Deck 3: Organizing and Financing a New Venture

Question 1

An S corporation provides unlimited liability for its shareholders.

Answer 1

False

Question 2

Professional corporations PCs) and service corporations SCs) are corporate structures that "states" provide for professionals such as physicians, dentists, lawyers, and accountants.

Answer 2

True

Question 3

In a corporate legal entity, the personal assets of the owners are separate from the business' assets, but the personal liabilities of the owners are not.

Answer 3

False

Question 4

The income received by a proprietorship is taxed at personal tax rates.

Question 5

The marginal tax rate for the first dollar of taxable income is higher for corporations than for individuals.

Question 6

Financial bootstrapping maximizes the need for financial capital.

Question 7

The equity capital sources for a proprietorship are partners, families, and friends.

Question 8

The articles of incorporation are the basic legal declarations contained in the corporate charter.

Question 9

Patents, trade secrets, trademarks, and copyrights are intangible assets.

Question 10

Partnerships are treated with pass-through taxation. This means that profits and losses of the business pass directly through to investors on the basis specified in the partnership agreement.

Question 11

An employment contract is an agreement between an employer and employee about the terms and conditions of employment including the employee's agreement to keep confidential information secret and to assign ideas and inventions to the employer.

Question 12

Limited liability in the corporate business structure means creditors can seize only some of the corporation's assets.

Question 13

The difference between a limited partnership and a general partnership is that the limited partnership has partners who actively manage the day-to-day operations but also has passive investors.

Question 14

Based on the 2015 tax laws, the highest possible marginal tax rate for corporations is less than the highest rate for individuals.

Question 15

Limited liability companies LLCs) are owned by shareholders with limited liability and its earnings are taxed at the corporate rate.

Question 16

There are four types of "marks" that can be used to try to protect intellectual property.

Question 17

The maximum number of owners in a Subchapter S corporation is 150.

Question 18

Most trademarks take the form of names, words, or graphic designs.

Question 19

A limited partnership limits certain partners' liabilities to pay the venture's obligations to the amount each paid for their partnership interests.

Question 20

The highest marginal income tax rate for taxable personal income is 45 percent.

Question 21

"Trademarks" are intellectual property rights that allow firms to differentiate their products and services through the use of unique marks.

Question 22

A trademark must be novel in order to receive protection.

Question 23

The Leahy-Smith America Invents Act of 2011 was passed, in part, to alleviate the backlog of patent-related lawsuits.

Question 24

Business angels are wealthy individuals who invest in early-stage ventures in exchange for the excitement of launching the business, as well as a share of the firm's financial gains.

Question 25

"Design patents" cover most inventions pertaining to new products, services, and processes.

Question 26

Patent Trolls are firms authorized by the U.S. Congress to help reduce the number of patent-related lawsuits.

Question 27

A copyright must be registered with the U.S. Copyright Office in order for a work to be protected.

Question 28

Confidential disclosure agreements are used to protect intellectual property when disclosure must be made to an outside individual or organization.

Question 29

Copyrights are intellectual property rights to writings in printed and electronically stored forms.

Question 30

If you are an inventor with a patent, the burden of enforcing the patent is yours.

Question 31

"Business method" is one kind of patent.

Question 32

A "color mark" is considered to be one four types of "marks" used to try to protect intellectual property.

Question 33

An idea is enough to be patented.

Question 34

"Service marks" refer to services such as those provided by a sorority or a labor union.

Question 35

Nondisclosure agreements prohibit the creator of an idea or other form of intellectual property from sharing it with others once it has been presented the first time.

Question 36

A work does not need to be registered to receive copyright protection; the work's creation is enough to provide copyright protection.

Question 37

"Certification marks" provide indications of quality.

Question 38

There are four kinds of patents.

Question 39

"Patents" are intellectual property rights granted for inventions that are useful, novel, and obvious.

Question 40

"Business method" patents protect a specific way of doing business and the underlying computer codes, programs, and technology.

Question 41

Intellectual property can be protected by all of the following except:

A) patents
B) trademarks
C) legal disclaimers
D) copyrights
E) trade secrets

Question 42

Based on 2015 tax schedules, the highest marginal tax rate on corporate taxable income is:

A) 25.0%
B) 28.0%
C) 35.0%
D) 38.0%
E) 39.0%

Question 43

Based on 2015 tax schedules, the highest marginal tax rate on personal taxable income is:

A) 25.0%
B) 28.0%
C) 33.0%
D) 39.6%
E) 45.0%

Question 44

The average tax rate for a single filer with taxable income of $90,750 would be:

A)15.0%
B) 16.5%
C) 19.7%
D) 20.4%
E) 25.0%

Question 45

Which of the following numbers of shareholders is allowed in a Subchapter S or S) corporation business form?

A) 100
B) 125
C) 130
D) 500

Question 46

Which form of business organization typically offers the easiest transfer of ownership?

