Question 1

A corporate charter should be

Accepted Answer

A)  very detailed. 
B)  prepared by the founder. 
C)  broad in its statement of the firm's power. 
D)  lengthy and precise. 
A)  very detailed. 
B)  prepared by the founder. 
C)  broad in its statement of the firm's power. 
D)  lengthy and precise.

Question 2

Ralph formed a corporation as a fund manager. He accepted money from his customers, promising to invest it and build cash value for them. Instead, he kept the money for himself to enjoy a lavish lifestyle. The court removed liability protection from his corporate entity because the incorporation had been used to perpetuate fraud. This is an example of

Accepted Answer

A)  piercing the corporate veil. 
B)  unlimited liability. 
C)  reciprocation. 
D)  a preemptive right. 
A)  piercing the corporate veil. 
B)  unlimited liability. 
C)  reciprocation. 
D)  a preemptive right.

Question 3

Match the term with its definition.
-A document that establishes a corporation's existence

Accepted Answer

A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability 
A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability

Question 4

Match the term with its definition.
-An ordinary corporation, taxed by the federal government as a separate legal entity

Accepted Answer

A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability 
A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability

Question 5

In a B corporation, shareholders can sue directors if the company falls short of its stated social mission.

Accepted Answer

A) True 
 B)False

Question 6

The management team of a small business should focus on competent insiders as opposed to outside specialists.

Accepted Answer

A) True 
 B)False

Question 7

Match the term with its definition.
-A powerful sense of obligation to repay in kind what another has done for or provided to us

Accepted Answer

A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance 
A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance

Question 8

Any person capable of _____ may legally become a business partner.

Accepted Answer

A)  assenting to liability 
B)  contracting 
C)  contributing capital 
D)  having a claim on assets 
A)  assenting to liability 
B)  contracting 
C)  contributing capital 
D)  having a claim on assets

Question 9

Harvey would like to support his friend's new business financially but also wants to protect his assets in case the business fails. Which form of ownership would you recommend?

Accepted Answer

A)  Sole proprietorship 
B)  Partnership 
C)  Limited partnership 
D)  501(c)(3) corporation 
A)  Sole proprietorship 
B)  Partnership 
C)  Limited partnership 
D)  501(c)(3) corporation

Question 10

Julie and Diane are starting a new company decorating wedding cakes that are unique in their design and structure. Both women are certified chefs and have 10 years of experience between them. They are trying to decide whether to form a general partnership or a limited liability company (LLC)? Which form would you recommend?

Accepted Answer

The recommended form would be an LLC, pr

Question 11

Becky wants to organize her startup as a regular corporation. One of the first steps Becky should take is to

Accepted Answer

A)  hire the officers (president, treasurer, etc.) of her company. 
B)  file her corporate charter with the secretary of state. 
C)  apply for permission to incorporate in her state. 
D)  obtain financing for her venture. 
A)  hire the officers (president, treasurer, etc.) of her company. 
B)  file her corporate charter with the secretary of state. 
C)  apply for permission to incorporate in her state. 
D)  obtain financing for her venture.

Question 12

What are the potential benefits and drawbacks of forming a partnership?

Accepted Answer

Operating a business as a partnership ha

Question 13

Which of the following best defines a partnership?

Accepted Answer

A)  A business owned and operated by one person who hires part-time employees 
B)  A voluntary association of two or more persons to operate a business for profit 
C)  The governing body for a corporation 
D)  A group of three persons in which each person has limited personal liability 
A)  A business owned and operated by one person who hires part-time employees 
B)  A voluntary association of two or more persons to operate a business for profit 
C)  The governing body for a corporation 
D)  A group of three persons in which each person has limited personal liability

Question 14

The key to strong management in a new firm is

Accepted Answer

A)  balance, with each member having competence in at least one area. 
B)  financial competence of the chief executive. 
C)  a strong marketing manager who understands financial statements. 
D)  close friendship among all members of the team. 
A)  balance, with each member having competence in at least one area. 
B)  financial competence of the chief executive. 
C)  a strong marketing manager who understands financial statements. 
D)  close friendship among all members of the team.

