Deck 13: Developing the Startup Marketing Plan

Question 1

The law requires a partnership to draw up a written partnership agreement based on the Uniform Partnership Act.

Answer 1

False

Question 2

In a/an ____, all partners assume unlimited personal liability and responsibility for the management of the business.

A)limited partnerships
B)general partnership
C)ostensible authority
D)sole proprietorship
E)LLC

Answer 2

B

Question 3

____ pay taxes on profits and their shareholders pay taxes on dividends they receive, resulting in double taxation. ​

A)S-corporations
B)C-corporations
C)LLCs
D)Foreign corporations
E)None of these choices

Answer 3

B

Question 4

DBA stands for a certificate of doing business under an assumed name. ​

Question 5

In a sole proprietorship, the owner is the only person responsible for the activities of the business and, therefore, is the only one to enjoy the profits and suffer the losses.

Question 6

More than 76 percent of all businesses in the United States are ____. ​

A)limited partnerships
B)nonprofit businesses
C)dormant partnerships
D)sole proprietorships
E)limited liability companies

Question 7

____ make(s)all partners responsible for the obligations that each incurs in the course of doing business.

A)Limited partnerships
B)General partnership
C)Ostensible authority
D)Sole proprietorship
E)Limited liability

Question 8

A ____ corporation is chartered in a state other than in the one in which it will do business.

A)closely held
B)domestic
C)foreign
D)S-
E)C-

Question 9

Nonprofit corporations are not allowed to make a profit, according to the Internal Revenue Service.

Question 10

Upon the death of a partner, the insurance proceeds can be used to keep the business going or to buy out the deceased partner's interest under a/an ____. ​

A)buy/sell agreement
B)partnership agreement
C)ostensible authority
D)sole proprietorship
E)None of these choices

Question 11

Only about 25 percent of all U.S. businesses are ____, but they account for 67 percent of all sales transactions.

A)nonprofits
B)LLCs
C)corporations
D)sole proprietorships
E)None of these choices

Question 12

LLCs are becoming a popular vehicle for companies that may have global investors, because the C-corporation does not permit foreign ownership.

Question 13

____ life insurance is a policy on the life of principal members of the partnership, usually the senior partners.

A)Principal
B)Uniform partnership
C)First-partner
D)Key-person
E)None of these choices

Question 14

____ partners typically provide capital but do not actively participate in the management of the business.

A)Secret
B)Silent
C)Dormant
D)Limited
E)General

Question 15

Sole proprietorships, partnerships, S-corporations, and limited liability companies all permit pass-through earnings and losses, but S-corporations and LLCs offer more protection from liability.

Question 16

A high-growth venture cannot be started as a sole proprietorship.

Question 17

In forming a ____, the entrepreneur gives up proprietary interest in the organization and dedicates all the assets and resources of the corporation to tax-exempt activities.

A)sole proprietorship
B)LLC
C)C-corporation
D)S-corporation
E)nonprofit corporation

Question 18

Common stockholders are entitled to vote at stockholder meetings.

Question 19

Having a strategic plan in place for the venture enables the entrepreneur to choose a legal form that won't have to be changed or one that can easily be shifted to when the time is right.

Question 20

In terms of its treatment of income, expenses, and taxes, a partnership is essentially a sole proprietorship consisting of more than one person.

Question 21

The most significant disadvantage of the sole proprietorship form of doing business is:

A)More difficult for the owner to raise capital
B)The owner has unlimited liability
C)The survival of the business depends on the owner
D)It may require getting a DBA
E)It cannot be used for high-growth ventures

Question 22

Each partner owns and has use of the property acquired by the partnership, unless otherwise stated in ____. ​

A)the corporate charter
B)the partnership agreement
C)the commercial code
D)proprietary bylaws
E)SEC regulations

Question 23

By creating a corporation and issuing stock, the entrepreneur is giving up a measure of control to the ____. ​

A)creditors
B)government
C)partnership
D)board of directors
E)SEC

Question 24

In a/an ____, corporate stock is owned privately by a few individuals and is not traded publicly on a securities exchange.

A)partnership
B)sole proprietorship
C)closely held corporation
D)open corporation
E)limited partnership

Question 25

Often small businesses such as pizza parlors and boutiques are run as ____.

