BusinessA100 Quizzes (Exam #2) – Flashcards
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Taxes and liability.
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Two important considerations when choosing a form of business ownership is:
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Corporation.
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The form of business ownership that usually requires the most detailed record keeping is the:
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Stockholder.
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An owner of a corporation is known as a(n):
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Put the partnership agreement in writing.
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When entering into a new partnership, a good strategy is to:
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Overwhelming time commitment often required of the owner.
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A significant disadvantage of owning a sole proprietorship is the:
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Unlimited liability the owner has for the debts of the firm.
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One of the major disadvantages of a sole proprietorship is the:
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Corporations can attract employees by offering stock options.
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Which of the following is an attractive benefit of a corporation?
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To protect his/her other assets with limited liability.
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The reason a professional such as a lawyer or doctor would incorporate his/her business is
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When you own your own business you are responsible for all the business debts.
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Unlimited liability means:
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The responsibility of the owner.
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Any debts or damages incurred by a firm organized as a sole proprietorship are:
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Lose their investment but nothing else.
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Dane is a stockholder in SmallWorld, Inc., a C-corporation that manufactures amusement park rides. The company recently lost a major court decision and will probably be forced into bankruptcy. In fact, the damages awarded are so great that, even if all company assets are sold and the proceeds are used to pay its debts, SmallWorld is likely to still owe money to its creditors. If SmallWorld go bankrupt, Dane and the other stockholders will:
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Keeping all of the money she earns except for the taxes she is required to pay.
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Maria has a lot of self-confidence and business knowledge. She recently opened a bakery as a sole proprietor. She is expecting a high level of profits and is looking forward to:
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Conglomerate merger.
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When two companies in completely unrelated industries agree to become one firm, the result is called a:
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Vertical, horizontal, and conglomerate.
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Three types of corporate mergers are
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Taking the firm private.
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If a group of stockholders or management obtain all the stock of a previously publicly traded firm for themselves, this is referred to as:
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To expand within their own field or enter new markets.
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One reason that companies participate in mergers and acquisitions is:
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conglomerate
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When two firms who do not participate in the same industries, for example a software company and a fast food restaurant company decide to merge, the result is called a ____________ merger.
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Acquisition.
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Modern Screen Entertainment, Inc., recently bought Star Power Pictures, Inc., for an undisclosed amount of money. It now owns all of Star Power Picture's properties and obligations. This is an example of a(n):
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No longer sold to investors on the open market.
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When investors successfully take a firm private, the firm's stock is:
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taking the firm private
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Adam is a major stockholder in Precision Transmission Services (PTS), a nationwide network of transmission repair shops founded by his father. Currently, PTS stock is sold on the open market, but Adam has talked to several relatives about his desire to get all of the PTS stock back in his family's hands. Adam is interested in _______________________________.
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accepting the risk of starting and running a business.
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Entrepreneurship is:
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The sense of self-satisfaction and independence
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Which of the following explains why individuals accept the risks of business ownership?
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believe in themselves and their ideas.
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Successful entrepreneurs are self-nurturing. This means they:
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incubators
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For the past twenty-five years, state and city governments have promoted facilities where new businesses can open-up shop and share common services such as secretarial, accounting, and legal services. Due to their remarkable success rate, _______________ continue to grow in popularity.
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they strive to take calculated risks.
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Although successful entrepreneurs are more tolerant of uncertainty,
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is independently owned but not dominant in its industry.
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The Small Business Administration defines a small business as a firm that:
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successful big businesses often create profitable opportunities for small businesses.
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As a result of corporate downsizing, Alex lost his job as an information systems manager for a large telecommunications company. A bonafide computer geek in his own right, Alex knew that several of his past company contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that:
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businesses with potential of high profit levels tend to be difficult to start and hard to keep going.
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A review of small business successes and failures indicates that the:
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may be classified as a small business depending upon the size of other firms in the industry.
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According to SBA guidelines, a manufacturing firm with 1,000 employees:
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many small business owners got their entrepreneurial idea from a previous job.
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Conversations with people who start their own business often reveal that:
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Gain experience by working for a successful businessperson.
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Which of the following suggestions would an experienced business owner offer to help someone who is thinking about starting a business venture?
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meet with experienced entrepreneurs and learn from their advice.
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A small business management course at a community college may offer entrepreneurs an opportunity to:
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business plan
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A __________ is a written document that details the business idea, the target market and the business's competitive advantage, financial resources available for the business, and the qualification of the management.
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have both a willingness to buy and the financial resources needed to buy.
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To be considered part of a market, an individual must:
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Other prospective small business owners
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Which of the following is a poor recommended source of small business advice for persons contemplating a new business?
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the Service Corps of Retired Executives.
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The Small Business Administration sponsors volunteers from industry, trade associations, and education who offer advice to small business owners. These volunteers are called:
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the plan enables Demitri to think carefully about all aspects of his business idea.
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In order to improve his chances of small business success, Demitri prepared a business plan. Most often, a positive outcome of this exercise is:
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expect the entrepreneur to provide a business plan.
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Entrepreneurs applying for a bank loan should realize that bankers will:
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her business plan
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In order to finance The Shortbread Shack, a mobile bakery business that services several large Silicon Valley companies, Marcy demonstrated her steadfast desire to get her bakery off the ground by visiting several bankers with _____________.
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technological advances such as the Internet and PayPal for safely fulfilling orders
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Increased participation in small business exporting owes credit to _________.
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Managers, owners, creditors, employees, and the government
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Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to _____________."
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To provide financial information that is useful to decision makers.
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Although accounting has several specific uses, the overall purpose of accounting can be summarized as:
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Summarizing information in order to create reports and financial statements
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Which of the following is an area of importance in accounting?
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Summarizing and interpreting financial information needed by his firm's managers.
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As an accountant, Joe Billings responsibilities include:
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Auditing and managerial accounting
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The accounting profession is divided into 5 key working areas, two of which are:
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annual report
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A(n) _________ is a yearly published statement of the financial condition, progress and expectations of an organization.
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Financial accounting.
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Kelley's Kloset, LLC has applied for a business loan. Her prospective banker has requested information concerning the financial condition of her business. Which accounting discipline is responsible for providing accounting information to outside stakeholders?
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managerial accountants
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As U.S. firms focus on cost cutting in order to stay competitive with producers in low-wage countries, they will rely on __________ to create strategies to help reduce costs.
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accounting cycle
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The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements.
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Separate all of the firm's transactions into meaningful categories.
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A bookkeeper's first task is to:
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Recording information into journals
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Which of the following is a key step in the accounting cycle?
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Trial balance
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Heather works in the accounting department of Colorado Manufacturing. Today she will use the firm's ledger to summarize information that was posted over the most recent time period. Her goal is to determine if the accounts are balanced as required by the double-entry method of bookkeeping. To be sure they are correct, Heather will prepare a(n):
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liabilities
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Debts owed by a business are called ___________.
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Assets.
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Resources that a firm owns are called:
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Current assets
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Company resources that are purchased with the intention that they will convert to cash within one year are:
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Assets = Liabilities + Owners' equity.
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The balance sheet is set up to reflect the Fundamental Accounting Equation. This equation shows:
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assets.
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As Hector was packing to return to State University after his summer vacation, he realized that he owned many valuable things such as a laptop computer, a stereo system, and a DVD player. An accountant would list all of these as Hector's:
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A company's ability to earn a profit over time
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A company's income statement is important to accountants and other stakeholders. It reveals:
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Should be compared to other firms in the same industry.
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In order to understand if the results of ratio calculations indicate a financially strong company, the results:
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liquidity
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The current ratio is a type of ________ ratio.
