Question 1

As discussed in the text, a strong board of directors should provide entrepreneurs with which of the following?

Accepted Answer

A strong board of directors can offer entrepreneurs access to people and capital, enhance their credibility, provide strategic thinking, and offer education and mentoring, making all the options correct.

Question 2

Which of the following statements regarding management control and a corporation is(are) true?

Accepted Answer

All the statements are correct as they describe typical scenarios in corporate management and control dynamics.

Question 3

The ability of an entrepreneur to raise capital depends upon __________.

Accepted Answer

An entrepreneur's ability to raise capital can be influenced by the success of the business, their personal capabilities and character, and the amount of personal liability they are willing to assume.

Question 4

For the proprietorship, Canada Revenue Agency (CRA) treats the business as the individual owner. All income appears on the owner's return as __________.

Accepted Answer

In a proprietorship, the business income is considered personal income for tax purposes and is reported on the owner's personal tax return.

Question 5

For tax purposes, income from the proprietorship __________.

Accepted Answer

Income from a proprietorship is considered personal income for the owner and is reported on their personal tax return.

Question 6

Which of the following forms of business has the advantages of not being subject to double taxation when profits are distributed to the owner and business losses may be used to offset other income?

Accepted Answer

Proprietorships and partnerships are not subject to double taxation as they are pass-through entities, meaning profits and losses are reported on the owner's personal tax returns.

Question 7

For a proprietorship, home office expenses are treated differently from other business expenses in which of the following ways?

Accepted Answer

Home office expenses for a proprietorship can only be used to offset business income, meaning they cannot create a loss to offset other types of income.

Question 8

As discussed in the text, both partnerships and proprietorships are organizational forms that__________.

Accepted Answer

Partnerships and proprietorships are both pass-through entities, meaning that the income and deductions of the business are passed through to the individual owners and reported on their personal tax returns. This means that the business itself does not pay taxes, but the owners do. Additionally, both partnerships and proprietorships have separate legal identities from their owners, which means that the owners are not personally liable for the debts and obligations of the business.

Question 9

Which of the following statements regarding partnerships and distribution of income is(are) true?

Accepted Answer

Income serves as the basis for determining the share of each partner, and income is distributed based on the partnership agreement. Partners report their share as personal income and are taxed at the regular rate.

Question 10

It is especially important for partnerships to report income since this serves as the basis for determining each partner's ______________.

Accepted Answer

In a partnership, the income reported is used to determine each partner's share of the profits or losses, which affects their individual tax liabilities and financial statements.

Question 11

Which of the following statements regarding distribution of income of corporations is(are) true?

Accepted Answer

Corporations pay a lower rate of tax than individuals, dividends received by shareholders are taxed at a lower rate than other sources of income, and corporations are able to claim more deductions and expenses than proprietorships and partnerships.

Question 12

From strictly a taxation perspective, the most favourable form of business structure in Canada would be a__________.

Accepted Answer

Corporations in Canada benefit from lower tax rates on the first $500,000 of active business income due to the small business deduction, making them more tax-efficient compared to other structures.

Question 13

As a venture grows from start-up to a successful business, the challenge for an entrepreneur is to__________.

Accepted Answer

As a business grows, the organizational structure often needs to change to handle increased complexity and workload effectively.

Question 14

As discussed in the text, stage 1 of an organization's development is characterized by which of the following?

Accepted Answer

Stage 1 of an organization's development is typically characterized by the business being operated by one person, usually the entrepreneur, who makes most of the decisions.

Question 15

As discussed in the text, stage 2 of an organization's development is characterized by which of the following?

Accepted Answer

Stage 2 of an organization's development involves the entrepreneur managing the business while delegating decision-making authority to managers.

Question 16

As a new venture grows, the role of entrepreneur changes to become more of a(n) __________.

Accepted Answer

As a venture grows, an entrepreneur must adapt to various roles including adapting to changes, allocating resources efficiently, negotiating deals, and solving problems.

Question 17

The board of directors of a corporation __________.

Accepted Answer

The board of directors is responsible for representing the interests of all shareholders and making decisions in the best interest of the corporation.

Question 18

When attempting to build a successful organizational culture, it is important for the entrepreneur to remember that __________.

Accepted Answer

Changing behavior is often more feasible than changing attitudes, as behavior can be influenced by external factors and incentives, while attitudes are deeply rooted and personal.

Quiz 6: Protecting the Idea and Other Legal Issues for the Entrepreneur