Business Administration - Small Business Assistance Centers - Local department of economic development

Which of the following are trademarked by most large companies? (Check all that apply.)

- Company name - Company tag lines - Company symbols

Which of the following are common forms of debt for a new business? (Check all that apply.)

- Credit cards - Loans - Supplier credit

Which of the following are disadvantages associated with Subchapter S Corporations? (Check all that apply.)

- Expensive, complex formation compared with sole proprietorships - Limitation on the number of shareholders - May require a lawyer to process paperwork

What are the typical requirements for a new business to obtain a city or county business license? (Check all that apply.)

- It should agree to report basic information about its performance on a set schedule. - It should pay a set fee, which is usually less than $100.

Which of the following statements regarding performance reviews are correct? (Check all that apply.)

- They are for a specific time frame, often one year. - Employees should be given praise as well as details of areas of improvement. - They review an employee's performance against a set of goals.

Identify the characteristics of credit cards as a form of nonequity investment. (Check all that apply.)

- They are generally tied to a much higher interest rate than that of a bank loan. - They typically have a set upper limit.

Identify the true statements about workers' compensation laws in the United States. (Check all that apply.)

- They provide workers' compensation insurance that is regulated by each state. - They aim to provide some type of wages to employees who are disabled or injured while on the job.

A business with employees will be required to calculate and deduct various payroll taxes for: (Check all that apply.)

- federal authorities - local authorities - state authorities

The critical issues of personal liability and the desire to limit exposure to the original equity investment led to the development of corporations. A corporation addresses both drawbacks by _____.

considering the business and the individual separate entities

A ______ is an agreement between two parties to perform certain activities for some consideration.

contract

A corporation pays a tax on its profits; then those after tax profits are paid as dividends to the owners, who then have to pay personal income taxes on the dividend income. This situation is referred to as _______.

double taxation

Besides banks, finance companies, and the founders, another source of nonequity loans comes from:

friends and family.

Inventory should be taken at scheduled times during the year and an exact match should be completed between: (Check all that apply.)

- starting inventory - units sold - ending inventory

In the United States, a _____ is considered to apply to anything that is one's own original work, whether that original work itself is filed with the U.S. government or not.

copyright

Any form of capital infusion that must be paid back with interest is called ______.

debt

A board of _____ is required of corporations, but a board of ______ is optional regardless of the legal form.

directors; advisors

Banks have traditionally been a major source of funds for:

established firms.

Which of the following statements regarding equity theory are correct? (Check all that apply.)

- Employees will accept that someone who has been with the company longer may earn more. - Employees judge the fairness of their compensation based on another's in a similar situation. - Employees need a clear understanding of how their compensation compares to peers'.

What is the initial value at which the firm's shares are offered?

Par value

Which accounting record tracks time for hourly workers and attendance for salaried employees?

Payroll

Which account operates much like a bank savings account using a register to track the amount in the box?

Petty cash register

_____ resources is the quantity and quality of human effort directed toward producing goods and services.

Human

Subchapter S and Subchapter C Corporations take their names from subchapters in the ______ Code

Internal Revenue

A(n) ______ description describes the skills and capabilities that a candidate should have.

Job

What method of inventory control seeks to minimize excess capital investment in inventory by having it present only shortly before it is used?

Just-in-time inventory

Which type of funding involves a contractual agreement whereby the business receives some amount of money that must be repaid over a specified period of time at a specified interest rate?

Loan

_____ credit is a form of nonequity funding for physical assets as well as the actual supplies purchased.

Supplier

Which of the following statements about human resources is NOT true?

The most important role of human resources is to meet basic legal requirements.

Which of the following is NOT a common example of a license or a permit?

Trademark permit

True or False: If a corporation suffers substantial losses, the founder(s) will lose only his or her investment in the business.

True

True or false: Hiring a family member does not eliminate discrimination issues for large family businesses.

True

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

True

True or false: It is advisable for an entrepreneur to employ formal written contracts whenever there is an agreement with another party.

True

Which of the following is NOT a common form of debt for a new business?

Venture Capital

An entrepreneur of a retail store looks to hire billing executives. The job requires the executives to greet and interact with a large number of customers every day. In this scenario, which of the following are perfectly acceptable to test the job candidates? (Check all that apply.)

- A test on basic mathematics - A personality test

Which of the following are true regarding the accounts payable? (Check all that apply.)

- All invoices received should be recorded. - A record of payment toward each invoice should be included. - The record should include date paid, amount paid, and check number or tracking number.

Which of the following must be formally addressed by both Subchapter C and Subchapter S Corporations? (Check all that apply.)

- Authorization of more shares of stock - Reporting standards to local, state, and federal authorities - Holding annual board meetings

When someone provides funding in return for some ownership in the new business, it is referred to as a(n) _____.

equity investment

Which account should be used when there is an expense too small to write a check for or when a check is simply inappropriate?

Petty cash register

An advantage of the Subchapter _____ Corporation is that it allows the owners to report their income or losses on their personal income tax returns, thus avoiding double taxation.

S

True or false: Recruiting companies do an extremely good job recruiting and placing people with companies that have unique skill requirements.

True

The Fair Labor Standards Act _____.

established a minimum wage for workers

Which of the following is NOT a source of nonequity capital to start a business? (Check all that apply.)

Venture capital

Entrepreneurs should always ask candidates to fill out a(n) ______ for employment.

application

An entrepreneurial firm's package of benefits has ______ the compensation it offers to a job candidate.

as much of an impact as

A(n) ______ is like a master system for tracking the activity of the business.

chart of accounts

A ______ is payment based on a percentage of sales.

commission

Which of the following are benefits of a Subchapter S Corporation? (Check all that apply.)

- Consolidation of business and personal income for tax benefits - Legitimacy in the market as a more established form of business - Limited liability for the owners - Relatively easy to form compared with Subchapter C

Why should business owners retain employees who add value? (Check all that apply.)

- The hiring process consumes a lot of time and money. - It takes time to bring each new employee to an acceptable level of performance.

Which of the following statements regarding a company's compensation system are correct? (Check all that apply.)

- salary and benefits play an important role in maintaining employee morale - employees often compare their salary with others at their company - it needs to be fair and equitable for all employees

A separate accounts ______ record should be maintained for each creditor.

Payable

______ is an example of a hybrid compensation system where the employee is paid a small salary but earns a percentage of the profits at the end of the year.

Profit sharing

Match the types of accounting systems used by businesses (in the left column) with their descriptions (in the right column).

A cash-based accounting system > Only the smallest businesses use this system. An accrual-based accounting system > Subchapter C corporations, partnerships, or trusts use this system

_____ insurance obtained by an entrepreneurial business primarily covers the building, fixtures, and inventory in all of the buildings in which the business has a function.

Property