Deck 3: Organizing and Financing a New Venture

Question 1

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

Answer 1

False

Question 2

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.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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 5

Financial bootstrapping maximizes the need for financial capital.

Question 6

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

Question 7

An S corporation provides unlimited liability for its shareholders.

Question 8

Based on 2012 tax laws,the highest possible marginal tax table rate is higher for corporations than for individuals.

Question 9

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.

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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 22

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

Question 23

"Business method" is one kind of patent.

Question 24

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

Question 25

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

Question 26

There are four kinds of patents.

Question 27

A trademark must be novel in order to receive protection.

Question 28

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

Question 29

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

Question 30

"Certification marks" provide indications of quality.

Question 31

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

Question 32

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

Question 33

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

Question 34

An idea is enough to be patented.

Question 35

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 36

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

Question 37

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

Question 38

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

Question 39

"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 40

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

Question 41

Based on 2012 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 42

Following is a partial 2012 personal income tax schedule for a single filer:

The average tax rate for a single filer with taxable income of $85,650 would be:

A)14.7%
B)16.7%
C)20.0%
D)20.4%
E)25.0%

Question 43

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 44

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 45

Based on 2012 tax schedules,the first dollar of personal taxable 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 46

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 47

Following is a partial 2012 corporate income tax schedule:

The cumulative dollar amount of income taxes paid by a corporation with taxable income of $75,000 would be:

A)$6,250
B)$7,500
C)$8,500
D)$13,750
E)$22,250

Question 48

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

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

Question 49

Following is a partial 2012 personal income tax schedule for a single filer:

The cumulative dollar amount of income taxes paid by a single filer who has taxable income of $35,350 would be:

A)$150
B)$835
C)$3,840
D)$4,867.50
E)$10,385

Question 50

Based on 2012 tax schedules,the highest marginal tax rate on personal taxable income is:

A)25.0%
B)28.0%
C)33.0%
D)35.0%
E)40.0%

Question 51

Following is a partial 2012 personal income tax schedule for a single filer:

The dollar amount of income taxes paid by a single filer who has taxable income of $8,700 would be:

A)$150
B)$870
C)$3,840
D)$4,675
E)$10,385

Question 52

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 53

Following is a partial 2012 corporate income tax schedule:

The dollar amount of income taxes paid by a corporation with taxable income of $50,000 would be:

A)$1,500
B)$6,250
C)$7,500
D)$8,500
E)$10,850

Question 54

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 55

Based on 2012 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 56

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 57

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

A)74
B)125
C)130
D)500

Question 58

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 59

Following is a partial 2012 personal income tax schedule for a single filer:

The maximum dollar amount of income taxes in the $35,350-$85,650 "bracket" paid by a single filer with taxable income of $85,650 would be:

A)$150
B)$870
C)$3,997.50
D)$4,675
E)$12,575

Question 60

Following is a partial 2012 personal income tax schedule for a single filer:

The average tax rate for a single filer with taxable income of $35,350 would be:

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

Question 61

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 62

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 63

Following is a partial 2012 corporate income tax schedule:

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 64

During the development stage,seed financing chiefly comprises:

A)funds from business angels and venture capitalists
B)the entrepreneur's personal assets
C)funds from family and friends
D)a,b,and c
E)only b and c

Question 65

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 66

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 67

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 68

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 69

Which of the following is not a "kind" of patent?

A)Utility
B)Design
C)Mark
D)Plant
E)Business method

Question 70

Following is a partial 2012 corporate income tax schedule:

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 71

Which of the following is not a "type" of mark?

A)Trademark
B)Service mark
C)Collective mark
D)Certification mark
E)Design mark

Question 72

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

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

Question 73

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

Question 74

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 75

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 76

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

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

Question 77

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 78

Following is a partial 2012 corporate income tax schedule:

The maximum dollar amount of income taxes in the $75,000-$100,000 bracket paid by a corporation with taxable income of $100,000 would be:

A)$6,250
B)$7,500
C)$8,500
D)$13,750
E)$22,250

Question 79

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 80

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