OLS 274 Exam 2 Chapters 5 & 6 – Flashcards
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Many businesses fail during the early years because of ________. a. unmotivated owners b. poor planning c. niche marketers d. inadequate financing
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inadequate financing
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Most owners of small businesses rely on loans from financial institutions for their start-up funds. T/F
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True
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The ________ industry represents the greatest percentage of minority-owned businesses. a. Service b. Retail c. Transportation d. Finance
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Service
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Sole proprietorships are concentrated mainly in corporations. T/F
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False
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All of the following are duties of the board of directors of a corporation EXCEPT ________. a. hiring the corporation's chief executive officer b. guaranteeing the payment of cash dividends every year c. authorizing major transactions of the corporation d. electing its own officers
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guaranteeing the payment of cash dividends every year
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After starting a web design company while still in college, Rodrigo sold the company after graduation. He then opened a computer repair shop; and most recently, he has started a marketing firm that specializes in social media. Rodrigo is an example of a(n): a. serial entrepreneur. b. lifestyle entrepreneur. c. classic entrepreneur. d. social entrepreneur.
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serial entrepreneur
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Entrepreneurs possess all of the following traits EXCEPT ________. a. low self-confidence b. vision c. tolerance for ambiguity d. creativity
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low self-confidence
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The Hewlett Packard purchase of Compaq is an example of a conglomerate merger. T/F
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False
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___________ use their own capital supplemented with government loans to invest in small businesses. a. Franchisors b. Joint ventures c. Small Business Investment Companies (SBICs) d. Microloans
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Small Business Investment Companies (SBICs)
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Anita established a corporation in Nebraska, but she recently moved to Colorado where she now conducts her business. What type of corporation does Anita own? a. national corporation b. alien corporation c. domestic corporation d. foreign corporation
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foreign corporation
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Most of the small businesses today are run by Caucasian males. T/F
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False
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Devon and Keith opened a restaurant as a partnership. Two years later, Keith left the restaurant, and Devon discovered that Keith had charged numerous expenses to their account. These expenses resulted in thousands of dollars' worth of debt for the restaurant. What option does Devon have in this situation? a. He doesn't have to worry because, according to law, everyone is responsible for his/her own debts. b. Business creditors will pursue Keith alone since his signature authorized payments. c. Business creditors will expect full payment from Devon. d. Business creditors will expect Devon to pay at least half the debt since he owns 50 percent of the business.
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Business creditors will expect full payment from Devon.
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Corporations have all of the following advantages EXCEPT ________. a. favorable tax treatment b. limited liability c. unlimited life d. expanded financial capacity
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favorable tax treatment
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Twenty-first century innovations developed by small businesses include social networking sites and green energy industries. T/F
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True
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Logan is an entrepreneur who takes personal responsibility for the success or failure of his actions rather than believing in luck or fate. Which characteristic best describes Logan's entrepreneurial philosophy? a. need to achieve b. tolerance for failure c. internal locus of control d. tolerance for ambiguity
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internal locus of control
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The primary reasons people become entrepreneurs include all of the following reasons EXCEPT: a. to create employment opportunities for other people. b. to be one's own boss. c. to become a financial success. d. to create one's own job security.
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to create employment opportunities for other people.
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The maximum number of shareholders is limited to ________ for a firm to qualify as a subchapter S corporation. a. 25 b. 75 c. 50 d. 100
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100
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What percent of U.S. companies are considered small businesses? a. 15% b. 25% c. 50% d. 99.7%
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99.7%
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Assume that Microsoft decides to invest some of its excess cash by acquiring fellow Seattle-based Starbucks Coffee. This would be a ________. a. horizontal merger b. joint venture c. vertical merger d. conglomerate merger
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conglomerate merger
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The set-aside program designates that a percentage of government contracts must be awarded to qualifying small businesses. T/F
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True
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Sole proprietorships have all of the following advantages EXCEPT ________. a. ease of formation b. unlimited life c. profits subject only to a single tax d. ease of liquidation
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unlimited life
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When the Small Business Administration (SBA) assists a small business in applying for a major loan, it acts as the lender's ________. a. Bank b. savings and loan association c. Guarantor d. credit union
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Guarantor
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In 2009, Walmart started working together with another company in India by forming a __________ with Bharti Enterprises, Inc., one of India's leading business groups. a. joint venture b. horizontal merger c. subsidiary d. vertical merger
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joint venture
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Students who graduate from entrepreneurship programs are more likely to be self-employed. T/F
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True
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Ben is the owner of a small mushroom farm in Pennsylvania. Ben would like to join with other growers to create an organization that will promote and distribute mushrooms. The form of ownership that would be most suited for the growers is the ________. a. cooperative b. government-owned collective c. joint venture d. open corporation
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cooperative
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Jada is opening her own bakery. Jada is an example of a(n) ________. a. entrepreneur b. venture capitalist c. minority executive d. manager
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entrepreneur
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Entrepreneurial environments created within companies can help firms retain valuable employees who might otherwise leave to start their own businesses. T/F
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True
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Michael is a successful financial advisor looking to invest money directly into a new consulting business in return for equity in the company. Michael is an example of a(n) ________. a. angel investor b. aerial entrepreneur c. entrepreneur d. intrepreneur
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angel investor
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The Small Business Administration (SBA) provides all of the following EXCEPT: a. access to venture capitalists b. business incubators c. advice from retired executives d. loan guarantees
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business incubators
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Concerning education and entrepreneurs, all of the following statements are correct EXCEPT: a. Some colleges and universities sponsor business plan contests. b. Obtaining a college degree in entrepreneurship is essential before starting your own business. c. Some colleges and universities offer entrepreneurship courses outside the usual business curriculum. d. Hundreds of colleges and universities offer classes in entrepreneurship.
