Question 1

Linda has assembled a list of potential directors for her board. Whom should she not include?

Accepted Answer

A)  Her attorney 
B)  An owner of a small noncompeting company 
C)  Her college professor 
D)  An executive at a large noncompeting company

Question 2

The number of small business owners who are choosing to go it alone is increasing significantly because this option has been made increasingly manageable by

Accepted Answer

A)  new tax incentives. 
B)  emerging technologies. 
C)  expanding social networks. 
D)  balanced management teams.

Question 3

Match the term with its definition.
-A form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes; not for generation of profits

Accepted Answer

A) board of directors 
B) general partner 
C) legal entity 
D) limited liability company 
E) limited partners
F)nonprofit corporation
G)partnership agreement
H)sole proprietorship
I)social network

Question 4

Sole proprietors often benefit from fringe benefits such as tax-free insurance plans.

Accepted Answer

A) True 
 B)False

Question 5

A management team is often stronger than an individual entrepreneur because it provides a diversity of skills and greater assurance of continuity.

Accepted Answer

A) True 
 B)False

Question 6

In a limited partnership, which of the following types of partner remains bound by all debts of the business?

Accepted Answer

A)  Limited partner 
B)  Special partner 
C)  Partner with the greatest capital investment 
D)  General partner

Question 7

Jeanne, a Canadian citizen, would like to invest in Ingrid's startup. If Ingrid organizes her business as a(n) _____, Jeanne is prohibited from investing.

Accepted Answer

A)  sole proprietorship 
B)  partnership 
C)  S corporation 
D)  limited liability company

Question 8

A partnership agreement states explicitly the rights and duties of partners with each party assuming joint and several liability.

Accepted Answer

A) True 
 B)False

Question 9

Match the term with its definition.
-Liability on the part of an owner that extends beyond the owner's investment in the business

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

Question 10

A strategic alliance is a(n)

Accepted Answer

A)  organizational relationship that links two or more separate businesses. 
B)  unimportant organizational form in today's business environment. 
C)  attempt to duplicate efforts between two firms. 
D)  strategy that, as a result of its unwieldy nature, is falling from practice.

Question 11

What steps could an entrepreneur take to improve his or her chances of success when forming a strategic alliance?

Accepted Answer

The answer of What steps could an entrepreneur take to...

Question 12

Typically strategic alliances are harder to set up than to maintain.

Accepted Answer

A) True 
 B)False

Question 13

Match the term with its definition.
-The liability of each partner resulting from any one partner's ability to legally bind the other partners

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

Question 14

Cameron is creating the document that specifies the size of the board, the duties of the directors, voting rights, etc. This document is known as the

Accepted Answer

A)  corporate bylaws. 
B)  partnership agreement. 
C)  employment contract. 
D)  stock certificate.

Question 15

Millie has a sole proprietorship that is her only source of income. Which of the following legal actions should she take to prevent the business from being ruined if she becomes incapacitated?

Accepted Answer

A)  Give someone who is competent power of attorney to continue the business. 
B)  State in her will what she would like done with the company. 
C)  Find a partner and change the legal organization of the company. 
D)  Tell her heirs to sell as she can't prevent ruin with a sole proprietorship.

Question 16

The liability of owners is greater with a sole proprietorship than with a general partnership.

Accepted Answer

A) True 
 B)False

Question 17

A significant difference between a board of directors and an advisory board is that the advisory board

Accepted Answer

A)  has unlimited liability for the actions of the corporation. 
B)  is made up only of insiders. 
C)  is required to meet quarterly, not annually. 
D)  has no legal authority over the owner or the company.

Question 18

The sole proprietorship is a business owned by two or more people but operated by only one person.

Accepted Answer

A) True 
 B)False

Question 19

Max chose to operate his production studio as a sole proprietorship even though his attorney cautioned that he was

Accepted Answer

A)  reducing its overall profit potential. 
B)  increasing his taxable income. 
C)  exposing himself to unlimited personal liability. 
D)  violating an existing partnership agreement.

Question 20

Zeno, Zella, and Zorro wish to form a partnership. Zeno is putting up 60 percent of the capital, Zella is putting up 40 percent, and Zorro is putting in no capital but will manage the business. In the absence of a provision in the partnership agreement, how will the liability and profits be distributed?

Accepted Answer

A)  According to the input of capital 
B)  According to the amount of work each does in the business 
C)  Equally 
D)  According to the laws of the state where the partnership is formed

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

Linda has assembled a list of potential directors for her board. Whom should she not include?

The number of small business owners who are choosing to go it alone is increasing significantly because this option has been made increasingly manageable by

Match the term with its definition. -A form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes; not for generation of profits

Sole proprietors often benefit from fringe benefits such as tax-free insurance plans.

A management team is often stronger than an individual entrepreneur because it provides a diversity of skills and greater assurance of continuity.

In a limited partnership, which of the following types of partner remains bound by all debts of the business?

Jeanne, a Canadian citizen, would like to invest in Ingrid's startup. If Ingrid organizes her business as a(n) _____, Jeanne is prohibited from investing.

A partnership agreement states explicitly the rights and duties of partners with each party assuming joint and several liability.

Match the term with its definition. -Liability on the part of an owner that extends beyond the owner's investment in the business

A strategic alliance is a(n)

What steps could an entrepreneur take to improve his or her chances of success when forming a strategic alliance?

Typically strategic alliances are harder to set up than to maintain.

Match the term with its definition. -The liability of each partner resulting from any one partner's ability to legally bind the other partners

Cameron is creating the document that specifies the size of the board, the duties of the directors, voting rights, etc. This document is known as the

Millie has a sole proprietorship that is her only source of income. Which of the following legal actions should she take to prevent the business from being ruined if she becomes incapacitated?

The liability of owners is greater with a sole proprietorship than with a general partnership.

A significant difference between a board of directors and an advisory board is that the advisory board

The sole proprietorship is a business owned by two or more people but operated by only one person.

Max chose to operate his production studio as a sole proprietorship even though his attorney cautioned that he was