Deck 3: Entrepreneurship, New Ventures, and Business Ownership

Question 1

The most common form of business organization is the corporation.

Answer 1

False

Question 2

A limited liability corporation is a hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability.

Answer 2

True

Question 3

People who assume the risk of business ownership with a primary goal of growth and expansion are called entrepreneurs.

Answer 3

True

Question 4

In a franchise,the franchisee is the seller or parent company.

Question 5

A multinational corporation is a form of corporation spanning national boundaries.

Question 6

Groups of sole proprietorships or partnerships may agree to work together for their common benefit by forming a corporation,which combines the freedom of sole proprietorships with the financial power of cooperatives.

Question 7

The Small Business Administration is the government agency charged with owning small businesses.

Question 8

A group of small investors who invest money in companies with rapid growth potential is called a Small-Business Investment Company.

Question 9

A small business is classified as an independent business that is part of a larger business.

Question 10

Most successful entrepreneurs have a strong desire to be their own bosses.

Question 11

A limited partnership has limited partners who only invest money but do not have an active role in the operation of the business and are only liable for debts to the extent of their investment.

Question 12

Small Business Development Center (SBDC)is an SBA program that consolidates information for small businesses to access.

Question 13

The least common type of partnership is the general partnership.

Question 14

Unlimited liability is when a sole proprietor is not personally liable for all debts incurred by the business.

Question 15

For liability purposes,a limited partnership must have at least one general partner who runs the business and is responsible for its survival and growth.

Question 16

A small business is an independently owned business that has relatively little influence in its market.

Question 17

Manufacturing,more than any other industry,lends itself to big business.

Question 18

A sole proprietorship is a business owned by one person.

Question 19

Startup costs and double taxation are disadvantages of the corporate form of ownership.

Question 20

A business plan develops and describes an entrepreneur's business strategy and demonstrates how it will be implemented.

Question 21

A merger occurs when a corporation sells one or more of its business units.

Question 22

Most experts recommend starting a business from scratch rather than buying an existing business.

Question 23

Small businesses produce 13 times as many patents per employee as large patenting firms.

Question 24

Franchisees may be obligated to contribute a percentage of sales to parent corporations.

Question 25

One growing trend has been that new businesses are started by people who have left big corporations and who want to put their experience to work.

Question 26

History has shown that major innovations are more than likely to come from large corporations.

Question 27

The startup costs of a franchise are usually very low.

Question 28

Small business investment companies (SBICs)invest in companies with the potential for rapid growth.

Question 29

Franchises are less likely to fail than new businesses.

Question 30

Neglect is a major factor that contributes to small business failure.

Question 31

The failure rate among small businesses has been increasing in recent years.

Question 32

Most businesses in the U.S.are large businesses with more than 500 employees.

Question 33

Lending institutions are more likely to help finance the purchase of an existing business rather than the startup of a business from scratch.

Question 34

The number of small businesses being started by minorities and women is declining.

Question 35

Entrepreneurs share an aversion to risk.

Question 36

One of the most significant recent trend in small business startups is the rapid emergence of electronic commerce.

Question 37

Loans are the most important source of money for a new business.

Question 38

The most common type of small business is manufacturing.

Question 39

Venture capital firms provide capital to small business in return for partial ownership.

Question 40

By definition,a small business cannot be part of a larger business.

Question 41

Low startup costs and tax benefits are advantages of sole proprietorships.

Question 42

Most venture capital companies do not lend money.

Question 43

A disadvantage of the corporate form of business ownership is lack of continuity.

Question 44

A general partnership is legally limited to 10 partner-owners.

Question 45

African-American businesses have grown at a faster rate than Hispanic-owned businesses.

Question 46

The Internal Revenue Service taxes partners as individuals.

Question 47

Entrepreneurs often enjoy working for large organizations.

Question 48

The SBA may consider a business with 1,500 employees to be small,as long as it has low annual revenues.

