Question 1

Which of the following is not one of the four factors identified in the textbook as critical in selecting a form of business ownership?

Accepted Answer

A)  The cost of setting up and maintaining the legal form 
B)  The number and types of investors involved 
C)  Accounting considerations 
D)  Tax considerations 
E)  The extent to which personal assets can be shielded from the liabilities of the business 
A)  The cost of setting up and maintaining the legal form 
B)  The number and types of investors involved 
C)  Accounting considerations 
D)  Tax considerations 
E)  The extent to which personal assets can be shielded from the liabilities of the business

Question 2

Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm?

Accepted Answer

A)  C corporation 
B)  Sole proprietorship 
C)  Subchapter S corporation 
D)  Limited partnership 
E)  Limited liability corporation 
A)  C corporation 
B)  Sole proprietorship 
C)  Subchapter S corporation 
D)  Limited partnership 
E)  Limited liability corporation

Question 3

In a ________ corporation, the voting stock is held by a small number of individuals and is very thinly or infrequently traded.

Accepted Answer

A)  public 
B)  private 
C)  narrow 
D)  cautious public 
E)  closely-held 
A)  public 
B)  private 
C)  narrow 
D)  cautious public 
E)  closely-held

Question 4

The vast majority of corporations in the United States are public corporations.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an advantage of a general partnership?

Accepted Answer

A)  Business losses can be deducted against the partners' other sources of income. 
B)  The skills and abilities of more than one individual are available to the firm. 
C)  The liquidity of each partner's investment is low. 
D)  Creating one is relatively easy and inexpensive compared to a C corporation or limited liability company. 
E)  It is not subject to double taxation. 
A)  Business losses can be deducted against the partners' other sources of income. 
B)  The skills and abilities of more than one individual are available to the firm. 
C)  The liquidity of each partner's investment is low. 
D)  Creating one is relatively easy and inexpensive compared to a C corporation or limited liability company. 
E)  It is not subject to double taxation.

Question 6

A subchapter S corporation combines the advantages of a partnership and a C corporation.

Accepted Answer

A) True 
 B)False

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

The What Went Wrong? feature in Chapter 7 focuses on Fitbit. Fitbit makes wearable activity trackers that measure data such as number of steps walked, quality of sleep, and other personal metrics. The feature centered on a product that Fitbit made (the Fitbit Force) that caused some users to develop skin rashes. The ethical issue at stake was whether Fitbit ________.

Accepted Answer

A)  cut corners and used inferior material in producing the product 
B)  acted quickly enough in stopping production of the product 
C)  misrepresented the nature of the problem to the people affected 
D)  placed unfair blame on a supplier 
E)  placed unfair blame on a small number of employees 
A)  cut corners and used inferior material in producing the product 
B)  acted quickly enough in stopping production of the product 
C)  misrepresented the nature of the problem to the people affected 
D)  placed unfair blame on a supplier 
E)  placed unfair blame on a small number of employees

Question 9

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

Accepted Answer

A)  Preferred stock is rarely issued. 
B)  Common stock is rarely issued. 
C)  Common stock is issued more broadly than preferred stock. 
D)  Preferred stock is issued more broadly than common stock. 
E)  Common stock and preferred stock are issued in the same amount. 
A)  Preferred stock is rarely issued. 
B)  Common stock is rarely issued. 
C)  Common stock is issued more broadly than preferred stock. 
D)  Preferred stock is issued more broadly than common stock. 
E)  Common stock and preferred stock are issued in the same amount.

Question 10

The simplest and most common form of business entity is the ________.

Accepted Answer

A)  sole proprietorship 
B)  general partnership 
C)  C Corporation 
D)  limited liability company 
E)  subchapter S corporation 
A)  sole proprietorship 
B)  general partnership 
C)  C Corporation 
D)  limited liability company 
E)  subchapter S corporation

Question 11

A founders' agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about limited partnerships is incorrect?

Accepted Answer

A)  A limited partnership is a modified form of a general partnership. 
B)  Limited partnerships are common in real estate and oil and gas exploration. 
C)  A limited partnership is usually formed to raise money or to spread out the risk of a venture without forming a corporation. 
D)  Both the limited partners and the general partners are responsible for the debts and obligations of the partnership. 
E)  A limited partnership contains two classes of owners-general and limited partners. 
A)  A limited partnership is a modified form of a general partnership. 
B)  Limited partnerships are common in real estate and oil and gas exploration. 
C)  A limited partnership is usually formed to raise money or to spread out the risk of a venture without forming a corporation. 
D)  Both the limited partners and the general partners are responsible for the debts and obligations of the partnership. 
E)  A limited partnership contains two classes of owners-general and limited partners.

Question 13

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

Accepted Answer

A)  ethical quandary 
B)  ethical predicament 
C)  ethical dilemma 
D)  principled quandary 
E)  just dilemma 
A)  ethical quandary 
B)  ethical predicament 
C)  ethical dilemma 
D)  principled quandary 
E)  just dilemma

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A(n) ________ agreement binds an employee or another party to not disclose a company's trade secret. A ________ agreement prevents an individual from competing against a former employer for a specific period of time.

Accepted Answer

A)  nondisclosure; noncompete 
B)  non breach-of-trust; nonchallenge 
C)  voluntary truth; nonparticipate 
D)  binding confidentiality; noncompete 
E)  ethics; nonparticipate 
A)  nondisclosure; noncompete 
B)  non breach-of-trust; nonchallenge 
C)  voluntary truth; nonparticipate 
D)  binding confidentiality; noncompete 
E)  ethics; nonparticipate

Which of the following is not one of the four factors identified in the textbook as critical in selecting a form of business ownership?

Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm?

In a ________ corporation, the voting stock is held by a small number of individuals and is very thinly or infrequently traded.

The vast majority of corporations in the United States are public corporations.

Which of the following is not an advantage of a general partnership?

A subchapter S corporation combines the advantages of a partnership and a C corporation.

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.

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

The simplest and most common form of business entity is the ________.

A founders' agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm.

Which of the following statements about limited partnerships is incorrect?

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

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

A(n) agreement binds an employee or another party to not disclose a company's trade secret. A agreement prevents an individual from competing against a former employer for a specific period of time.

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

Assessing a New Venture's Financial Strength and Viability

Building a New-Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters

Exam 7: Preparing the Proper Ethical and Legal Foundation

Which of the following is not one of the four factors identified in the textbook as critical in selecting a form of business ownership?

Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm?

In a ________ corporation, the voting stock is held by a small number of individuals and is very thinly or infrequently traded.

The vast majority of corporations in the United States are public corporations.

Which of the following is not an advantage of a general partnership?

A subchapter S corporation combines the advantages of a partnership and a C corporation.

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.

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

The simplest and most common form of business entity is the ________.

A founders' agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm.

Which of the following statements about limited partnerships is incorrect?

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

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

A(n) ________ agreement binds an employee or another party to not disclose a company's trade secret. A ________ agreement prevents an individual from competing against a former employer for a specific period of time.

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

Assessing a New Venture's Financial Strength and Viability

Building a New-Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters

A(n) agreement binds an employee or another party to not disclose a company's trade secret. A agreement prevents an individual from competing against a former employer for a specific period of time.