Final ENT-2113

All of these are potential issues for an 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.

A. All of these choices are correct

What is the difference between venture capital funds and business angels? A. Venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses. B. Venture capital companies usually invest in small businesses, whereas business angels usually invest in big businesses. C. Venture capital companies make only small investments, whereas business angels make both small and big investments. D. Venture capital companies have a philanthropic attitude, whereas business angels have a profit-minded attitude.

A. Venture capital companies usually invest in large businesses, whereas business angels usually invest in small 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 entrepreneur must quickly act on any opportunity he or she identifies to maximize profits. D. 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.

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

Brainstorming works well in ________ groups. A.formal B. informal C. advisory D. technical

B. informal

________ is a fund that is organized as a limited partnership. A. Asset capital B. Business angel C. Venture capital D. Equity

C. Venture capital

Currently under the ________, firms with more than 50 employees are required to offer their employees insurance. A. Fair Labor Standards Act (FLSA) B. Equal Pay Act C. Americans with Disabilities Act D. Affordable Care Act

D. Affordable Care Act

Successful new business ideas can come from A. books and magazines. B. an individual's background. C. hobbies. D. All of these choices are correct.

D. All of these choices are correct.

An advantage of a sole proprietorship is that the owner reaps the benefits and doesn't have to share the equity. T/F

True

Funding for a small business starts with the founders and their personal resources. T/ F

True

The success of entrepreneurial firms pursuing new opportunities requires a number of deliberate actions by the business founder concerning human resources issues. T/F

True

Workers' compensation laws are designed so that employees who are disabled or injured while on the job are provided with some type of compensation. T/F

True

According to the agency theory, a manager at a large firm is more likely to exploit organizational resources for his or her own benefit than the owner of a small firm. T/F

True According to the agency theory, a manager at a large firm is more likely to exploit organizational resources for his or her own benefit than the owner of a small firm. The theory argues that individuals act to maximize their own benefit.

The largest group of new business owners is ________. women Hispanics retired men Asians

women

Microloans have been in existence for years; they are most commonly made directly to ________ for self-development. women men young adults Hispanics

women Microloan programs have been in existence for years to encourage self-development. These loans are often for only a few dollars each and are made directly to entrepreneurs, often women.

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 factoring crowdfunding equity investment

supplier credit Supplier credit is another form of nonequity funding where suppliers provide other firms with credit on both physical assets and the actual supplies provided.

In the context of evaluating entrepreneurial orientation, which of the following personality tests has a bias that adults will not change their personality over time and instead hold on to the personality they develop during childhood? the Enneagram test the Rorschach test the Myers-Briggs test the Big Five test

the Enneagram test

A petty cash fund operates like a bank savings account. T/F

true

A potential business owner needs to convey his or her business idea to a prospective investor or lender in ________ minutes. ten twelve five two

two

Which of the following is a difference between large organizations and entrepreneurial businesses? A. 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. C. Unlike large organizations, entrepreneurial businesses do things more efficiently because they are easily able to achieve economies of scale. D. 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.

When a small business owner pays a commission in addition to a basic salary, it is called ________. A. an hourly wage B. a hybrid compensation system C. a tax D. a benefit

B. a hybrid compensation system

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

B. fringe benefits being treated as income A Subchapter C Corporation has the advantage that fringe benefits that are paid out are not treated as income.

Threats to ________ are threats to the success of a new business related to its ability to establish and maintain a high-margin product or service. A. deficit gaps B. profit margins C. sales generation schemes D. operational financing

B. profit margins

Which personality test believes that a person is the result of all experiences in his or her life? A. Insights B. Myers-Briggs C. Enneagram D. Big Five

C. Enneagram The underlying philosophy of the Enneagram test is that a person is the result of all the experiences in his or her life.

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

C. Small Business Assistance Centers

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

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

Job advertisements written for a new hire should A. contain the current challenges faced by the industry. B. be similar to the generic advertisements placed every week. C. be kept concise and should communicate the culture of the firm. D. give maximum information needed for a potential applicant.

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

James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n) ________. A. cash out B. payout C. draw D. expected outlay

C. draw A draw is a distribution of funds from a business. It is usually in the form of a cash dispersion in advance of salary, bonus, expected year-end distribution, and the like.

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 ________, A. Subchapter C Corporation B. Sole proprietorship C. limited liability partnership D. general partnership

C. limited liability partnership In an LLP, the individual who, as such, has unlimited liability for any debts or judgments against the firm is considered the manager of the firm. The other partners are called limited partners and can work for the firm but may not be active in the management of the organization.