A)sole proprietorships
B)silent partnerships
C)general partnerships
D)nonprofit businesses
E)an LLC

Question 26

All of the following are types of nonprofit organizations except ____. ​

A)religious organizations
B)novelty shops
C)schools
D)museums
E)shelters

Question 27

Sole proprietorships offer several advantages, which include all of the following except ____.

A)they are easy and inexpensive to create
B)they give the owner complete authority
C)dividends are paid to owners
D)the income from the business is taxed only once, at the owner's personal income tax rate
E)there are no major reporting requirements, as with a corporation

Question 28

A corporation established for charitable, public (scientific, literary, or educational), or religious purposes or for mutual benefit (trade associations, tennis clubs), as recognized by federal and state laws, is a ____. ​

A)nonprofit corporation
B)joint venture
C)syndicate operation
D)limited partnership
E)sole proprietorship

Question 29

The U.S. Supreme Court has defined the ____ as an artificial being, invisible, intangible, and existing only in contemplation of the law.

A)corporation
B)sole proprietorship
C)partnership
D)joint venture
E)closely held corporation

Question 30

Which of the following statements is not true of an S-corporation?

A)It may have no more than 100 shareholders.
B)Shareholders must be U.S. citizens or residents.
C)Profits and losses must be allocated in proportion to shareholder interests.
D)Partnerships may be shareholders.
E)Shareholders may not deduct losses in an amount greater than their original investment.

Question 31

A corporate form that enjoys the pass-through tax benefits of partnerships in addition to the limited liability of a C-corporation is known as a ____. ​

A)multinational corporation
B)secret partnership
C)silent partnership
D)limited liability company (LLC)
E)closely held partnership

Question 32

A financial vehicle that enjoys limited liability in that its owners are liable for its debts and obligations only to the limit of their investment is a ____. ​

A)sole proprietorship
B)S-corporation
C)C-corporation
D)joint venture
E)limited partnership

Question 33

If a nonprofit corporation is ever dissolved, its assets must be distributed ____. ​

A)to the owners
B)at public auction
C)to another tax-exempt organization
D)to the shareholders
E)to the federal government

Question 34

To operate as a sole proprietor requires nothing more than a ____.

A)stock certificate
B)"Certificate of Doing Business Under an Assumed Name"
C)limited liability certificate
D)retained earnings statement
E)visit to an attorney

Question 35

A corporation that is chartered in the state in which it will do business and issue stock is a/an ____.

A)foreign corporation
B)domestic corporation
C)secret partnership
D)alien corporation
E)closely held corporation

Question 36

When one or more people agree to assume unlimited personal liability and responsibility for management of the business, a ____ exists.

A)secret partnership
B)general partnership
C)silent partnership
D)joint venture
E)LLC

Question 37

The owner is the only person responsible for the activities of the business in a ____. ​

A)limited partnership
B)nonprofit business
C)dormant partnership
D)sole proprietorship
E)limited liability company

Question 38

When two or more people share the assets, liabilities, and profits of the business, the legal structure is a ____.

A)sole proprietorship
B)corporation
C)partnership
D)limited partnership
E)None of these choices

Question 39

Professionals such as lawyers, doctors, and accountants frequently employ the legal structure of a ____.

A)sole proprietorship
B)S-corporation
C)partnership
D)C-corporation
E)None of these choices

Question 40

Income derived from for-profit activities in a nonprofit corporation is subject to ____. ​

A)withholding
B)distribution
C)income taxation
D)reinvestment
E)dividend payments

Question 41

What are the disadvantages of a limited liability company (LLC)?

Question 42

What are the disadvantages of a sole proprietorship? ​

Question 43

What are the added advantages of a partnership over a sole proprietorship?

Question 44

Define the two types of partnerships. ​

Question 45

What questions should entrepreneurs answer when determining which legal form is best for their venture?

Question 46

What are the critical issues a partnership should address in a buy-sell agreement? ​

Question 47

What are the advantages of sole proprietorships? ​

Question 48

List the various legal structural forms available to an entrepreneur according to the level of risk of each.

Question 49

Define a nonprofit corporation. ​

Question 50

What are the advantages of a C-corporation?