Question 1

A stockholder in a Subchapter S corporation

Accepted Answer

Subchapter S corporations have restrictions on stockholders, including that they cannot be nonresident aliens.

Question 2

S corporations are taxed as

Accepted Answer

S corporations are taxed similarly to partnerships, where income, deductions, and credits flow through to shareholders to be reported on their individual tax returns.

Question 3

Max Baer chose to operate his production studio as a sole proprietorship even though his attorney cautioned that he was

Accepted Answer

Operating as a sole proprietorship exposes the owner to unlimited personal liability, meaning their personal assets may be at risk in the event of a lawsuit or financial trouble. This was cautionary advice given by Baer's attorney.

Question 4

Formal control and function control in small corporations usually rests in ____ individuals.

Accepted Answer

The answer of Formal control and function control in small...

Question 5

Lauren Hassell, a partner in Jales & Jales Bonding Company, manages its day-to-day operations. She is considered to be a _____ partner.

Accepted Answer

A general partner is involved in the day-to-day operations and management of the business, unlike a limited partner who typically does not participate in management.

Question 6

A(n) _____ would be the choice for a form of organization if you intend to provide extensive fringe benefits for owners or employees that would not be treated as taxable income to employees.

Accepted Answer

A C corporation can provide extensive fringe benefits to owners or employees, which are not treated as taxable income to employees, due to its ability to deduct these benefits as business expenses.

Question 7

Explain the importance of a strong management team for a new venture.

Accepted Answer

The answer of Explain the importance of a strong management...

Question 8

Looking to the future, strategic alliances represent _____ for small entrepreneurial firms.

Accepted Answer

Strategic alliances can provide small entrepreneurial firms with access to resources, knowledge, and capabilities they may not possess on their own. They can also help to reduce costs and risks, increase market share and competitiveness, and enhance innovation and growth opportunities. Thus, strategic alliances represent great promise for small entrepreneurial firms.

Question 9

In which type of organization does a business owner have unlimited liability?

Accepted Answer

In a sole proprietorship, the business owner is personally liable for all debts and legal issues associated with the business, therefore having unlimited liability. In contrast, corporations, limited partnerships, and LLCs provide some level of protection for the business owner's personal assets.

Question 10

An entrepreneur's social network could include all of the following except:

Accepted Answer

Competitors are typically not part of an entrepreneur's social network as they are often seen as rivals rather than collaborators or supporters.

Question 11

Discuss the concept of a balanced management team.

Accepted Answer

The answer of Discuss the concept of a balanced management...

Question 12

An active board of directors serves management of the small firm in the following important ways except

Accepted Answer

The board of directors does not typically provide direct financing for the small firm, but rather advises on financial strategy and may assist in obtaining financing from external sources.

Question 13

Large manufacturers have been known to form strategic alliances with small manufacturers in order to benefit from the smaller firms'

Accepted Answer

The answer of Large manufacturers have been known to form...

Question 14

The limited liability company form of organization

Accepted Answer

The limited liability company (LLC) form of organization avoids the double taxation of C corporations, making it a popular choice for small businesses. It provides protection from personal liability for business debts and obligations, while also allowing for pass-through taxation like partnerships. It may also offer flexibility in management and ownership structures. Option B is incorrect because LLCs afford more protection from liability than partnerships. Option C is incorrect because LLCs can be a good choice for new businesses. Option D is incorrect because LLCs cannot offer stock incentives to employees as they cannot issue stock.

Question 15

Reciprocation is

Accepted Answer

Reciprocation refers to the idea that when someone does something for us, we feel a sense of obligation to repay the favor. This is an important concept in building social capital and maintaining relationships. It is not related to responding to competitor's marketing efforts or the timing of establishing one's business.

Question 16

A strategic alliance is

Accepted Answer

A strategic alliance is an organizational relationship between two separate businesses that have decided to work together for a mutually beneficial outcome. This can include sharing resources, knowledge, and expertise in a way that creates value for both parties. Strategic alliances have become an important organizational form in today's business environment as companies seek to gain a competitive advantage and expand their reach.

Question 17

To be eligible to be an S corporation, a firm must

Accepted Answer

To be eligible to be an S corporation, a firm must not have any nonresident alien stockholders. A, C, and D are incorrect statements.

Question 18

Which of the following is not a common form of legal organization for a small business?

Accepted Answer

Sub chapter 5 corporation is not a common form of legal organization for a small business. The other choices mentioned (sole proprietorship, partnership, and corporation) are all common forms of legal organization for small businesses.

Question 19

One benefit of an S Corporation is that it allows shareholders to receive dividends without

Accepted Answer

The benefit of an S Corporation is that it allows shareholders to avoid double taxation. In a traditional corporation, the company's profits are taxed at the corporate level, and then again when dividends are distributed to shareholders. However, in an S Corporation, profits flow through to the shareholders' personal tax returns and are only taxed once, at the individual level. This allows shareholders to receive dividends without facing double taxation.

Question 20

A corporation's board of directors

Accepted Answer

The board of directors is responsible for making important decisions and providing guidance for the overall direction and strategy of the corporation. They oversee the executive officers and are accountable to the shareholders. They have the ultimate responsibility for corporate activity but do not directly manage the corporation on a day-to-day basis. The determination of the taxability of dividends is typically in the purview of the tax authorities, not the board of directors. The design of the organizational structure of the firm may involve the board of directors, but this is usually handled by management and other specialists.

Quiz 8: The Human Resources Plan: Managers, Owners, Allies, and Directors