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Obtaining a college degree in entrepreneurship is essential before starting your own business.
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Social entrepreneurs recognize a societal problem and use business principles to develop innovative solutions. T/F
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True
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Owning a business, by definition, means that you are an entrepreneur. T/F
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False
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All of the following are contributions of small businesses EXCEPT: a. They fuel local economies. b. They provide more job security than large corporations. c. They provide needed services to the larger corporate community. d. They create a substantial number of new jobs.
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They provide more job security than large corporations.
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A corporation operating outside its state of incorporation is known as a domestic corporation. T/F
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False
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United Airlines' purchase of Continental Airlines combines the resources and capabilities of both firms to create the world's largest airline. The newly formed company is an example of a _____________. a. horizontal merger b. joint venture c. vertical merger d. conglomerate merger
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horizontal merger
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Angie wants to be her own boss, but she doesn't have an idea for a profitable business. What could Angie do to help her identify a successful business idea? a. Identify the most popular companies in her area and create a replica business b. Pick an industry that is not experiencing a lot of change c. Ask her friends and family for suggestions d. Make a list of her interests and abilities and a list of businesses that match these interests and abilities
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Make a list of her interests and abilities and a list of businesses that match these interests and abilities
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Small businesses produce over 16 times more patents than large businesses each year. T/F
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True
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Which of the following persons is LEAST likely to become an entrepreneur? a. A calm, low-energy person b. An intelligent person c. A flexible person d. An inquisitive person
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A calm, low-energy person
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Lucia is a chief financial officer in a large corporation. Her responsibilities include the full financial authority to make appropriations and authorize expenditures. Lucia is likely to be a member of ________ management. a. supervisory b. top c. advisory d. middle
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top
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Owners of small businesses can increase their chances of success if they: a. hire only family members or friends. b. understand their own limitations. c. incorporate their business. d. become an expert in legal, financial, marketing, and other related business areas.
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understand their own limitations.
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________ are pioneers of innovations that benefit humanity. a. classic entrepreneurs b. social entrepreneurs c. atypical entrepreneurs d. change agents
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social entrepreneurs
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Tata Motors' purchase of Jaguar is an example of a horizontal merger. T/F
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True
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James is putting together a business plan for his new bookstore and café. Which of the following will NOT be part of his business plan? a. An outline of what makes the company unique b. An detailed, itemized budget for the entire fiscal year c. An executive summary that covers the who, what, where, why, when, and how of the business d. An overview of prospective customers that identifies their needs
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An detailed, itemized budget for the entire fiscal year
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Small-business owners want to determine whether their companies meet the standards for small-business designation because: a. they do not have to pay taxes on their profits. b. government agencies offer benefits designed to help small businesses compete with larger firms. c. incorporation is easier for them. d. banks are more likely to grant them loans.
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government agencies offer benefits designed to help small businesses compete with larger firms.
