ENT Study Guide
Before establishing a new business, the first thing founders should do is
list their personal skill sets.
In the context of business designs, one of the advantages of a corporation is that when it suffers losses, the founders will
lose only their investment in the business rather than their life's savings.
Which of the following entrepreneurial firms needs to pay special attention to OSHA guidelines regardless of their size?
manufacturing firms
The success of entrepreneurial businesses occurs partially because they are ________.
more focused than their large corporate counterparts
What are the advantages of leasing equipment for a new business?
no hassles of an aging asset beginning operations with a minimum cash outlay ability of the business to trade up as newer, higher-quality machines become available
A harvest plan for a small business means the owner is
planning to exit a small business.
In an interview, an interviewer can ask questions about
prior convictions
Human resources, as defined in economics, is the ________ and ________ of human effort directed toward producing goods and services.
quantity; quality
Small companies have flourished in the United States because they
respond more quickly to their customers' needs.
In the context of inventory accounts, the difference between what is sold by a business and what was brought into it is known as ________.
shrinkage
What is the percentage of self-employed people in the workforce?
20
Marsciva Technologies is an emerging business. The firm considers the owners to be employees of the firm and therefore pays them salaries and bonuses. To reduce corporate tax, the owners of Marsciva Technologies pay themselves nearly all the profits generated so that very little actual profits are reported by the firm. Based on these characteristics, Marsciva Technologies is most likely a
subchapter C corporation
Accepting ________ ties a firm to the supplier and usually stops the firm from shopping around for a lower price.
supplier credit
Which of the following laws prohibits discrimination in hiring, dismissal, or promotion on the basis of race, color, gender, religious beliefs, or national origins?
the civil rights act
When a small business owner is advertising for a job, the company needs to attract ________ pool of applicants to choose from.
the largest
The break-even point is defined as
the level where revenue coming into the firm is sufficient to cover expenses.
Identify a true statement about gap analysis.
A gap analysis should be completed in a short period of time.
Identify a true statement about the process of generating business ideas.
After analysis, entrepreneurs may change their ideas even if they initially thought that their ideas would be successful.
Which of the following statements is true of worker's compensation?
All of the answers are correct
The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is ________.
the presence of small and medium-sized enterprise
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 is a characteristic of a venture capital start-up?
An experienced president is hired to grow the start-up.
In the context of proper accounting practices, identify a major difference between cash-based and accrual-based accounting systems.
Cash-based systems recognize revenue as it is generated, whereas accrual-based systems record revenue only when it occurs.
A chart of accounts is a listing of each type of activity (such as expense items) and each type of asset within the company.
true
A customer of a small business could be considered an important stakeholder to the success of a company.
true
A frustration of the commission system comes when the firm does not change the rate of the commission even when the company is doing well.
true
A rule of thumb in the founding of businesses has always been that an owner whose business is both a vocation and an avocation is difficult to beat.
true
An Employer Identification Number is required of any business that has employees.
true
Debt is a generic term that describes any type of nonequity funding tied to a business.
true
Some small business owners find a patent, and then get permission from the owner to develop marketable products based on it.
true
The largest group of new business owners is ___
women
Which of the following is true of robber barons in the context of the history of entrepreneurial businesses in the United States?
They indulged in great abuses in order to succeed in their business.
In the context of identifying new business opportunities, which of the following is the definition of brainstorming?
a creative process whereby a group of individuals are brought together and asked to generate numerous ideas, with little or no effort made to evaluate the potential for each idea
In the context of good accounting practices, the organizational fund used for expenses too small to write a check for is known as
a petty cash fund.
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 undertakings. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as
a venture capital fund
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 undertakings. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as
a venture capital fund.