A(n) ________ is needed regarding all employees, and the owner must be diligent in the attempt to assist a poorly performing employee. A. audit profile B. firing document C. paper trail D. performance review

C. paper trail A paper trail is needed regarding all employees, and the owner must be diligent in the attempt to assist a poorly performing employee.

The potential entrepreneur needs to consider ________ when starting a new business. A. rationality B. education C. prior experience D. capital

C. prior experience These include risk tolerance, prior experience, and personality orientation of the individual.

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

C. whenever the landowner wants to.

Which of the following statements is true of a family business? A family business gives no importance to human resource management. Managing family members is quite easy as the individuals know each other well .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.

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

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

________ states that individuals make decisions that maximize their own individual benefits. A. Agency theory B. Self-fulfilling prophesy C. Individual benefit theory D. Organizational benefit theory

A. Agency theory

Which of the following information should be obtained in the application/interview process? A. All of the answers are correct. B. social security number C. work history D. education and training

A. All of the answers are correct.

Which of the following questions should a new business owner examine when considering leases? A. All of the answers are correct. B. Who is responsible for maintenance and improvements? C. Is there an ability to renew the lease? D. What exactly is the new business owner leasing?

A. All of the answers are correct.

Which of the following statements is true of the Civil Rights Act? A. It currently applies to all firms with more than 25 employees. B. It provides that each and every business must provide unfettered access to all disabled people. C. It ensures that all individuals are judged according to the discretion of an entrepreneur. D. It allows for the promotion of the differently-abled employees irrespective of their performance.

A. It currently applies to all firms with more than 25 employees. The Civil Rights Act currently applies to all firms having more than 25 employees. Title VII of the Civil Rights Act prohibits discrimination in hiring, dismissal, level of pay, or promotions on the basis of race, color, gender, religious beliefs, or national origin of the employee.

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. a business angel. B. an investment banker C .an asset lender. D. a venture capitalist.

A. a business angel.

Which of the following is a document that describes a job that is to be filled? A. job description B. Job plan C. job design D. job analysis

A. job description

Which of the following terms means a set amount of compensation for a given time period? A. salary B. profit C. bonus D. commission

A. salary

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 A. sole proprietorship. B. limited liability partnership. C. general partnership. D. Subchapter S Corporation.

A. sole proprietorship. Sole proprietorships are characterized by the fact that the person who owns the business and the business itself are treated as the same entity.

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

All of the answers are correct.

What are the critical elements that an entrepreneur must solve for success? sustainable operating profit margins being properly financed All of these choices are correct. an effective sales generation model

All of these choices are correct.

In the context of legal forms of business, identify a benefit of an Subchapter S Corporation over a Subchapter C Corporation. A. An Subchapter S Corporation has more potential for future expansion than a Subchapter C Corporation. B. An Subchapter S Corporation pays for fringe benefits of the owners at its own expense unlike a Subchapter C Corporation. C. An Subchapter S Corporation can have a larger number of investors than a Subchapter C Corporation. D. An Subchapter S Corporation has limitations in the number and type of shareholders unlike a Subchapter C Corporation.

D. An Subchapter S Corporation has limitations in the number and type of shareholders unlike a Subchapter C Corporation.

Identify a true statement about the process of generating new business ideas. A. Entrepreneurs should focus on generating ideas and funding a new business based on them, but they must not become personally involved in its success. B. While generating business ideas, an entrepreneur needs to focus on exploitable market trends rather than use personal experience to inform the process C. Family is generally the best source of ideas for a new business. D. As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful.

D. As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful.

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

D. Established partners can bring in new equity partners by surrendering a portion of their ownership position. Established partners in a general partnership can bring in new equity partners by surrendering a portion of their ownership position. This is usually a process in which the new "partner" buys out a portion of each of the existing partners in a transaction that also adds some financial muscle to the organization.

In the context of legal forms of business, a Subchapter S Corporation A. gives the owners of the firm virtually unlimited liability for its debts and liabilities. B. treats the owners of the firm and the firm itself as the same entity. C. treats the owners of the firm as advisory members with little say in the operations of the firm. D. allows the owners to treat the income of the firm as part of their personal incomes.

D. allows the owners to treat the income of the firm as part of their personal incomes. A Subchapter S Corporation allows the owners to treat the income of the firm as they would if the firm were a sole proprietorship or a partnership. Thus, the owners report their income or losses on their own personal income tax returns.

