Deck 3: Entrepreneurship, New Ventures, and Business Ownership

Question 1

Loans are the most important sources of money for new businesses.

Answer 1

False
Explanation:According to the National Federation of Independent Business, personal resources are the most important sources of money for new businesses.

Question 2

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

Answer 2

True
Explanation:Each general partner can be seen as a sole proprietor in terms of taxation and the repaying of debt.

Question 3

Low start-up costs and tax benefits are advantages of sole proprietorships.

Answer 3

True
Explanation:Sole proprietorships can vary widely in size; a sole proprietorship is merely defined as a business owned and operated by one person.

Question 4

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

Question 5

Small businesses produce more patents per employee than large patenting firms.

Question 6

A limited liability corporation is a hybrid of a publicly held corporation and a partnership.

Question 7

The least common type of partnership is the general partnership.

Question 8

A group of small investors who invest money in companies in return for partial ownership is known as a small-business development company.

Question 9

Manufacturing is overwhelmingly handled by big business.

Question 10

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

Question 11

A business plan demonstrates how an entrepreneur's business strategy will be implemented.

Question 12

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

Question 13

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

Question 14

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

Question 15

Major innovations are most likely to come from large corporations.

Question 16

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

Question 17

Many new businesses are started by people who have left big corporations.

Question 18

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

Question 19

Most businesses in the United States are large businesses with more than 500 employees.

Question 20

Small-business investment companies (SBICs)may be sponsored by the federal government.

Question 21

What is the MOST significant disadvantage of owning a franchise?

A) start-up costs
B) operational guidelines
C) difficulty obtaining loans
D) double taxation
E) competition

Question 22

Corporations generate sales revenues proportionate to their number as compared to other forms of ownership.

Question 23

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

Question 24

Most venture capital companies do not lend money.

Question 25

Many entrepreneurs are finding new opportunities in foreign markets.

Question 26

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

A) banks
B) the SBA
C) personal resources
D) government grants
E) venture capital

Question 27

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

Question 28

Who constitutes the membership of SCORE?

A) retired executives
B) venture capitalists
C) company officers
D) commercial lenders
E) successful entrepreneurs

Question 29

What is the name of the document in which an entrepreneur summarizes his or her business strategy for a proposed new venture?

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

Question 30

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

Question 31

Entrepreneurs often have more than one goal for starting a business and becoming self-employed.Which of the following reasons is the LEAST common goal of entrepreneurs?

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
E) to provide for their financial needs

Question 32

The number of minority-owned businesses has decreased in recent years.

Question 33

The Small Business Administration (SBA)may consider a business with many employees to be small as long as it has low annual revenues.

Question 34

Which entity is defined as independent and has little influence on its market?

A) corporation
B) joint venture
C) small business
D) partnership
E) government agency

Question 35

The Small Business Development Center program consolidates information from various disciplines and institutions for use by new and existing businesses.

Question 36

The Internal Revenue Service taxes partners as individuals.

Question 37

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

Question 38

Entrepreneurs often enjoy working for large organizations.

Question 39

Which of the following is the MOST significant disadvantage of starting a business from scratch?

A) having few employees
B) inability to franchise
C) having competition
D) coming up with new ideas
E) the risk of failure

Question 40

General partnerships generate more than one-third of total sales revenue in the United States.

Question 41

Which of the following is the MOST significant disadvantage of franchising?

A) high start-up costs
B) risk of failure
C) difficulty in obtaining financing
D) lengthy contracts
E) high cost of operation

Question 42

Suppose BrightLights Online Video purchases another company,QuikFlix.What is this an example of?

A) merger
B) spin-off
C) divestiture
D) acquisition
E) collapse

Question 43

The U.S.Department of Commerce considers a business "small" if it has fewer than how many employees?

A) 10
B) 50
C) 100
D) 500
E) 1,500

Question 44

Which of the following helps entrepreneurs gain skills that are essential for running a business?

A) ESOP
B) SBICs
C) SEC
D) LLC
E) SBA

Question 45

What is the major drawback of accepting venture capital?

A) sharing company control
B) having to pay high interest rates
C) limiting expansion
D) facing a short repayment period
E) having to write a proposal

Question 46

What are shares in a business that the business sells called?

A) bonds
B) profits
C) stocks
D) dividends
E) loans

Question 47

Which of the following types of venue is favored by small-business retailers?

A) superstore
B) catalog showroom
C) specialty shop
D) department store
E) studio workroom

Question 48

Which of the following are groups of small investors seeking to make profits on companies with rapid growth potential?

A) community banks
B) venture capital companies
C) equity managers
D) government securities dealers
E) stock brokers

Question 49

What does a start-up company need in order to estimate the required size of a plant,store,or office,to decide how much inventory to carry,and to determine how many employees to hire?

A) sales forecast
B) tax estimate
C) business objective
D) stock options
E) funding source

Question 50

Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses?

A) SCORE
B) SBICs
C) SBDC
D) FDIC
E) SEC

Question 51

Which type of business is legally considered a separate entity from its owners and is liable for its own debts?