What are the advantages of leasing equipment for a new business
all of the answers are correct ability of the business to trade up as newer, higher-quality machines become available beginning operations with a minimum cash outlay no hassles of an aging asset
Which of the following items does a payroll record list?
all of the answers are correct taxes gross pay base pay
All of these are potential issues for an owner in a family business except: firing a family member all of these promoting a family member reprimanding a family member
all of these
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
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
Entrepreneurial business resources are more ________ than venture capital-backed businesses.
constrained
All of these are threats to business success except deficit gaps profit margins sales generation schemes operational financing
deficit gaps
James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n) ________.
draw
Founders cannot lend money to their own firm.
false
One of the disadvantages of an entrepreneurial business is the burden of creating and managing organizational policies and procedures.
false
The second column in a gap analysis is devoted to listing the market need.
false
When brainstorming, the true potential for each idea is often fully evaluated before the process moves onto generating the next one.
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
Whether hiring for a line worker or a first line manager, an owner should devote the same amount of time in checking references. Group startsTrue or False
false
Potential owners should examine all of these specific areas before choosing a business idea except
financial history
Incubators for small businesses include all of the following except
financial loans
incubators for small businesses include all of the following except space legal expertise common receptionist financial loans
financial loans
Funding for any new business starts with the resources of the _______
founders
All of these are harvest plan strategies except
franchising
All of the following are benefits of a Subchapter C Corporation EXCEPT
fringe benefits being treated as income.
Some communities offer facilities that house new businesses and provide resources for them. These are called _______
incubators
Which of the following is not a personality dimension of the Big Five test?
individualist
Brainstorming works well in ________ groups.
informal
A company seeks to have inventory present only shortly before it is used. This method of inventory control is called
just-in-time inventory.
The Americans with Disabilities Act regulates firms with how many employees?
15 or more
The government regulates the employment of children under the age of _______
16
What percentage of U.S. millionaires are self-employed?
66.7
In the context of financing tools available to new businesses, identify a major disadvantage to asset leasing.
A new business might spend more money on leasing equipment over time than if it had bought the equipment outright.
________ states that individuals make decisions that maximize their own individual benefits.
Agency theory
Identify a true statement about the process of generating new business ideas.
As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful.
Which of the following personality tests is popular in universities and is composed of factors that are considered by many researchers to be the key components or types of an individual's personality?
Big Five
Which personality test believes that a person is the result of all experiences in his or her life?
Enneagram
________ funds are received by a business in exchange for a percentage ownership of the company.
Equity
In the context of legal forms of business, identify an accurate statement about a general partnership. Multiple Choice
Established partners can bring in new equity partners by surrendering a portion of their ownership position.
In the context of legal forms of business, identify a true statement about limited liability partnership (LLP).
In a limited liability partnership, limited partners can work at the firm but not be active in its management.
Which of the following statements is true of the Civil Rights Act?
It currently applies to all firms with more than 25 employees.
According to the book, the development and implementation of a new business is
Part art and part science
Which of the following information should be obtained in the application/interview process?
SSN work history education training
Alexis de Tocqueville, the French statesman, stated that "the United States was not so much a nation with ventures ... but instead a nation of innumerable small ventures."
True
Heather Schuck, owner of Glamajama, is an example of how women can concentrate on more than one facet of life.
True
One advantage that a large firm has over a small firm is economies of scale.
True
Self-employed people make up less than 20 percent of the workers in the United States.
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.
True
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.
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 a Subchapter C Corporation, it is possible to have a double taxation situation.
true
Large firms can absorb bad employees easier than small businesses because they have organizational slack.
true
An employee cannot sue a small business owner for injury, if the individual accepts ____
workers compensation
What is the major difference between a board of directors and a board of advisors?
A board of directors has fiduciary responsibility, whereas a board of advisors advises the firm.
Currently under the ________, firms with more than 50 employees are required to offer their employees insurance.
Affordable Care Act
A common form of debt for a small business can be classified as ________.
All of the answers are correct
What are the critical elements that an entrepreneur must solve for success?
All of these choices are correct. -being properly financed -sustainable operating profit margins -an effective sales generation model
During Eisenhower's presidency, who stated that "what is good for General Motors is good for the nation"?