In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business? A. because the supply structures of established businesses are resistant to incorporating new supply sources B. because it is more profitable for established businesses to fulfill any requirements through resources already present within their organizational structures C. because small businesses are typically family-run establishments, making them unreliable in the long run D. because it is not clear if the new business will be able to fulfill an order or service a product in the future

D. 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 business risks, how can an entrepreneur identify competitors to a new potential business? A. by observing the market and identifying companies that have seen the maximum growth in the past quarter B. by conducting a brainstorming session with other entrepreneurs C. by performing a gap analysis evaluation to identify potential competitors D. by observing what potential customers do to satisfy their current needs or wants

D. by observing what potential customers do to satisfy their current needs or wants

Funding for any new business starts with the resources of the ________. A. equity fund B. investment banker C. bank D. founder(s)

D. founder(s)

A type of gap analysis that compares the possibilities in the marketplace with an individual's competence to address those gaps is called A. descriptive analysis. B. predictive analysis. D. opportunity analysis. C. market analysis.

D. opportunity analysis. Opportunity analysis is a type of gap analysis that compares opportunities in the marketplace with an individual's competence to address those gaps.

When should a new business owner ensure there are sufficient financial resources to operate the business? A. after six-month review B. opening day C. first payroll D. prior to the start

D. prior to the start t is simply good business practice to ensure that sufficient financial resources are available prior to the start of that business.

Which of the following is not a personal motivation for an individual to start a business? A. willing to make career-changing moves B. being proactive C. feeling driven to achieve goals D. taking a defensive position

D. taking a defensive position

A company can use personality testing, even though there is no direct link between the test and the skill set necessary for the job. T/F

False A company can use personality testing if there is a direct link between performance on the test and the skill set necessary for success on the job.

A trademark cannot be renewed once it has been issued even when the firm or the product is active. T/F

False A trademark can be renewed as long as the firm or the product is active.

Entrepreneurs must quickly react to any business opportunities they identify to maximize their gains. Group starts T/F

False An individual needs to make a rational evaluation of a business opportunity and its potential. Quickly reacting in a knee-jerk manner to what appears to be an opportunity is not advisable.

A credit card has a set repayment schedule. T/F

False Credit cards are not tied to any particular asset, and do not they have a set repayment schedule.

Equity investment does not involve selling a percentage of the business to an outside investor. T/F

False Equity investment involves selling a percentage of a business to an outside investor.

Family members are in a unique position to keep an individual focused on pursuing the wrong approach to an issue. T/F

False Family members are in a unique position to provide you with key insights when you may be pursuing the wrong approach to an issue.

Human resources, as defined in economics, is the processing of employees in monetary terms. T/F

False Human resources, as defined in economics, is the quantity and quality of human effort directed toward producing goods and services.

Gap analysis involves identifying an opportunity between the demand for a product or service and the availability of the product or service that you can buy from vendors to be resold to your customers. T/F

False In a gap analysis, individuals identify a gap or an opportunity that exists between the demand for a product or service and the supply provided by the firms in the market.

The business plan for a small business should be at least 50 pages long. T/F

False It is better to keep the length of the business plan for a small business between 15 to 25 pages.

Patents are inexpensive and easy to obtain and maintain. T/F

False Patents are expensive to obtain and maintain.

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

False Qualitative gap analysis charts can be completed with minimal or no research. The gap analysis is intended to be completed by the entrepreneur or entrepreneurial team in a very short time period

Large companies understand their customers more in the local area as compared to small firms. True or False

False The owners and employees of entrepreneurial businesses have an understanding of the local community not easily obtained by a large conglomerate.

Human resource programs for small companies are the same and have the same effects as large businesses. T/F

False While a large firm can absorb the resulting difficulties from hiring/firing of employees due to their organizational slack, a small firm can be devastated by bad human resource decisions.

The term ________ refers to the fact that women, like minorities, may be hired by large firms but experience limits placed on their advancement. "androcentric" "glass cliff" "grapevine" "glass ceiling"

Glass Ceiling "glass ceiling" refers to the fact that women, like minorities, may be hired by large firms but experience limits placed on their advancement. As a result, these women leave the large firms and start their own businesses.

dentify a true statement about the history of entrepreneurial businesses in the United States. Steel and automobile manufacturing in the United States flourished in the late 1970s and early 1980s. The 1880s saw the initial development of the nation's large industrial base. The Great Depression of the 1930s was harder on mature businesses than on entrepreneurial businesses. Entrepreneurial businesses as a percentage of the U.S. economic output began to grow exponentially following World War II.