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Small businesses are not required to pay any taxes. T/F
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False
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Horizontal mergers are popular in the auto and healthcare industries. T/F
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True
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Joint ventures are not ideal for international companies due to logistics and conflicting business laws. T/F
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False
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An acquisition occurs when ________. a. two or more firms combine to form a single company b. one corporation owns 8 percent of the stock of another corporation c. one company purchases the property and assumes the obligations of another company d. owners of small companies band together to operate their businesses collectively
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one company purchases the property and assumes the obligations of another company
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___________ must verify in writing the accuracy of their corporation's financial statements. a. CEOs and CFOs b. stockholders c. government officials d. board members
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CEOs and CFOs
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Kayla is opening a home health care business that she knows will do well in her community based on prior research. Although she must repay borrowed funds, Kayla chooses to maintain complete control over the business without having to answer to investors or partners. a. equity financing b. venture financing c. debt financing d. sole proprietor financing
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debt financing
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Many small businesses prove successful when they become suppliers to large corporations. T/F
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True
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For small businesses, establishing a Website is generally cheaper than opening up a retail store. T/F
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True
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Franz and Arlene had an idea for a different type of ice cream. They struggled to open their own small business, and later, to expand production and distribution. Their products are distributed nationwide and their sales continue to increase. Franz and Arlene are examples of ________. a. classic entrepreneurs b. social entrepreneurs c. change agents d. serial entrepreneurs
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classic entrepreneurs
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Isabella owns 100 shares of IBM ________ stock, which means she has voting rights on company decisions at IBM, but only residual claims on the company's assets. a. common b. pricipal c. management d. preferred
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common
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Obtaining financing for an existing business is easier than it is for most start-up companies. T/F
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True
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Alexander has just opened a bakery & café in a busy New York City neighborhood. He has received an SBA-guaranteed microloan of $13,000. Alexander can use the microloan for all of the following, EXCEPT: a. to pay for a new advertising campaign b. to pay rent and utility bills for the building c. to pay off outstanding business-related credit card bills d. to buy a new dough mixer
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to pay off outstanding business-related credit card bills
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Many entrepreneurs rely on personal savings or loans from business associates, family members, or even friends for start-up funds. T/F
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True
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Desire for improved quality of life is often a motivation for becoming an entrepreneur. T/F
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True
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Although the average farm size has increased in recent years the majority of farmers operate as ________ businesses. a. partnerships b. government owned c. small d. large
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small
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According to surveys, the largest lenders to small businesses are ________ . a. family members b. commercial banks c. investors d. credit card companies
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commercial banks
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Elian wants to start a business. He takes a personality test and discovers he possesses a trait that may reduce the likelihood he will succeed. Which of the following is that trait? a. vision b. internal locus of control c. creativity d. low tolerance for risk
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low tolerance for risk
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Which type of merger results in decreased competition within the same industry? a. conglomerate merger b. vertical merger c. joint venture d. horizontal merger
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horizontal merger
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The ________ is most likely an example of public ownership. a. trucking company b. television company c. movie theater d. city sewer system
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city sewer system
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High start-up expenses sometimes prove to be challenging for owners of small businesses. T/F
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True
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The joining of Chemical Bank and Chase Manhattan Bank was an example of a ________. a. conglomerate merger b. horizontal merger c. joint venture d. vertical merger
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horizontal merger
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Entrepreneurs enjoy guaranteed job security because no one can fire them. T/F
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False
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Information technology can help entrepreneurs in all of the following ways EXCEPT: a. ensure financial success. b. project a professional image. c. work quickly and efficiently. d. provide improved customer service.
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ensure financial success.
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Most small businesses turn a profit within the first year T/F
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False
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The stock of Old Germany Brewery is totally owned by the Prechter family. When the family elected to move from a sole proprietorship to a corporation, the greatest concern was ________. a. choosing work assignments b. double taxation c. how to limit liability d. there might be family squabbles
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double taxation
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Which of the following is the leading cause of today's small business failures? a. no marketing plan b. management shortcomings c. poor products and/or services d. location
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management shortcomings
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Dina is a single mother who is required to work evenings and weekends at a local retail store. She is thinking of starting a consulting business primarily so she can ________. a. increase her job security b. enjoy a higher quality of life c. guarantee her financial success d. become her own boss
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enjoy a higher quality of life
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If Smith Steel buys Kennedy Iron Ore to assure itself of a constant flow of ore, this is an example of a ________. a. subsidiary corporation b. vertical merger c. domestic company d. conglomerate company
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vertical merger
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The average amount rewarded to owners of small businesses through Small Business Administration (SBA) microloans is $13,000. T/F
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True
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Louis works as an artist for a major textile company and created an innovation for producing designs. The company will implement Louis's idea as part of its ________ strategy. a. skunkworks b. seed capital c. angel investment d. entrepreneurship
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skunkworks
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If business owners in a partnership wish to limit liability, they have the option to ________. a. pledge funds b. divide into sole proprietorships c. set up a limited partnership d. withhold funds
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set up a limited partnership