Charles Wilson
Which of the following represents the impact of a poor employee on the functioning of a small business?
The organization does not fully benefit from the employee. The owner's time is lost. The problems may bleed over to other employees.
In the context of entrepreneurial businesses, which of the following is an advantage that small businesses have over big businesses?
ability to produce small niche products
investors can be
all of the answers are correct active passive a minority
Successful new business ideas can come from
all of these choices are correct
Characteristics of an entrepreneurial firm start-up include all except
having over 100 employees.
In general, the greater the debt a business owner is willing to take on, the ________ the risk tolerance.
higher
Threats to ________ are threats to the new business in financing its growth, including high development cost.
operational financing
A type of gap analysis that compares the possibilities in the marketplace with an individual's competence to address those gaps is called
opportunity analysis.
________ occur(s) in large companies that have excess resources such as equipment and employees.
organizational slack
A(n) ________ is needed regarding all employees, and the owner must be diligent in the attempt to assist a poorly performing employee.
paper trail
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.
In contrast to the role of leadership in a typical large organization, the founder of a new entrepreneurial business tends to play a very critical role because
the concentration of knowledge tends to be with her or him.
A petty cash fund operates like a bank savings account.
true
An advantage of a sole proprietorship is that a business is very easy to form and dissolve because there is virtually no separation between the founder and the business.
true
As a Subchapter S Corporation, one of the advantages is having legitimacy in the market as a more established form of business.
true
Banks will lend money for the establishment and maintenance of inventory by arranging a revolving line of credit.
true
Brainstorming is a creative process in which a group of individuals are brought together and asked to generate ideas related to a specific topic or problem.
true
Charles Wilson, secretary of defense for President Eisenhower, stated that "what is good for General Motors is good for the nation."
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 action a small business owner might take to establish that the firm is not discriminatory would be to advertise the job widely in several publications.
true
In the context of legal forms of business, identify a benefit of an Subchapter S Corporation over a Subchapter C Corporation.
An Subchapter S Corporation has limitations in the number and type of shareholders unlike a Subchapter C Corporation.
Which of the following statements is true of a family business?
A family business is generally run by and for the benefit of a particular family.
Which of the following statements is true about venture capital start-ups?
They are funded by angel investors who invest more than $2 million and expect extraordinary returns.
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 ________,
limited liability partnership
When should a new business owner ensure there are sufficient financial resources to operate the business?
prior to the start
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
What is an advantage that small firms have over large businesses?
the ability to respond quickly to changes
Which of the following experiences can entrepreneurs evaluate when generating business ideas based on their education?
the courses they took that were particularly enjoyable
In the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships?
the possibility of bringing in new equity partners
allows the owners to treat the income of the firm as part of their personal incomes.
the responsibility of the owners.
Small businesses act as a catalyst for social change because Multiple Choice
they have the ability to generate profits in markets ignored by large corporations.
A problem with having a line of credit to purchase inventory is that a business tends to carry old and outdated inventory on the books.
true
An advantage of a sole proprietorship is that the owner reaps the benefits and doesn't have to share the equity.
true
Equity theory argues that people judge how they are being treated relative to how they see others being treated. Group starts
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.
true
Organizational slack allows large organizations flexibility that is not available to smaller companies.
true
The Americans with Disabilities Act (ADA) applies fully to any firm with more than 15 employees.
true
The fourth column in a gap analysis is used to list the resources required for the successful operation of a business.
true
The setting of goals for an employee allows an entrepreneur to judge how well the employee is performing.
true
The time period for which profit sharing or bonuses are given should be relevant to the individuals in a firm and within the realities and constraints of the business.
true
There are widespread efforts worldwide to encourage the development of small and medium enterprises.
true
In a lease, a landowner can enter a business premises for all the following reasons EXCEPT
whenever the landowner wants to.
