Exam 7: Preparing the Proper Ethical and Legal Foundation

Xplosafe, the company profiled in the opening feature for Chapter 7, interviewed four attorneys before selecting the attorney they now use. They selected the attorney they did for two reasons:

A situation that involves doing something that is beneficial to oneself or the organization, but may be unethical, is called a(n):

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

A separate legal entity organized under the authority of a state is referred to as a:

A(n) ________ details the responsibilities and the ownership shares of the partners involved with an organization.

A ________ is a formal statement of an organization's values on certain ethical and social issues.

Corporations are organized as either C Corporations, T Corporation, or subchapter S corporations.

The idea that it's important to get "everything in writing" in regard to business agreements causes unnecessary work and can lead to an erosion of trust between business partners.

It is usually easier for a corporation to raise investment capital than a sole proprietorship or a general partnership because the shareholders are not liable beyond their investment in the firm.

Mediation is the process in which an impartial third party helps those involved in a dispute reach an 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.

According to the 2009 National Business Ethics Survey, a total of ________ of the employees surveyed said they had observed misconduct or unethical behavior in the past year.

It is important for an entrepreneur to select an attorney as early as possible when developing a business venture.

What is a founders' agreement? Describe the purpose of a buyback clause and why it's important?

Which of the following is the most important thing that an entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization?

Which of the following statements is incorrect regarding sole proprietorships?

Partnerships are organized as either:

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

The ________ is a form of business organization that is rapidly gaining popularity in the United States. The concept originated in Germany and was first introduced in the United States in the state of Wyoming.

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