Exam 7: Preparing the Proper Ethical and Legal Foundation

A disadvantage of C corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.

Which of the following is true regarding common and preferred stock?

Steven Diaz just took a job with Harley Davidson. As part of his employment agreement, Harley Davidson required Steven to sign an agreement, which states that if he leaves Harley Davidson, he will not work for a firm that competes against Harley Davidson for at least two years. The agreement that Steven signed is called a ________ agreement.

A(n) ________ is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founder will have to remain with the firm for their shares to fully vest.

Large firms like Apple, Facebook, General Electric, and Microsoft, that trade on organized stock exchanges, are ________.

A ________ sets forth the rights and duties of the general and limited partners, along with the details of how the partnership will be managed and eventually dissolved.

Corporations that trade their stock on organized exchanges like the New York Stock Exchange and the NASDAQ are called ________ corporations.

According to the textbook, ________ are common in real estate development, oil and gas exploration, and motion picture ventures.

List and briefly describe three specific steps that an entrepreneurial organization can take to build a strong ethical culture.

The single most important thing the founders of an entrepreneurial venture can do to avoid ethical misconduct is to establish a strong ethical culture for their firms.

What is meant by the term "piercing the corporate veil"? How can the corporate veil be pierced?

A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.

The Savvy Entrepreneurial Firm feature in Chapter 7 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff.

Which of the following is an advantage of a C Corporation?

An ethical dilemma is a situation that involves doing something that is beneficial to oneself or the organization, but may be unethical.

According to the 2016 Global Business Ethics Survey, ________ percent of U.S. respondents indicated that they reported observed misconduct in their workplace.

The advantage of having a code of conduct is that it provides specific guidance to entrepreneurs, managers, and ________ regarding expectations of them in terms of ethical behavior.

A disadvantage of a general partnership is that the liquidity of each partner's investment is low.

Which of the following statements regarding business licenses and permits is incorrect?

Choosing a legal entity for a firm is a one-time event. Once a form of legal entity has been chosen, it cannot be changed.