Question 1

Lucy Zimmerman has organized her craft shop as a sole proprietorship.Her sister has warned her about ________,the legal principal holding Lucy responsible for paying off all of the debts of the business.

Accepted Answer

Unlimited liability is the legal principle where the owner of a business is held personally responsible for paying off all the debts of the business. As Lucy has organized her craft shop as a sole proprietorship, there is no legal distinction between her personal and business assets. Therefore, any debts incurred by the business will be the responsibility of Lucy to pay off, making unlimited liability a potential risk for her.

Question 2

Top managers hired by the board of directors to run the corporation on a day-to-day basis are called ________.

Accepted Answer

These managers are given the title of corporate officers and are responsible for executing the strategic plans, managing operations, and making day-to-day decisions in the organization. The board of directors hires them to ensure that the corporation is operating effectively and to achieve its goals. First-line supervisors are responsible for overseeing operational employees, staff members are professionals who provide support and advice, and stockholders are owners of the corporation who elect the board of directors.

Question 3

Shirley Rathke is opening a flower shop and has decided to operate as a sole proprietorship.Which of the following is NOT one of the advantages of operating the business as a sole proprietorship?

Accepted Answer

A sole proprietorship does not offer limited liability; the owner is personally liable for all business debts and obligations. The other three options (freedom, simple to form, and low start-up costs) are advantages of operating a business as a sole proprietorship.

Question 4

In a ________,two or more organizations collaborate to create and own a new business venture.

Accepted Answer

A joint venture is a business partnership between two or more organizations that collaborate to create and own a new business venture. It is not the same as a professional corporation or a vertical merger, which involve different types of business relationships. A strategic alliance is a broader term that can refer to any type of partnership or collaboration between organizations.

Question 5

Which of the following occurs when two firms combine to create a new company?

Accepted Answer

A merger occurs when two companies combine to form a new company, with neither company surviving as a legal entity on its own. The other options involve one company acquiring or taking over another company. A venture refers to a new business enterprise or project.

Question 6

The person responsible for the firm's overall performance is the ________.

Accepted Answer

The CEO (Chief Executive Officer) is the top executive of a company and is responsible for making strategic decisions that determine the overall performance of the firm. They are accountable to the board of directors and the stockholders, but ultimately it is the CEO who is responsible for the success or failure of the company. The board of directors provides oversight and guidance but does not make day-to-day decisions. An agent is someone who acts on behalf of another person or company, but they do not have the ultimate responsibility for the firm's performance. Therefore, the best choice is C) CEO.

Question 7

The number of Hispanic-owned businesses now totals about 1.6 million and has grown approximately ________ percent.

Accepted Answer

The number of Hispanic-owned businesses has grown approximately 31 percent.

Question 8

In a(n)________,owners have limited business liability but unlimited professional liability.

Accepted Answer

A professional corporation (PC) is a type of corporation that is specifically designed for professionals such as doctors, lawyers, and accountants. In a professional corporation, owners have limited business liability, similar to a regular corporation, but they have unlimited professional liability. This means that owners are personally liable for their own professional negligence or malpractice, but not for the actions of other owners or employees. This type of corporation provides a level of protection for the business and its owners, while still allowing professionals to operate under a corporate structure.

Question 9

Kent Kauffman and Patrick McCormick have decided to start a landscaping business.One of the first things that they do is sign the ________,which describes the investments and responsibilities of the partners and makes provisions for the allocations of profits and dissolution of the business.

Accepted Answer

A partnership agreement is a legal document that outlines the terms and conditions of the partnership between two or more individuals. It includes details about each partner's investment, responsibilities, profit allocation, and provisions for the dissolution of the business. The other options such as articles of incorporation and corporate charter are more appropriate for forming a corporation rather than a partnership.

Question 10

________ corporations are most likely comprised of doctors,lawyers,accountants,or other professionals.

Accepted Answer

Professional corporations (PCs) are formed specifically for professionals such as doctors, lawyers, accountants, and other similar professions. In a PC, the shareholders must all be licensed members of the profession and the liability protection is similar to that of a regular corporation.

Question 11

Today,about ________ of all businesses in the United States are sole proprietors.

Accepted Answer

According to the U.S. Small Business Administration (SBA), 72 percent of all U.S. businesses are sole proprietors, which means they are owned and operated by a single individual. This form of ownership is popular because it is relatively easy and inexpensive to set up, and allows the owner to have complete control over the business. However, sole proprietors are also personally liable for all debts and obligations of the business, which can be a disadvantage.

Question 12

What is a small business?

Accepted Answer

The answer of What is a small business?...

Question 13

American Business Machines is organized as a corporation.Its income will be taxed first at the corporate level and also on shareholder returns as dividends.This situation is known as ________.

Accepted Answer

Double taxation refers to the situation where a corporation's income is taxed at both the corporate level and on shareholder returns as dividends. This can result in higher taxes for both the corporation and its shareholders. Dual costs, regulatory costs, and double ownership are not terms commonly associated with this situation.

Question 14

Each year,between 600,000 and 650,000 new businesses are launched in the United States.How many businesses fail each year?

Accepted Answer

The question states that between 600,000 and 650,000 new businesses are launched in the United States each year. The answer choices provide ranges of businesses that fail each year. The only answer choice that falls within the range of new businesses launched is C) 500,000 and 600,000.

Question 15

Approximately ________ of all U.S.businesses employ 20 or fewer people.

Accepted Answer

Approximately 86 percent of all U.S. businesses employ 20 or fewer people, highlighting the prevalence of small businesses in the U.S. economy.

Question 16

The number of African American-owned businesses has increased by almost ________ over the past five-year period.

Accepted Answer

According to the Census Bureau's Survey of Business Owners, the number of African American-owned businesses increased by 47.8 percent between 2012 and 2017.

Question 17

In a ________,a firm sells one or more of its business units.

Accepted Answer

A divestiture is when a firm sells one or more of its business units. A merger is a combination of two or more companies into a single entity. A takeover is when one company attempts to acquire another company by purchasing its shares. An acquisition is when one company buys another company in its entirety.

Question 18

The roles of shareholders,directors,and other managers in corporate decision-making are called ________.

Accepted Answer

The roles and responsibilities of shareholders, directors, and managers in corporate decision-making are collectively referred to as corporate governance. Articles of incorporation and bylaws are legal documents that establish a corporation's structure and internal rules, while partnership agreements are relevant to partnerships rather than corporations.

Question 19

The governing body of a corporation is its ________.

Accepted Answer

The board of directors is responsible for making major decisions and setting policies for the corporation. They are elected by shareholders and serve as the governing body of the corporation.

A) Stockholders have ownership in the corporation but do not make decisions on behalf of the corporation.

B) Stakeholders refer to any group or individual who has an interest in the performance of the corporation, including employees, customers, and suppliers. They are not the governing body of the corporation.

D) Top managers are responsible for day-to-day operations but do not make major decisions or set policies for the corporation.

Question 20

In a(n)________,a firm sets up one or more corporate units as a new independent corporation.

Accepted Answer

In a spin-off, a firm sets up one or more corporate units as a new independent corporation. This allows the unit(s) to operate on its own and create its own strategic and financial decisions, separate from the parent company. A divestiture involves selling a portion or all of a company's assets or business units. A merger is the combination of two or more companies into a single entity. An ESOP (Employee Stock Ownership Plan) is a program that allows employees to have ownership in the company they work for.

Quiz 3: Entrepreneurship, New Ventures, and Business Ownership