A) proprietorship
B) limited partnership
C) corporation
D) subchapter S corporation
E) general partnership

Question 47

The maximum dollar amount of income taxes in the $37,450-$90,750 "bracket" paid by a single filer with taxable income of $90,750 would be:

A) $1
B) $922.50
C) $4,233.75
D) $5,156.25
E) $13,325

Question 48

Which of the following is not a right or a duty of general partners?

A) participation in profits and losses
B) some liability for partnership obligations
C) veto right on new partners
D) eventual return of capital
E) access to partnership books

Question 49

Based on 2015 tax schedules, the first dollar of personal taxable income is taxed at which of the following marginal tax rates:

A) 5.0%
B) 10.0%
C) 15.0%
D) 20.0%
E) 25.0%

Question 50

The rules and procedures established to govern the corporation are called the

A) corporate charter
B) articles of incorporation
C) corporate bylaws
D) confidentiality disclosure agreements
E) partnership agreements

Question 51

Which form of business organization is characterized by having the shortest start-up time and lowest legal costs?

A) proprietorship
B) limited partnership
C) corporation
D) subchapter S corporation
E) limited liability corporation

Question 52

Based on 2015 tax schedules, the first dollar of corporate income is taxed at which of the following marginal tax rates:

A) 05.0%
B) 10.0%
C) 15.0%
D) 20.0%
E) 25.0%

Question 53

In which form of business organization are the owners not offered the protection of limited liability?

A) proprietorship
B) limited partnership
C) corporation
D) subchapter S corporation
E) limited liability corporation

Question 54

The average tax rate for a corporation with taxable income of $75,000 would be:

A) 15.0%
B) 18.3%
C)20.0%
D)22.7%
E)25.0%

Question 55

In which form of business organization is the taxation effects characterized by the income flowing to shareholders taxed at personal tax rates?

A) proprietorship
B) limited partnership
C) corporation
D) subchapter S corporation
E) general partnership

Question 56

The average tax rate for a single filer with taxable income of $37,450 would be:

A) 10.0%
B) 13.8%
C) 15.0%
D)16.7%
E) 20.0%

Question 57

In a general partnership, legal action that treats all partners equally as a group is called:

A) joint and several liability
B) joint liability
C) limited liability
D) accrued liability
E) general liability

Question 58

Which form of business organization is characterized as having unlimited life?

A) proprietorship
B) limited partnership
C) limited liability corporation
D) subchapter S corporation
E) general partnership

Question 59

The average tax rate for a corporation with taxable income of $100,000 would be:

A)15.0%
B) 16.75%
C)20.0%
D)22.25%
E)25.0%

Question 60

Which of the following are intellectual property rights granted for inventions that are useful, novel, and non-obvious?

A) patents
B) trademarks
C) legal disclaimers
D) copyrights
E) trade secrets

Question 61

Business angels typically initiate their investments during the:

A) early stages of a venture's lifecycle
B) middle stages of a venture's lifecycle
C) maturity stage of a venture's lifecycle
D) all of the above

Question 62

Which of the following are intellectual property rights that allow firms to differentiate their products and services through the use of unique marks which allow consumers to easily identify the source and quality of the products and services?

A) patents
B) trademarks
C) legal disclaimers
D) copyrights
E) trade secrets

Question 63

Intellectual property rights to "writings" in written and electronically-stored forms are protected by:

A) Patents
B) copyrights
C) trade secrets
D) trademarks

Question 64

Which of the following are not sources of seed and start-up financing?

A) family and friends
B) the entrepreneur's physical and financial assets
C) business angels
D) venture capitalists
E) stock and bond markets

Question 65

Patents that cover most inventions pertaining to new products, services, and processes, are referred to as:

A) design patents
B) plant patents
C) utility patents
D) electrical patents
E) mechanical patents

Question 66

Certification marks are typically used to:

A) indicate membership in a trade group
B) indicate a certain brand of service
C) indicate quality
D) are symbols used to associate products to a specific brand

Question 67

Patents are intellectual property rights granted for inventions that are:

A) not useful, novel, and non-obvious
B) not useful, not novel, and obvious
C) useful, novel, and non-obvious
D) useful, not novel, and obvious

Question 68

Which of the following forms of protecting intellectual property had its protection limit increased from 17 to 20 years?

A) copyrights
B) trademarks
C) patents
D) trade secrets

Question 69

Which of the following are intellectual property rights to writings in written and electronically stored forms?

A) patents
B) trademarks
C) legal disclaimers
D) copyrights
E) trade secrets

Question 70

Which of the following forms of protecting intellectual property currently has a protection limit of 20 years?

A) copyrights
B) patents
C) trade secrets
D) trademarks

Question 71

Which of the following are intellectual property rights in the form of inventions and information such as formulas, processes, and customer lists that are not generally known to others and which convey economic advantage to the holders?

A) patents
B) trademarks
C) legal disclaimers
D) copyrights
E) trade secrets

Question 72

Wealthy individuals who invest in early stage ventures in exchange for the excitement of launching a business and a share in any financial rewards are known as:

A) creditors
B) white knights
C) corporate raiders
D) business angels
E) stakeholders