Friday, April 21, 2006

Quiz 4 - Chapters 5 and 6

Chapter 5 True or False:
5-1. The corporation is the most common form of business ownership.

5-2. The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.

5-3. Few people today start their own business.

5-4. Once a business is established, it's almost impossible to change from one form of business ownership to another.

5-5. A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

5-19. A general partner can take an active role in the management of the business.

5-20. All of the partners in a general partnership have limited liability for the debts of their firm.

5-21. In a general partnership, all owners share in both management of the business and in the assumption of liability for the firm's debts.

5-22. In a general partnership, all active partners are entitled to an equal share of the firm’s profits.

5-23. Limited partnerships are just like general partnerships, except that they are organized to operate as a going concern for only a limited time period.

5-45. A conventional corporation is a state-chartered legal entity, with authority to act and have liability separate from its owners.

5-46. In today's economy, only large business enterprises should operate as corporations.

5-47. The owners of a corporation are known as general corporate partners.

5-48. A corporation can raise financial capital by selling shares of stock to interested investors.

5-49. Stockholders in a corporation must accept unlimited liability for the corporation’s debts.

5-80. Though popular during the early and middle 1900s, mergers and acquisitions were quite rare in the 1990s and early 2000s.

5-81. In a merger, two firms combine to form one company.

5-82. The three major types of mergers are rectangular, triangular, and circular.

5-83. An acquisition is when one company buys the property and obligations of another company.

5-84. One of the major reasons for the wave of mergers in the late 1990s and early 2000s was the desire of firms to expand within their own markets to save on costs.

5-100. A franchise agreement is an arrangement where a franchisor sells the rights to a business name and to sell a product or service within a given territory to a franchisee.

5-101. A franchise may be organized as a sole proprietorship, partnership, or corporation.

5-102. Recent figures suggest that franchising has declined in importance over the last ten years.
5-103. Franchisors give franchisees the right to use their name and product, but franchisees must obtain all financing and develop all marketing strategies on their own.

5-104. Today, franchising accounts for nearly 50 percent of the national retail sales in the United States.

5-124. A cooperative is simply another name for a corporation.

5-125. A cooperative consists of people with similar needs who pool their resources for mutual gain.

5-126. It is not unusual for members of cooperatives to work for and help manage their cooperative.

5-127. Farm cooperatives were originally established to help farmers increase their economic power by acting as a group rather than as individuals.

5-128. One thing Blue Diamond, Ocean Spray, and Land O Lakes have in common is that they all are cooperatives.

Chapter 6: Multiple Choice:
6-2. An entrepreneur:
A) manages businesses for others.
B) has a controlling interest in the ownership of a corporation.
C) manages businesses that operate in multiple countries.
D) accepts the risk of starting and running a business.

6-3. The importance of entrepreneurs to our economy is found in their:
A) impact on the political process.
B) ability to create jobs for others.
C) contributions of money to organizations that help people in need.
D) ability to influence national macroeconomics polices.

6-4. Which of the following would not be helpful in explaining why individuals accept the risks of business ownership?
A) The potential for profit and wealth.
B) The sense of self-satisfaction and independence.
C) The challenge of taking calculated risks.
D) The desire to work fewer hours.

6-5. All of the following are characteristics of successful entrepreneurs except:
A) self-disciplined.
B) tolerant of uncertainty.
C) willingness and desire to follow others.
D) action-oriented

6-6. The management of charities, government agencies, and schools is ________ the management of a business.
A) much different than
B) much the same as
C) less well defined than
D) better organized than.

6-7. All of the following are elements of the Small Business Administration's definition of a small business except that these firms:
A) have fewer than 100 stockholders.
B) are independently owned.
C) are not dominant in its field.
D) have annual receipts of less than a specified amount depending upon the industry.
6-8. Small businesses create about ____ percent of the new jobs in the United States.

A) 10
B) 25
C) 75
D) 10

6-9. About 80% of all Americans find their first jobs in:
A) government agencies.
B) large corporations.
C) the manufacturing sector.
D) small businesses.

6-10. A Small Business Management course at a community college may offer entrepreneurs an opportunity to:
A) meet with experienced entrepreneurs and learn from their advice.
B) try out ideas on a computer simulation before risking real time and money.
C) listen to a qualified instructor solve all of the problems of small business owners.
D) do a research paper on a topic of interest.

6-11. Conversations with people who start their own business often reveal that:
A) many small business owners got their entrepreneurial idea from a previous job.
B) it is unusual for experienced corporate managers to start their own businesses.
C) the most successful entrepreneurs often start their business ventures right after high school.
D) most small business owners begin with significant personal wealth.

6-12. ________ are the primary concerns of someone starting a business.
A) Human relations and accounting.
B) Financing and planning.
C) Marketing and public relations.
D) Staffing and controlling.

6-13. The business plan of a new entrepreneur should include all of the following except:
A) target market.
B) capital required.
C) competitive advantages.
D) names of employees.

6-14. A detailed written statement that describes the nature of the business, the target market, the firm’s competitive advantages, as well as the owner’s resources and qualifications is a:
A) business plan.
B) entrepreneurial mission statement.
C) profit and loss statement.
D) professional action plan.

6-15. Entrepreneurs seeking financial support from bankers and potential investors should:
A) be vague regarding their creative business plans to avoid having their idea stolen.
B) seek their assistance in developing their business plan.
C) create a detailed business plan to help the bankers and investors understand why this business will succeed.
D) ask for a relatively small amount of capital initially, postponing a full funding request until the investors better understand the business concept.

6-16.There are about ________ people in the United States, but over ________ in the world.
A) 5 million; 6 billion
B) 280 million; 6 billion
C) 5 million; 10 million
D) 275 million; 500 million

6-17. According to the Commerce Department, a ________of small businesses export their goods.

A) small percentage
B) large percentage
C) decreasing number
D) decreasing percentage

6-18. All of the following are hurdles small businesses face when considering exporting except?
A) Financing is often difficult to find.
B) Overseas buyers prefer dealing with large corporate bureaucracies.
C) There is great deal of required paperwork.
D) Cultural differences are not easily understood.

6-19. One reason why many U.S. small businesses are not involved in exporting is:
A) there is a limited market for their products.
B) the government’s new homeland security programs limit opportunities for small businesses.
C) many of these firms do not know how to get started.
D) U.S. products are perceived as inferior.