Deck 3: Organizing and Financing a New Venture

Question 1

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

Answer 1

False

Question 2

A limited liability company (LLC)is owned by shareholders with limited liability, and its earnings are taxed at the corporate rate.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

The marginal tax rate for the first dollar of personal taxable income is higher for "single filers" relative to "married, filing jointly."

Question 5

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

Question 6

A basic C corporation is also known as an S corporation.

Question 7

An income tax law passed in 2017 provided for a 21% flat corporate income tax rate beginning in 2018.

Question 8

Based on the 2018 tax laws, the tax rate for corporations is less than the highest marginal tax rate for individuals.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

Chapter 3 begins the focus on the startup and survival stages of a venture's life cycle.

Question 14

Beginning in 2018, the income tax laws provided for a flat personal income tax rate.

Question 15

An S corporation provides unlimited liability for its shareholders.

Question 16

The highest federal marginal income tax rate for personal taxable income is 40 percent.

Question 17

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 18

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

Question 19

The 2018 flat corporate tax rate was higher than the lowest personal marginal income tax rate.

Question 20

In a corporate legal entity, the personal assets of the owners are separate from the assets of the business.

Question 21

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

Question 22

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

Question 23

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

Question 24

An idea is enough to be patented.

Question 25

Intellectual property refers to a venture's intangible assets and human capital.

Question 26

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

Question 27

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

Question 28

There are four kinds of patents.

Question 29

Collective marks cover memberships in groups (e.g., a sorority or a labor union).

Question 30

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

Question 31

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

Question 32

Certification marks cover memberships in groups (e.g., a sorority or a labor union).

Question 33

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

Question 34

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

Question 35

Trade secrets are intellectual property rights in the form of inventions and information not generally known to others that convey economic advantages to the holders.

Question 36

A trademark must be novel in order to receive protection.

Question 37

A business method patent is one kind of patent.

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

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

Question 43

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

A)general liability
B)joint liability
C)limited liability
D)accrued liability

Question 44

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

Question 45

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

Question 46

Certification marks are intellectual property rights in the form of inventions and information (e.g., formulas, processes, customer lists, etc.)not generally known to others.

Question 47

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

Question 48

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

A)participation in profits
B)no participation in management
C)veto right on new partners
D)access to partnership books

Question 49

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 50

During which of the following venture life cycle stages is the entrepreneur concerned with choosing the initial organizational form?

A)development stage
B)startup stage
C)survival stage
D)rapid-growth stage

Question 51

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 52

Financial bootstrapping maximizes the need for financial capital.

Question 53

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

Question 54

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 55

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

A)proprietorship
B)limited partnership
C)corporation
D)limited liability company (LLC)

Question 56

The type of financing available at a venture's survival stage in its life cycle is first-round financing.

Question 57

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

Question 58

Certification marks provide indications of quality.

Question 59

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

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

Question 60

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

A)proprietorship
B)limited partnership
C)limited liability company (LLC)
D)subchapter S corporation

Question 61

Which of the following business organizational forms provides the owners with limited investor liability and passes its income before taxes through to the owners?

A)partnerships and S corporations
B)S corporations and C corporations
C)C corporations and limited liability companies (LLCs)
D)S corporations and limited liability companies (LLCs)

Question 62

Based on 2018 tax schedules, the highest tax rate on corporate taxable income is:

A)15.0%
B)21.0%
C)35.0%
D)38.0%

Question 63

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

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

Question 64

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)copyrights
D)trade secrets

Question 65

Intellectual property rights to writings in printed and electronically stored forms are protected by:

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

Question 66

Following is a partial personal taxable income schedule for a single filer: What would be the maximum dollar amount of income taxes in the $38,700-$82,500 bracket paid by a single filer with taxable income of $82,500?

A)$952.50
B)$3,501.00
C)$4,453.50
D)$9,636.00

Question 67

Following is a partial personal taxable income schedule for a single filer: The average tax rate for a single filer with taxable income of $82,500 would be :

A)12.0%
B)17.1%
C)18.6%
D)22.0%

Question 68

Based on 2018 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%

Question 69

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

A)patents
B)trademarks
C)legal disclaimers
D)copyrights

Question 70

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 that convey economic advantages to the holders?

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

Question 71

The total dollar amount of federal income taxes paid by a corporation with taxable income of $50,000 under the 2018 tax law would be:

A)$5,000
B)$7,500
C)$10,500
D)$12,500

Question 72

Following is a partial personal taxable income schedule for a single filer: What would be the dollar amount of income taxes paid by a single filer who has taxable income of $9,525?

A)$952.50
B)$1,143.00
C)$3,501.00
D)$4,453.00

Question 73

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 74

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 75

Following is a partial personal taxable income schedule for a single filer: The average tax rate for a single filer with taxable income of $38,700 would be:

A)10.0%
B)11.5%
C)12.0%
D)17.1%

Question 76

The total dollar amount of federal income taxes paid by a corporation with taxable income of $75,000 under the 2018 tax law would be:

A)$7,500
B)$10,500
C)$15,750
D)$18,750

Question 77

Based on 2018 tax schedules, the first dollar of corporate income is taxed at which of the following tax rates?

A)10.0%
B)15.0%
C)21.0%
D)25.0%

Question 78

Based on 2018 tax schedules, the highest marginal tax rate on personal taxable income is:

A)25.0%
B)28.0%
C)33.0%
D)37.0%

Question 79

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

A)patents
B)trademarks
C)legal disclaimers
D)copyrights

Question 80

Following is a partial personal taxable income schedule for a single filer: What would be the cumulative dollar amount of income taxes paid by a single filer who has taxable income of $38,700?

A)$922.50
B)$1,143.00
C)$3,501.00
D)$4,453.00