Two triggers for staring a new business are talking to successful entrepreneurs and being laid off from your job.
true
In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business?
because it is not clear if the new business will be able to fulfill an order or service a product in the future
Why can a small business owner make decisions quicker than a big business?
because the decision maker is both the owner and the manager of the business
In the context of entrepreneurship, which of the following is a typical trigger for starting a new business?
being laid off from established employment
When conducting a gap analysis, the first column should include the ________.
business ideas
In the context of business risks, how can an entrepreneur identify competitors to a new potential business?
by observing what potential customers do to satisfy their current needs or wants
A job offer is finalized by _____
candidate signing the offer
While developing a quality business idea, what should potential business founders ideally do after evaluating their personal skill sets?
carefully analyze the market and look for a gap
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 ______
equity investment
Credit cards don't have
equity investment.
In the context of good accounting practices, ________ allow entrepreneurs to perform a monthly tracking of how much they spend and ultimately form an annual record of all business-related costs
expense accounts
A copyright can only be claimed on creative works if they are published or made available for public consumption.
false
A lease need not specify a length of validity as it is assumed to remain in effect as long as a tenant is able to pay for it.
false
A small business start-up is typically oriented toward the personal goals of venture capitalists.
false
An entrepreneur needs to set limits to how much time he or she spends on a business for it to be successful.
false
Entrepreneurs driven by circumstantial motivators are often more proactive than those with personal motivation for starting a business.
false
Equity investment does not involve selling a percentage of the business to an outside investor.
false
Human resource management is not important in family businesses.
false
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
In the case of business failure, debt does not need to be repaid.
false
Large firms can fill niches that small companies cannot afford to fill.
false
New entrepreneurial businesses tend to have slack financial resources that they can rely on, which gives them high flexibility in responding to emergencies.
false
Patents are inexpensive and easy to obtain and maintain.
false
The excess resources that large companies tend to have to assist them are referred to as organizational redundancies.
false
The founders of an entrepreneurial business must avoid personally lending money to the business, as such debts are considered to be unsecured investments that need not be paid back, should the business fail.
false
Venture capitalists typically do not invest more than $2 million.
false
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.
Which of the following is not a characteristic of a high-growth venture?
It is designed to reflect the mission of the founder
Which of the following statements is true of the Fair Labor Standards Act (FLSA)?
It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half.
In the context of legal forms of business, identify a true statement about sole proprietorship firms.
Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms.
Marsciva Technologies is an emerging business. The firm considers the owners to be employees of the firm and therefore pays them salaries and bonuses. To reduce corporate tax, the owners of Marsciva Technologies pay themselves nearly all the profits generated so that very little actual profits are reported by the firm. Based on these characteristics, Marsciva Technologies is most likely a
Subchapter C Corporation.
Which of the following laws states an employer cannot discriminate in pay to men and women who do the same job?
The Equal Pay Act
Which of the following personality tests was developed by two independent research teams who analyzed data collected from thousands of people?
The big five test
Which of the following statements is true of a performance review in an entrepreneurial business?
The formal conversation with a worker who is doing a good job and appreciating his or her work is a form of compensation.
Identify a true statement about the potential founder of a new business.
The founder of a new business needs to be intimately involved in its designing, funding, and running.
Identify a true statement about a large firm that has organizational slack.
The loss of an employee barely affects the abilities of its workforce.
Identify a true statement about entrepreneurial firms.
The number of employees in such businesses is not expected to grow to more than 50 to 100.
Identify a defining characteristic of entrepreneurial firms.
They tend to be oriented toward the personal goals of the founder.
Identify a defining characteristic of venture capital start-ups.
They tend to develop operations in multiple locations very shortly after the initial investment.
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
Threats to operational financing states that there are a number of obstacles to a new venture in obtaining the necessary financing for its growth.
True
In the context of risks to new businesses, identify a true statement about risk tolerance.
What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances.
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
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.
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.
One of the accounting records maintained by Visors Inc. lists the number of regular work hours worked by its employees, the overtime hours worked by various employees, and the firm's overtime pay rate. This record also tracks salary checks issued to each employee. This record is most likely a(n) ________.
payroll record
