Chapters Five ; Six, Exam One – Flashcards
Unlock all answers in this set
Unlock answersquestion
If you want to go into business for yourself, the easiest way is a sole proprietorship. A. True B. False
answer
A, True, Forming a sole proprietorship is easy and inexpensive because of the simple management structure, the low cost of permits and the lack of lawyer involvement
question
Jane has discovered that she is bored working for others. She wants to open a business in which she will have maximum control and the least interference from government regulation. Which business form should she use? A. Joint venture B. Cooperative C. Corporation D. Partnership E. Sole proprietorship
answer
: E, A sole proprietorship is easy and inexpensive to form, it has the greatest degree of secrecy, all profits belong to the owner, it has complete control, it has the most freedom from government regulation, the owner pays one income tax and the business can be easily dissolved
question
In a general partnership, each partner is liable only for the debts he or she incurs. A. True B. False
answer
B, False, In a general partnership, each partner has unlimited liability for the debts of the business.
question
The biggest advantage of the corporate form of ownership may be the limited liability of its owners. A. True B. False
answer
A. True, The biggest advantage of a corporation is limited liability because the corporation's assets and liabilities are separate from its owners'
question
When two companies combine to form a new company, it is called a(n) A. merger. B. acquisition. C. tender offer. D. leveraged buyout. E. white knight.
answer
: A, A merger occurs when two companies, usually corporations, combine to form a new company
question
Any business that is independently owned and operated can be classified as a small business. A. True B. False
answer
B, False, A small business is independently owned and operated that is not dominant in its competitive area and does not employ more than 500 employees
question
. In recent years, small businesses generated very few new jobs in the U.S. A. True B. False
answer
B, False, In the last decade, 60 to 80 percent of net new jobs annually were created by small businesses
question
In the context of starting a new business, a retailer differs from a manufacturer in that the retailer is less likely to make a heavy investment in A. equipment and distribution systems. B. space. C. bookkeeping. D. stationery. E. advertising.
answer
A, An entrepreneur opening a new retailing store does not have to spend the large sums of money for the equipment and distribution systems that a manufacturing business requires
question
Targeting small niches or product needs is a dangerous strategy for a small business to follow. A. True B. False
answer
B. False, By targeting small niches or product needs, small businesses sometimes can avoid fierce competition from larger firms, helping them grow into stronger companies.
question
Managerial inexperience can lead to business failure. A. True B. False
answer
A. True, Three major causes of small business failure are undercapitalization, managerial inexperience or incompetence and inability to cope with growth
question
Small business success A. rarely lasts more than two years. B. is not guaranteed. C. is not really attainable. D. happens only in the United States. E. is a sure thing.
answer
: B, Nearly 70 percent of small businesses fail within the first ten years but the ones that do succeed sometimes become multinational corporations such as Google and Dell
question
A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is a A. mission statement. B. corporate charter. C. business plan. D. corporate statement. E. balance sheet.
answer
C, The business plan is a key component of a business's success that is a detailed explanation of how it will achieve its goals
question
The money used to start a business and keep it running is also called A. capital. B. trade. C. currency. D. leverage. E. stock.
answer
A, Capital is the wealth, owned or employed, in a business by an individual or firm.
question
Venture capitalists are an example of A. debt financing. B. owners' equity. C. preferred stockholders. D. equity financing. E. none of the above.
answer
D, equity financing includes investors such as venture capitalists, friends, families in which the owner sells stock in the business
question
Which segment of the population is probably the wealthiest in the U.S.? A. Echo boomers B. Generation Y C. Baby boomers D. Millennials E. Generation Z
answer
C, America's Baby Boom generation, the wealthiest segment in the U.S., began in 1946 and ended in 1964
question
Forming a sole proprietorship is easy and inexpensive because
answer
of the simple management structure, the low cost of permits and the lack of lawyer
question
In a general partnership, each partner has
answer
unlimited liability for the debts of the business.
question
The biggest advantage of a corporation is
answer
limited liability because the corporation's assets and liabilities are separate from its owners'
question
A merger occurs when
answer
two companies, usually corporations, combine to form a new company
question
A small business is
answer
-Independently owned and operated that is not dominant in its competitive area -Does not employ more than 500 employees
question
In the last decade, 60 to 80 percent of net new jobs annually were created by
answer
small businesses
question
An entrepreneur opening a new retailing store does not have to spend the large sums of money for
answer
the equipment and distribution systems that a manufacturing business requires
question
By targeting small niches or product needs, small businesses sometimes can avoid
answer
fierce competition from larger firms, helping them grow into stronger companies.
question
Three major causes of small business failure are
answer
1) Undercapitalization 2) Managerial Inexperience or Incompetence 3) Inability to Cope With Growth
question
Nearly 70 percent of small businesses fail within the first
answer
ten years but the ones that do succeed sometimes become multinational corporations such as Google
question
The business plan is a key component of a business's success that
answer
is a detailed explanation of how it will achieve its goals
question
Capital is
answer
the wealth, owned or employed, in a business by an individual or firm.
question
equity financing includes investors such as venture capitalists, friends, families in which
answer
the owner sells stock in the business
question
America's Baby Boom generation, the wealthiest segment in the U.S., began in
answer
1946 and ended in 1964