A) sole proprietorship
B) corporation
C) limited partnership
D) cooperative
E) general partnership

Question 52

Which of the following is the MOST significant recent trend in small-business start-ups?

A) entrepreneurs who cross over from big business
B) increased opportunities for minorities
C) increased opportunities for women
D) emergence of e-commerce
E) global economic downturn

Question 53

Who are the owners of a corporation?

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

Question 54

What percent of a business is the least amount that a master partner will retain?

A) 10 percent
B) 25 percent
C) 50 percent
D) 75 percent
E) 80 percent

Question 55

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

A) African Americans
B) Asians
C) Hispanics
D) Pacific Islanders
E) Europeans

Question 56

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

A) sole proprietorship
B) general partnership
C) cooperative
D) corporation
E) limited partnership

Question 57

What are specific locations of Ramada,McDonald's,and Subway examples of?

A) government entities
B) university sponsored businesses
C) franchises
D) networking businesses
E) cooperatives

Question 58

Which of the following types of businesses is MOST common in the United States?

A) sole proprietorships
B) general partnerships
C) cooperatives
D) corporations
E) limited partnerships

Question 59

In which business sector are cooperatives still important?

A) manufacturing
B) automotive
C) public utilities
D) agriculture
E) health care

Question 60

Which of the following industry groups is the fastest growing segment of small business enterprise?

A) manufacturing
B) wholesaling
C) retailing
D) transportation
E) services

Question 61

A new business should have enough capital to operate at least how many months without earning a profit?

A) 1
B) 2
C) 4
D) 6
E) 9

Question 62

Who invests all of the funds needed for a business but plays no role in its management?

A) silent partner
B) sole proprietor
C) general partner
D) principal
E) director

Question 63

Which of the following factors MOST contributes to small business failure?

A) managerial incompetence or inexperience
B) bad product design
C) legal problems
D) time spent raising capital
E) personnel issues

Question 64

Which of the following legal forms of business is owned and usually operated by a person who is responsible for its debts?

A) cartel
B) corporation
C) general partnership
D) sole proprietorship
E) limited partnership

Question 65

What percent of all businesses in the United States are corporations?

A) 12 percent
B) 17 percent
C) 50 percent
D) 75 percent
E) 85 percent

Question 66

According to SBA estimates,what percent of all new businesses can expect to survive for at least four years?

A) 14 percent
B) 24 percent
C) 44 percent
D) 64 percent
E) 84 percent

Question 67

What do both sole proprietorships and partnerships lack?

A) trust
B) legal standing
C) continuity
D) shared vision
E) adaptable processes

Question 68

What resources does a sole proprietorship primarily depend on?

A) the corporation
B) foreign investors
C) capital markets
D) those of the owner
E) a committed clientele

Question 69

What type of company has stock that is widely held and available for sale to the general public?

A) private corporation
B) public corporation
C) general partnership
D) limited liability corporation
E) professional corporation

Question 70

Two businesses,Rio Books and Devereaux Holdings,collaborate to create and run a new bookselling business.What is this action called?

A) corporatization
B) vertical merger
C) joint venture
D) strategic alliance
E) institutional investment

Question 71

Why do attitudes about entrepreneurship vary internationally?

A) Decision making in big business can overlook local customs.
B) Attitudes towards risk-taking in business are culturally determined.
C) Consumer attitudes are influenced by economic cycles.
D) Foreign-owned companies can be unresponsive to local markets.
E) International business is creating a global village.

Question 72

Which of the following is a partner who actively manages a firm and has unlimited liability for its debts?

A) limited partner
B) general partner
C) stockholding partner
D) public partner
E) silent partner

Question 73

What type of corporations are those comprised of doctors,lawyers,or accountants MOST likely to be?

A) private
B) public
C) subchapter S
D) professional
E) multinational

Question 74

Why is it difficult to compare relative job growth for different-sized businesses?

A) Sourcing up-to-date employment figures is difficult.
B) Many small businesses experience rapid unreported growth.
C) Spheres of influence overlap between the small and big business sectors.
D) Staff size of small businesses tends to change faster than staff size of big businesses.
E) It is hard to determine the cutoff point at which a small business becomes a large business.

Question 75

Which of the following will force a sole proprietorship to be legally dissolved?

A) sales exceed $1 million
B) the partners reorganize the firm's structure
C) earnings are less than $500,000
D) the owner donates profits
E) the owner dies

Question 76

What is a major drawback of sole proprietorships?

A) short-term focus of shareholders
B) work flexibility
C) low start-up costs
D) unlimited liability
E) structured hours

Question 77

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

A) acquisition
B) takeover
C) venture
D) divestiture
E) merger

Question 78

What is the MOST important advantage of general partnerships?

A) the unlimited liability of the partnership
B) the ability to grow with the addition of new talent and money
C) the ease of implementing an effective control system
D) the increased role of luck
E) the need for minority partners

Question 79

What is the MOST common type of partnership?

A) limited partnership
B) corporate partnership
C) general partnership
D) sole partnership
E) cooperative partnership

Question 80

What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts?

A) corporation
B) partnership
C) cooperative
D) conglomerate
E) nonprofit