The 1880s saw the initial development of the nation's large industrial base. The 1880s saw the initial development of the nation's large industrial base. Until the mid-1880s, almost all U.S. businesses were still relatively small.

A Myers-Briggs test analyzes four pairs of variables to indicate the different ways in which individuals deal with other people and their environment. T/F

True

A gap analysis identifies potential gaps in a market, but it does not provide individuals with the capability to fill those gaps. T/F

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. T/F

True

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

True

One way to identify a gap in the marketplace is to examine trends around the region, nation, or world that may not yet have reached your geographic location. T/F

True

T/F Close to 50 percent of the millionaires in the United States are entrepreneurs.

True

The Americans with Disabilities Act requires that there should be no discrimination in the hiring, management, or dismissal of employees with disabilities. T/F

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. T/F

True

Two triggers for staring a new business are talking to successful entrepreneurs and being laid off from your job. T/F

True Being laid off from established employment and being spurred to action by attending a seminar, reading a book, or talking with successful entrepreneurs are triggers for starting a business.

Business incubators work best with small manufacturing-based firms. T/F

True Business incubators work best with office-based service firms, scientific-based firms requiring lab space, or small, clean manufacturing firms.

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 businesspeople are best described as None of the answers is correct. supplier credit. a venture capital fund. asset lease arrangement.

a venture capital fund.

The development and implementation of a new business is part ________ and part ________. art; science resources; hard work luck; skill genius; hard work

art; science

Which one of the following is a huge advantage for small business owners to start a business? benefit the stakeholders desire to work for others desire to be efficient and productive desire to be one's own boss

desire to be one's own boss

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 ________. crowdfunding debt asset-based lending equity investment

equity investment Equity investment is where someone provides funding in return for some ownership in a new business.

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

equity investment. Credit cards have no set repayment schedule, are not tied to a particular asset, and may have a high interest rate.

An entrepreneurial business's resources are less constrained than those of a venture capital-backed business. T/F

false An entrepreneurial business's resources are significantly more constrained than those of a venture capital-backed business.

Which of the following is not a personality dimension of the Big Five test? conscientiousness individualist agreeableness extroversion

individualist Big Five is a test composed of five factors: open-mindedness, conscientiousness, agreeableness, emotional stability, and extroversion. These are considered to be the five key components of an individual's personality.

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

interactive; linear

Before establishing a new business, the first thing founders should do is list their personal skill sets. analyze the market. obtain financial support hire a lawyer.

list their personal skill sets.

Debt is a form of ________ funding. equity nonequity asset venture

nonequity

Small companies have flourished in the United States because they respond more quickly to their customers' needs. often expand easily in mature industries. employ more skilled people than larger businesses. have better organizational policies and procedures.

respond more quickly to their customers' needs.

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

scientific firms Business incubators work best with scientific-based firms requiring lab space; small, clean manufacturing firms; or office-based service firms.

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

B. None of the answers is correct. Credit cards are not tied to any particular asset, have a set upper limit, and have interest rates that are higher than that of bank loans.

________ occur(s) in large companies that have excess resources such as equipment and employees. A. Limited boundaries B. Organizational slack C. Organizational resources D. Unlimited boundaries

B. Organizational slack

What percentage of U.S. millionaires are self-employed? 33 1/3 50 66.7 25

66.7 Almost two-thirds of U.S. millionaires are self-employed, although self-employed people make up fewer than 20 percent of the workers in the United States.

The government regulates the employment of children under the age of ________. A. 20 B. 16 C. 21 D. 18

B. 16

The founders of a small business need to be involved in which of the following tasks when starting the new business? A. funding B. All of these choices are correct C. design D. operating

B. All of these choices are correct

________ are high-net-worth individuals who invest in businesses not as a business, but as individuals. A. Business analysts B. Business angels C. Investment bankers D. Project managers

B. Business angels

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

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

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

B. In a limited liability partnership, limited partners can work at the firm but not be active in its management. In a limited liability partnership, limited partners can work at the firm but not be active in its management. They are considered to be passive investors, and as such, their liability is limited to their investment in the business.

In the context of legal forms of business, identify a true statement about sole proprietorship firms. A. 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. C. Because of the limited nature of the growth potential of such firms, any profits they make are exempt from federal taxation. D. 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.

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. It creates an overall healthy environment within a firm when the salespeople are very focused on their commission. 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 a rigid compensation system where abuse is minimal, and it removes the frustration for employees and the entrepreneur.

It creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm.