ENT 2113 Final Exam

The business plan for a small business should be at least 50 pages long

False

Heather Schuch, owner of Glamajama, is an example of how women can concentrate on more than one facet of life

True

The development plan of a venture capital start-up is oriented around positive cash flow

False

The presence of venture capital for start-ups is limited outside of the United States

True

An entrepreneurial firm is typically self-funded or closely funded by the founder

True

In the context of a harvest plan, which of the following is the deciding metric in a potential public offering of a business?

size

Until the mid-1880s, almost all U.S. businesses were

small

What term is used to describe individuals or other organizations that impact the success of a business?

stakeholders

A harvest plan for a small business means the owner is

planning to exit a small business

What is the percentage of self-employed people in the workforce?

20

Which of the following terms describes a plan to exit a small business?

a harvest plan

Identify a true statement about the history of entrepreneurial businesses in the United States.

The 1880s saw the initial development of the nation's large industrial base

Identify a defining characteristic of entrepreneurial firms

They tend to be oriented toward the personal goals of the founder

Which of the following is a characteristic of an entrepreneurial firm?

the number of employees can be as few as zero or one

Owning a small business provides a means to meet varied demands that individuals face in society. Which of the following is not a need mentioned in the text's discussion of how society benefits from small business ownership?

Small business owners have greater ability to attract financing from venture capital firms

Small companies have flourished in the United States because they

respond more quickly to their customers' needs

The Myers-Briggs test is used for personality evaluations

True

Business incubators work best with small manufacturing-based firms

True

One of the negative aspects to being the owner of a family business has to do with firing a family member

True

According to the agency theory, a manager at a large firm is more likely to exploit organizational resources for their own benefit than the owner of a small firm

True

The owner must be aware of their own tolerance of risk and establish a business that is consistent with that tolerance

True

Which of the following personality tests is popular in universities and is composed of factors that are considered by many researchers to be the key components or types of an individual's personality?

Big Five

When should a new business owner ensure there are sufficient financial resources to operate the business?

prior to the start

________occur(s) in large companies that have excess resources such as equipment and employees.

Organizational slack

Which personality test believes that a person is the result of all experiences in their life?

Enneagram

Which of the following personality tests is based on the philosophy of Carl Jung?

Myers-Briggs

Established businesses are often ________ to buy from a start-up small business.

hesitant

The potential entrepreneur needs to consider ________ when starting a new business.

prior experience

All of these are potential issues for an owner in a family business except

All of these choices are correct

Which of the following is an advantage that family businesses enjoy over nonfamily-owned businesses?

Individuals in family businesses are often willing to work at times and in conditions that employees in nonfamily-owned businesses would not accept

In the context of entrepreneurial orientation, the presence of ________ often leads young people to be pioneers in an area, as they are not limited by the restrictions of the past.

bounded rationality

Which of the following is an advantage that small firms have over large businesses?

the ability to respond quickly to changes

In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business?

because it is not clear if the new business will be able to fulfill an order or service a product in the future

The first step in developing a quality business idea is to analyze the market.

False

The second column in a gap analysis is devoted to listing the market need.

False

The first column in a gap analysis is devoted to various business ideas.

True

Assume that an opportunity exists in northern Minnesota. A customer needs a "hand warmer" packet. Mary, a new business owner, decides she has the ability to address this gap because she knows how to produce hand warmer packets. This process is called gap analysis.

Group starts

True

A rule of thumb in the founding of businesses has always been that an owner whose business is both a vocation and an avocation is difficult to beat.

True

Potential owners should examine all of these specific areas before choosing a business idea except

financial history

Threats to ________ are threats to the new business in financing its growth, including high development cost.

operational financing

Which of the following experiences can entrepreneurs evaluate when generating business ideas based on their education?

the courses they took that were particularly enjoyable

While developing a quality business idea, what should potential business founders ideally do after evaluating their personal skill sets?

carefully analyze the market and look for a gap

Which of the following can be a threat to operational financing?

swift expansion plans

Threats to ________ are threats to the success of a new business related to its ability to establish and maintain a high-margin product or service.

profit margins

In the context of risks to new businesses, identify a true statement about risk tolerance

What constitutes a risk is determined by an entrepreneur by observing their own tolerances.

Identify a true statement about the process of generating business ideas.

After analysis, entrepreneurs may change their ideas even if they initially thought that their ideas would be successful

Identify a true statement about the potential founder of a new business

The founder of a new business needs to be intimately involved in its designing, funding, and running

Identify a true statement about the process of generating new business ideas

As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful

Before establishing a new business, the first thing founders should do is

list their personal skill sets

In the context of business risks, how can an entrepreneur identify competitors to a new potential business?

by observing what potential customers do to satisfy their current needs or wants

Bonding is a type of insurance in which the business is covered in case the workers cause any damage in the performance of their work.

True

A patent is a claim of intellectual property that covers a specific innovation.

True

An advantage of a sole proprietorship is that a business is very easy to form and dissolve because there is virtually no separation between the founder and the business.

True

A business that chooses to form a corporation must have a board of directors. In new small corporations, the board of directors and shareholders must be different individuals.

False

In a C Corporation, it is possible to have a double taxation situation.

True

Trilane Systems is a small business. Its owner, Myra, is also its only employee. She handles the business's operations herself and is responsible for all of the business's income and losses. In the context of the legal forms of business, Trilane Systems is a(n)

sole proprietorship

Marsciva Technologies is an emerging business. The firm considers the owners to be employees of the firm and therefore pays them salaries and bonuses. To reduce corporate tax, the owners of Marsciva Technologies pay themselves nearly all the profits generated so that very little actual profits are reported by the firm. Based on these characteristics, Marsciva Technologies is most likely a(n)

C Corporation

In the context of legal forms of business, an S Corporation

allows the owners to treat the income of the firm as part of their personal incomes

In a lease, a landlord can enter a business premises for all the following reasons except

whenever the landlord wants to

In the context of legal forms of business, a general partner in a limited liability partnership

has unlimited liability for any debts or judgments against the firm

In the context of legal forms of business, identify a true statement about sole proprietorship firms

Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms

In the context of legal forms of business, identify a true statement about limited liability partnership (LLP).

In a limited liability partnership, limited partners can work at the firm but not be active in its management

All of the following are benefits of a C Corporation EXCEPT

fringe benefits being treated as income

Which of the following questions should a new business owner examine when considering leases?

All of these choices are correct.

James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n)

draw

In the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships?

the possibility of bringing in new equity partners

Human resources in family businesses are critical, but since family members make up many of the significant employees in the company, everything becomes more complicated.

True

Title VII of the Civil Rights Act currently applies to firms with more than 10 employees.

False

The success of entrepreneurial firms pursuing new opportunities requires a number of deliberate actions by the business founder concerning human resources issues

True

John reviews Michael's performance on the goals and outcomes that were set 12 months ago. This is called a goal review.

False

Human resource programs for small companies are the same and have the same effects as large businesses.

False

A job offer is finalized by

the candidate signing the offer

What does OSHA stand for?

Occupational Safety and Health Administration

The government regulates the employment of children under the age of

16

Human resources, as defined in economics, is the ________ and ________ of human effort directed toward producing goods and services.

quantity; quality

Which of the following laws states an employer cannot discriminate in pay to men and women who do the same job?

The Equal Pay Act

Identify a legal question that an employer can ask during an interview.

"Do you have a Social Security number?"

Human resource management includes ________ employees.

All of these choices are correct.

Which of the following statements is true of the commission compensation system?

It creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm.

Which of the following statements is true of the Fair Labor Standards Act (FLSA)?

It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half.

Which of the following statements is true of workers’ compensation?

All of these choices are correct.

Which of the following statements is true of a performance review in an entrepreneurial business?

The formal conversation with a worker who is doing a good job and acknowledging their work is a form of compensation.

Identify an accurate statement about the hybrid compensation system.

An entrepreneur should provide bonuses in a timely manner that is relevant to the individuals in the firm and within the realities and constraints of the business.

A chart of accounts is a listing of each type of activity (such as expense items) and each type of asset within the company.

True

A cash-based accounting system recognizes expenses as they are paid and recognizes revenue when it is generated.

True

Banks will lend money for the establishment and maintenance of inventory by arranging a revolving line of credit.

True

Equity investment does not involve selling a percentage of the business to an outside investor.

False

Debt, a source of nonequity funding, allows a new business to handle the disparity between when goods must be purchased and when money will be received from a customer to pay for those goods.

True

_______ have traditionally been a major source of funds for established firms but are quite restrictive in their lending to start-up firms, as the risk is perceived to be too high.

Banks

_______ are special funds that are neither equity nor debt, that do not require repayment, and are designed to aid businesses in specific areas.

Grants

Which of the following items does a payroll record list?

All of these choices are correct

______ funds are received by a business in exchange for a percentage ownership of the company.

Equity

In the context of financing tools available to new businesses, identify a major disadvantage to asset leasing

A new business might spend more money on leasing equipment over time than if it had bought the equipment outright

Investors can be

All of these choices are correct.

What are the advantages of leasing equipment for a new business?

All of these choices are correct.

In the context of proper accounting practices, identify a major difference between cash-based and accrual-based accounting systems.

Cash-based systems recognize revenue as it is generated, whereas accrual-based systems record revenue only when it occurs.

Carla is a high-net-worth individual who was once an entrepreneur. She now financially invests in small start-ups and businesses. Though Carla funds their initial operations and advises them on the best way to develop their operations, she rarely interferes with their day-to-day operations. In the context of the various forms of equity funding, Carla is most likely

a business angel.

Sonor Designs is a small business that makes greeting cards. Because of the small scale of the firm's operations, it cannot afford to purchase the expensive printers it needs to make greeting cards. Instead, it rents the printers from another organization. In the context of business financing, Sonor Designs renting essential business equipment from another company is an example of

asset leasing.

Several successful businesspeople establish a partnership with each other. They combine their financial resources and use the resultant pool of resources to make equity investments in various high-growth new undertakings. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as

a venture capital fund.

Covore Inc., a start-up firm, receives the majority of the funds it requires to begin its operations from five individuals. In exchange for these funds, each individual receives a share of ownership in the firm. The funds provided to Covore Inc. by the individuals are an example of

equity investment.