Innovation and Entrepreneurship

Which of the following statements are true regarding liability insurance?

1)It covers the business for accidents. 2)It helps protect against lawsuit judgments. 3)It covers product negligence.

Identify a characteristic of a general partnership that is different from that of a sole proprietorship.

Partners are generally held to be jointly liable for all debts incurred by the partnership.

Which of the following are the characteristics of limited partners in a limited liability partnership (LLP)?

1)They are considered passive investors, and their liability is limited to their investment in the business. 2)They are typically allowed to work for the firm.

Which of the following questions should be considered by a new business owner before entering into a lease contract?

1)Who is responsible for maintenance and other facilities issues? 2)Can the business owner renew the lease after the term expires? 3)Who would be responsible for making improvements to the facility? 4)Who has to carry the liability insurance and at what level?

Which law requires that there be no discrimination in the hiring, management, or dismissal of employees with disabilities?

Americans with Disabilities Act

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

Which type of legal business organization is characterized by the fact that the person who owns the business and the business itself are treated as the same entity?

Sole proprietorship

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

Subchapter C

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

The number of shareholders that an organization can obtain.

A sole proprietorship is very popular among individuals who:

1)Are unsure of their business idea 2)Have a very small business 3)Have a business where costs and risks are low

What are the two broad categories of partnerships?

1)General 2)Limited

Two related entities that can help the new business owner foresee potential legal liabilities are:

1)A board of advisers. 2)A board of directors.

A trademark is valid for _____ years and can be renewed as long as the firm or product is active.

10

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

__________ insures businesses from damages caused by workers in the performance of their jobs.

Bonding

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

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

Employer identification number.

TRUE/FALSE: Workers' compensation insurance is considered a minor expense for a business.

FALSE

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

Floor value

Which of the forms of incorporation has recently become the most popular?

LLC (Limited Liability Corporation)

__________ are the least expensive corporation types to form.

LLC (Limited Liability Corporation)

Which form of business has at least two individuals who are partners in a venture but only one person declares a full pass-through of all income on his or her federal taxes and assumes unlimited liability?

Limited liability partnership

_____ 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

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

Trademark permit

A board of _____ is formed at the discretion of the founders and composed of individuals outside the business who advise the founders.

advisors

In the United States, a _____ is assumed to apply to anything that is your own original work (whether that original work itself is filed with the U.S. government or not).

copyright

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.

Which of the following are three basic types of legal business organization?

1)Sole Proprietorship 2)Corporation 3)Partnership

Which of the following are excellent sources of information regarding regulatory requirements?

1)Chamber of Commerce 2)Local department of economic development 3)Small Business Administration 4)Small Business Assistance Centers

Which of the following elements are required when forming a Subchapter C or a Subchapter S Corporation?

1)General name of the business 2)Location of corporate headquarters 3)Name, addresses, and titles of all founders

Which of the following is true regarding a board of advisors?

1)The group is formed at the discretion of the founder. 2)The group advises the founder on key issues. 3)The group is composed of individuals outside the business.

Which class of partner in a limited partnership is considered the manager of the firm and has unlimited liability for any debts or judgments against the firm?

General

Which form of intellectual property protection is the most complex and expensive and covers a specific innovation?

Patent

A corporation pays a tac 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

Identify the typical requirements for a new business to obtain a city or county business license.

1)It should pay a set fee, which is usually less than $100. 2)It should agree to report basic information about its performance on a set schedule.

Which of the following industries would be highly regulated by the government?

1)Medical-related industries 2)Industries involving alcohol 3)Military-related businesses

Which of the following must be formally addressed by both Subchapter C and Subchapter S Corporations?

1)Reporting standards to local, state, and federal authorities. 2)Authorization of more shares of stock. 3)Holding annual board meetings.

Which form of business involves two or more individuals sharing unlimited liability in a business venture?

General Partnership

In new corporations, the stakeholders and board of _____ are often the same individuals.

directors

TRUE/FALSE: A partnership will be governed by either the Uniform Partnership Act or the Revised Uniform Partnership Act if the partnership agreement is not developed and signed.

TRUE

A __________ consists of individuals who have a fiduciary responsibility to the shareholders of an organization.

board of directors

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

trademark

A business owner hires a mechanic to work on cars owned by the customers. The mechanic makes a mistake that leads to significant and costly damage to a customer's car. Which type of insurance can be purchased to cover the damages?

Bonding

Which of the following are the characteristics of a Subchapter C Corporation?

1)It does not have any limits on shareholder participation. 2)It does not provide any protection for the owners beyond their equity investment.

A ______ patent is for a new process, machine, article of manufacture, or composition of matter, or any new and useful improvement of those.

utility

Which of the following are drawbacks of a sole proprietorship?

1)The lack of legitimacy with suppliers and customers. 2)The formation is limited to a single founder. 3)The liability of the business is the responsibility of the single owner.

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

General partnership

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

Internal Revenue