Question 15

S corporations can have nondomestic alien stockholders but no more than 50 stockholders.

Accepted Answer

A) True 
 B)False

Question 16

An advisory board, as compared to a board of directors,

Accepted Answer

A)  may be perceived as less of a threat to an owner than a board of directors. 
B)  is always compensated, unlike persons serving on a board of directors. 
C)  has increased legal liability, requiring the company to increase its insurance levels. 
D)  has greater levels of decision making, requiring it to work more cooperatively. 
A)  may be perceived as less of a threat to an owner than a board of directors. 
B)  is always compensated, unlike persons serving on a board of directors. 
C)  has increased legal liability, requiring the company to increase its insurance levels. 
D)  has greater levels of decision making, requiring it to work more cooperatively.

Question 17

Match the term with its definition.
-A form of corporation that creates a positive social or environmental impact while maintaining high standards of transparency and accountability

Accepted Answer

A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability 
A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability

Question 18

Trevor is in his early 60s but still wants to "strike out on his own" by starting a new business. One roadblock he may face is resistance from

Accepted Answer

A)  creditors to lend money for the enterprise. 
B)  his heirs about the distribution of assets at his death. 
C)  customers who fear he may become ill and unable to fulfill their orders. 
D)  the federal government regarding his tax identification number. 
A)  creditors to lend money for the enterprise. 
B)  his heirs about the distribution of assets at his death. 
C)  customers who fear he may become ill and unable to fulfill their orders. 
D)  the federal government regarding his tax identification number.

Question 19

What advantages does a small business have in forming a strategic alliance with another small business as opposed to a small business forming an alliance with a large company?

Accepted Answer

According to Inc. researchers, strategic

Question 20

For a small firm, which of the following steps will increase the chance for success of a strategic alliance?

Accepted Answer

A)  Be protective of any proprietary materials shared with the other company. 
B)  Discuss the proposed alliance in enough detail that limited adjustments are needed after beginning the alliance. 
C)  Make sure the alliance is clearly a "win-win" opportunity. 
D)  All of these steps will increase success. 
A)  Be protective of any proprietary materials shared with the other company. 
B)  Discuss the proposed alliance in enough detail that limited adjustments are needed after beginning the alliance. 
C)  Make sure the alliance is clearly a "win-win" opportunity. 
D)  All of these steps will increase success.

Exam 8: The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

A corporate charter should be

Match the term with its definition. -A document that establishes a corporation's existence

Match the term with its definition. -An ordinary corporation, taxed by the federal government as a separate legal entity

In a B corporation, shareholders can sue directors if the company falls short of its stated social mission.

The management team of a small business should focus on competent insiders as opposed to outside specialists.

Match the term with its definition. -A powerful sense of obligation to repay in kind what another has done for or provided to us

Any person capable of _____ may legally become a business partner.

Harvey would like to support his friend's new business financially but also wants to protect his assets in case the business fails. Which form of ownership would you recommend?

Becky wants to organize her startup as a regular corporation. One of the first steps Becky should take is to

What are the potential benefits and drawbacks of forming a partnership?

Which of the following best defines a partnership?

The key to strong management in a new firm is

S corporations can have nondomestic alien stockholders but no more than 50 stockholders.

An advisory board, as compared to a board of directors,

Match the term with its definition. -A form of corporation that creates a positive social or environmental impact while maintaining high standards of transparency and accountability

Trevor is in his early 60s but still wants to "strike out on his own" by starting a new business. One roadblock he may face is resistance from

What advantages does a small business have in forming a strategic alliance with another small business as opposed to a small business forming an alliance with a large company?

For a small firm, which of the following steps will increase the chance for success of a strategic alliance?

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, Ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Businesses

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

Managing Risk

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