Small Business Management Exam 1

Which of the following is true about failure and small businesses?

A discontinuance may result from the apparent advantages of working for some 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 steps should a family-owned business take to compensate family members?

A managerial title should be offered to motivate a productive family member

Which of the following refers to 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?

Analyze one's attitude

Which of the following nurture young firms and help them to survive and grow during the startup period when they are most vulnerable?

Business incubators

A _____ provides the protection of limited for shareholders, but its earnings are taxed at both the corporate and shareholder levels

C corporation

A disadvantage of organizing a family business into a corporation and hiring professional managers is the

Concentration of power in small cliques

According to the SBA's Office of Advocacy, only _____ tend to be dominated by larger businesses

Construction and personnel/supply services

What is a business that is owned by and operated for the benefit of patrons using its services called?

Cooperative

_____ refers to family-owned businesses run by husband-and-wife teams

Copreneurs

In order to cope with the daily challenges of a family-owned business, that family should

Develop an appropriate family mission statement

Mark had opened a cafe in his neighborhood. Soon his cafe became very popular restaurant saw Mark's success and asked him to join the restaurant. The financial incentive Steve offered Mark was more than what he earned at his Cafe, and he would not have to face the daily hassles of managing everything on his own. He decided to shut down his cafe and join the restaurant. This is an example of

Discontinuance

_____ is a voluntary decision to terminate a business

Discontinuance

Why is management succession a problem for family-owned businesses?

Employees may dislike the chosen successor

Which of the following is an advantage of hiring professional managers to run family-owned businesses?

Fair treatment of employees

Which of the following is an advantage of selling a family owned business to family members

Family bonds are strengthened and additional friction is reduced

In the context of family-owned businesses, which of the following can be used to minimize estate taxes

Family limited partnership

______ is defined as a percentage share of an expensive asset and is most often use 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 situations should copreneurs avoid?

Ignoring business conflicts in an attempt to save the relationship

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 true about a family limited partnership

In a family limited partnership, the majority of the partners are related to each other as spouses, parents, grandparents, siblings, cousins, nieces, or nephews

Which of the following is true about small businesses?

Inadequate management in small businesses creates problems for small business owners and entrepreneurs

The new business owner's primary motive is usually _______

Independence

What does a buy-sell agreement do

It details the terms by which stockholders can purchase each others' interest

What is the purpose of the Uniform Partnership Act (UPA)

It governs partnerships in the absence of other expressed agreement

Which of the following is true about proprietorship

It is the most popular form of business in the United States

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

How can copreneurs efficiently manage their family-owned business?

Keep personal issues aside while holding business arguments

A limitation of a small family-owned business is that a family manager may

Lack general management skills, being proficient in a specific activity

How can children be prepared to enter the family-owned business

Let them work for another company to gain experience

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 a partnership

More capital can be raised since good credit may be available

A developing trend in family businesses is that young people

Offer an executive position to their parents in their company in return for funding

Which of the following is true about the final stage of the growth pattern that small businesses tend to follow?

Owners hire managers to run the firms

Which of the following is true about the first stage of the growth pattern that small businesses tend to follow?

Owners manage the business and do all the work

In the United States, finance, insurance, and real estate use the ____ form of business more frequently than do the other industries

Partnership

Which of the following is characteristic of a small business owner?

Perceives the business as being an extension of his or her personality

John opened All-for-Shop, a small retail in his neighborhood. He could not sustain it for more than a year because of huge lasses and chose to shut it down. Fortunately, he did not have any creditors. Which of the following does the situation describe?

Personal failure

What is estate planning

Preparing for the orderly transfer of the owner's equity when death occurs

Which of the following is the main goal of an incubation program?

Produce businesses that are financially viable and freestanding

Which of the following industries is expected to produce the most new jobs by the year 2018?

Professional and related

Which of the following 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 earning

A corporation formed by a doctor for the sole purpose of providing his services for which he is licensed is called a _______

Professional service corporation

The _____ form of business generates significant revenues in services, trade, and construction in the United States

Propriertorship

Which of the following does a business incubator do to help small business owners succeed?

Provide management assistance & shared office services

______ is the fundamental redesign of a business, often resulting in reduction in size and markets

Reinvention

______ is reducing the number of employees to increase efficiency

Rightsizing

A _______ is one 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 characteristic of successful fractional ownership

The co-owners must be honest in their dealings

Which of the following is true about small businesses?

The manager usually owns the business

In the context of a family-owned business, which of the following is a disadvantage of a living trust?

The title on real estate and securities must be changed to the name of the trust

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 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 is true of articles of incorporation

They are the instruments by which a corporation is formed

Which of the following is true of S corporations

They can issue only one class of stock- common

Which of the following is true about the board of directors of a corporation

They represent the stockholders in managing the company

Which of the following is a reason for starting a small business?

To satisfy personal objectives

Which of the following is a problem faced by small businesses today?

Unexpected growth and financing issues

Which of the following is true about small businesses, entrepreneurship, and educational institutions?

Universities have discovered that by teaching entrepreneurship they are able to tap into a vast pool of funds to support such programs

A way to deal with incompetent family members in a family-owned business is to

assign jobs to them that allow minimal contact with other employees

A _____ provides for a corporation to repurchase a shareholder's stock when he/she leaves the company

buy-sell agreement

A characteristic of family-owned businesses in the U.S. is that they

can be a source of unresolved family conflicts

Conflicts are likely to arise in a small family-owned business when

each family member has a different perspective, leading to dissension

A disadvantage of a partnership is that

each partner is responsible for the acts of the other partners

Which of the following factors should be considered when choosing the proper legal form for a business

earnings reinvestment

The most common type of industry for a ______ is agriculture

family limited partnership

According to the Family Firm Institute of Boston

family-owned businesses in the U.S. are predominantly small

The transition of a family-owned business to a successor can be made easier for the former owner by

handing over to the successor in phases

An entrepreneurial venture is characterized by:

innovative strategic practices and/or products

Which of the following is a characteristic of a nonprofit corporation

it enjoys tax-exempt status

Which of the following is an advantage of a corporation

it is a legal entity separate and distinct from its owners as individuals

A disadvantage of a corporation is that

it is subject to double taxation

A _____ resembles a will, but, in addition to providing for distributing personal assets on the maker's death, it also contains instructions for managing those assets, should a person become disabled

living trust

A ______ is formed for civic, educational, charitable, and religious purposes

nonprofit corporation

An advantage of proprietorship is that it

offers unique tax advantages

A partnership is a business that is

owned by two persons who have unlimited liability for its debts and obligations

A family limited partnership allows business owners to

pass assets to heirs with a minimum of income and estate tax costs while retaining control of assets during their lifetime

A number of entrepreneurs are turning to formal succession plans for their family-owned businesses to

prevent endless disputes over ownership between their heirs

Small business owners prefer a proprietorship over other forms of business because it

provides relative freedom of action and control

Expansion for small family-owned businesses may be limited by

the amount of family assets available

If a family-owned business is a corporation, replacement of ownership is decided by

the board of directors

According to the Family Firm Institute of Boston, family-owned businesses have a high mortality rate primarily because

the estate taxes are high

An advantage of selling a family-owned business to outsiders is that

the former owner receives an assured income

A home-based business is an attractive option for working mothers because

there has been a decrease in job sharing

A _______ is a document that contains instructions about what should be done with the family-owned business if the owner suddenly dies or becomes incapacitated

will