Question 49

The board of directors of a corporation report to the officers of the corporation.

Question 50

A good rule of thumb for individuals starting a new business is to not rely on personal resources.

Question 51

Limited liability is a major advantage of sole proprietorships.

Question 52

Sole proprietors are personally responsible for all the debts of the business.

Question 53

An S-corporation has stock that is widely held and available for sale to the general public.

Question 54

The biggest advantage of the corporate form of business ownership is limited liability.

Question 55

The most common type of partnership is the limited partnership.

Question 56

Many entrepreneurs are finding new opportunities in foreign markets.

Question 57

By law,each general partner is liable for all debts incurred in the name of the partnership.

Question 58

The most striking advantage of general partnerships is their ability to grow with the addition of new talent and money.

Question 59

Corporations account for roughly 90 percent of all businesses but only 20 percent of all sales revenues.

Question 60

Corporations enjoy significant tax benefits when compared to sole proprietorships or partnerships.

Question 61

________ are groups of small investors seeking to make profits on companies with rapid growth potential.

A) Business incubators
B) Investment clubs
C) Venture capital companies
D) Financial partnerships

Question 62

Which form of business ownership generates the most sales in the United States?

A) sole proprietorship
B) partnership
C) cooperative
D) corporation

Question 63

________ are people who assume the risk of business ownership.

A) Sole proprietors
B) General partners
C) Directors
D) Entrepreneurs

Question 64

In what business sector are cooperatives still important?

A) manufacturing
B) automotive
C) public utilities
D) agriculture

Question 65

A ________ is a business that is legally considered a separate entity from its owners and is liable for its own debts.

A) sole proprietorship
B) corporation
C) partnership
D) cooperative

Question 66

Which of the following was started from scratch?

A) Dell Computer
B) Wal-Mart
C) Microsoft
D) all of the above

Question 67

A master partner retains at least ________ ownership and runs the business.

A) 10 percent
B) 25 percent
C) 50 percent
D) 90 percent

Question 68

Entrepreneurs have more than one goal for starting a business and becoming self-employed.Which of the following reasons is NOT mentioned in the text?

A) to seek independence and be their own boss
B) to earn a comfortable living for a period of time
C) to grow and expand a current business
D) to meet community or social obligations

Question 69

A(n)________ invests money in a partnership but is liable only to the extent of his/her investment.

A) agent
B) general partner
C) limited partner
D) officer

Question 70

A ________ is independent and does not dominate its market.

A) corporation
B) sole proprietorship
C) small business
D) partnership

Question 71

Which of the following represents the fastest-growing segment of business ownership?

A) African-Americans
B) Asians
C) Hispanics
D) Pacific Islanders

Question 72

What is the most important source of money for new-business start-ups?

A) banks
B) the SBA
C) personal resources
D) grants

Question 73

SCORE members are ________.

A) retired executives
B) venture capitalists
C) paid by the SBA
D) commercial lenders

Question 74

A ________ is a document in which an entrepreneur summarizes his or her business strategy for a proposed new venture and how that strategy will be implemented.

A) success chart
B) director's guideline
C) financial blueprint
D) business plan

Question 75

Which of the following represents the most businesses in the United States?

A) sole proprietorships
B) partnerships
C) cooperatives
D) corporations

Question 76

In a franchise agreement,the franchisee is ________.

A) the parent company
B) the local owner
C) the supplier
D) any of a number of customers

Question 77

The owners of a corporation are the ________.

A) board of directors
B) officers
C) stockholders
D) top managers

Question 78

In a franchise agreement,the franchiser is ________.

A) the parent company
B) the local owner
C) the supplier
D) any of a number of customers

Question 79

The most significant disadvantage of owning a franchise is ________.

A) startup costs
B) guidelines on operating the business
C) competition
D) difficulty obtaining loans

Question 80

Corporate officers are ________.

A) top managers
B) members of the board
C) non-voting stockholders
D) none of the above