Quiz 2

Gemini Inc., a large conglomerate, offered Timothy's new logistics company the much required financial support in exchange for a 40% ownership in the company. It also provided Timothy with an experienced group of people to help him make crucial decisions for the company. In the given scenario, which of the following statements is true of Gemini Inc.? a. It is an angel investor. b. It is a venture capital firm. c. It is a sole proprietor. d. It provides commercial loans.

b

Identify a true statement about angel investors. a. They are wealthy companies that invest in start-up businesses with high growth potential. b. They invest in start-up businesses without requiring a share of ownership. c. They look for companies that seem likely to grow at 5% to 10% per year. d. They invest in promising start-up companies because they want to make money for themselves.

d

A(n) _____ is a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatment. a. limited liability company b. S corporation c. sole proprietorship d. quasi corporation

a

In low-income countries, a high percentage of entrepreneurs are considered _____. a. necessity entrepreneurs b. rational entrepreneurs c. social entrepreneurs d. voluntary entrepreneurs

a

In the context of financial statements of a company, cash flow statements commonly begin with _____. a. net income b. net debt c. the shared profit amount d. the shared expenses

a

In the context of managerial accounting, _____ are costs that are incurred as the result of some specific cost object. a. direct costs b. implicit costs c. indirect costs d. fixed costs

a

In the context of protecting your start-up, which of the following statements is true of growth hackers? a. They know their customers inside and out. b. They restrict the creation of blogs. c. They prevent customers from participating in conversations related to a brand. d. They do not believe in testing different strategies.

a

Since sole proprietorships are extensions of their owners, they: a. lack permanence. b. offer limited liability. c. have the ability to pool financial resources. d. lack tax advantage.

a

Small firms tend to be effective innovators for a number of reasons. Most importantly, their very reason for being often ties to: a. a brand-new idea. b. a large span of control. c. a search for crowdfunders. d. the presence of bureaucracy.

a

Svelter Corporation does not face the problem of double taxation as the Internal Revenue Service (IRS) does not tax the earnings of the company separately. Instead, taxes are only levied on the personal income of the stockholders. A limitation, however, is that the company is only allowed to have a maximum number of 100 stockholders at a time. Given this information, Svelter Corporation is a(n) _____. a. S corporation b. C corporation c. not-for-profit corporation d. statutory close corporation

a

Which of the following is a challenge faced by a franchisor? a. Keeping all the franchisees satisfied b. Paying for the rights to use the resources of the franchisee c. Executing expansion plans with the franchisee's approval d. Following the franchisee's procedures to the letter

a

Which of the following is an advantage associated with a sole proprietorship? a. Retention of control b. Unlimited liability c. Permanence d. Ease of transfer of ownership

a

Who among the following is the most appropriate person to start his or her own venture? a. Gita, who has been an event manager for five years but discontinues her job as she wants to spend enough time with her one-year-old child b. Linda, who has been working as an assistant manager for over a year but cannot make decisions on her own c. Mira, who is intolerant of uncertainty and becomes emotionally depressed at the sign of any form of financial distress in her family d. Laura, who is against approaching others for funds and only has enough savings to keep her business afloat for one year

a

5. Marcus is a venture capitalist who invests in start-ups and small businesses. He is interested in investing in an online start-up company that has been in business for a year. Before making a decision, Marcus does some research on the value of the company's assets and liabilities. In this scenario, Marcus is most likely analyzing the company's: a. income statement. b. balance sheet. c. articles of incorporation. d. operating budget.

b

Hopins, a medium-sized firm, has total assets whose value is equivalent to the sum of the funds provided by its owners and the loans taken by the firm from several financial institutions to purchase those assets. In this context, it can be said that: a. the stockholders' equity of Hopins always equals the dollar value of its assets. b. the balance sheet of Hopins satisfies the accounting equation. c. the value for accounts receivable of Hopins is equal to the value of its current liabilities. d. the statement of cash flows of Hopins satisfies the quartic equation.

b

Identify a true statement about current assets. a. They include the long-term assets of a firm. b. They are resources that a firm expects to convert into cash within a year. c. They are resources that a firm decides to set aside to pay its long-term liabilities. d. They include a firm's tangible assets, such as machinery and equipment.

b

Rolette Clemens is a financial institution that provides loans to businesses. It rejects a textile company's request for a loan after it reviews the value of the company's assets, liabilities, and owners' equity and finds them to be unsatisfactory. In this scenario, Rolette Clemens most likely analyzed the company's _____ to assess its financial condition. a. statement of cash flows b. balance sheet c. income statement d. operating budget

b

The _____ summarizes the financial results of a firm's operations over a given period of time. a. balance sheet b. income statement c. statement of cash flows d. statement of stockholders' equity

b

Which of the following categories of people is most likely to step into entrepreneurship? a. People who have minimal knowledge about the use of technology b. People who have trouble being subordinates because of their personalities c. People who are skeptical about taking financial risks d. People who lack the characteristic of self-reliance

b

Which of the following pieces of information is found in the U.S Small Business Administration (SBA) resources? a. Health tips for entrepreneurs b. Industry-specific statistics c. Updates on multibillion-dollar business regulations d. Tips on making a company public

b

Which of the following statements is true of stockholders of corporations? a. They actively participate in the management of the company. b. They do not have to be individuals. c. They do not elect a board of directors. d. They appoint the chief executive officer of the company.

b

13. A large film production company merges with a popular sound processing studio, resulting in the formation of a new company out of the two previously independent firms. This is most likely an example of a _____. a. market extension merger b. conglomerate merger c. vertical merger d. horizontal merger

c

25. Runion Bank is well-known for providing funds to start-ups. The bank lends money to an entrepreneur at an interest rate of 5%, which is to be repaid only after the business earns a sizable profit. If the business fails, then only the primary amount needs to be returned. In the given scenario, which of the following statements is true of Runion Bank? a. It is a venture capital firm. b. It is an angel investor. c. It provides commercial loans. d. It helps entrepreneurs in the process of crowdfunding.

c

3. In a sole proprietorship, any debts the company incurs are: a. taxed only if the owner has not taken a loan. b. treated as the owner's personal income. c. considered to be the owner's personal liabilities. d. used to purchase preferred stocks of the company.

c

Fiona, an external auditor reviewing a telecommunications company's accounts, finds that the company's internal accountants have entered false data in the company records. Instead of stating the actual figures, which would reveal the poor performance of the company, the accountants have overstated the company's earnings. In this case, Fiona is most likely to offer a(n) _____ in the independent auditor's report. a. qualified opinion b. unqualified opinion c. adverse opinion d. concurring opinion

c

In the context of small business opportunities, which of the following statements is true of market niches? a. They tend to have many competitors. b. They fail to offer enough potential for small, specialized companies. c. They tend to be quite attractive to small firms. d. They are high-profile enough for large firms.

c

Through the establishment of a set of generally accepted accounting principles (GAAP), the Financial Accounting Standards Board (FASB) aims to ensure that financial statements are: a. flexible. b. inexplicit. c. comparable. d. incongruent.

c

While performing a financial analysis for his organization, Morris discovers that there has been mismanagement of employee funds over the past three months. He immediately reports this to his supervisors. In this scenario, Morris is most likely a(n) _____. a. public prosecutor b. government accountant c. internal auditor d. public accountant

c

A _____ is a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives. a. business warrant b. business resource c. business directory d. business plan

d

Which of the following statements is true of a business plan? a. It should not consider the competition. b. It should be finalized before approaching personal funding sources. c. It includes an executive summary, which is at least 10 pages long. d. It is absolutely crucial for obtaining outside funding.

d