________ is most often associated with manufacturing defects, design or marketing defects, and a failure to warn.
Uniform commercial code
Which of the following points does the existence of a business plan demonstrate?
The business process has been carefully planned.
The business fulfills an important market need.
The business has full-time employees.
The business has a unique idea.
The business will be financially successful.
Companies MOST often resort to mergers and acquisitions when they want to expand their markets and product lines because ________.
more than 70 percent of all mergers exceed financial expectations
it minimizes conflicts that are rooted on hidden agendas and power struggles
it minimizes time and investment to research and develop new products
upper management prefers to concentrate on day-to-day activities
employees are motivated to work harder because of the resulting stability
One disadvantage of sole proprietorship is the ________.
burden of all the required paperwork that must be filed
fact that any income earned by this type of business is taxed twice
cost of starting or ending the company is higher than other businesses
unlimited liability the owner has for the debts of the company
possibility of disagreements between different owners
A franchise is a method of doing business in which ________.
a company buys ownership of another company and absorbs its employees and customer base into its own structure
a business is able to achieve rapid sales growth in the service sector due to taking advantage of many advertising opportunities
a company’s products or services are sold to independent third-party operators under the company’s name
an entrepreneur sets up and manages a small business based on an innovative idea or product
a small company is bought by a larger one and is absorbed into its existing structure
A(n) ________ is a type of entrepreneur who prefers to keep his or her business small.
Traci and Sally have considered starting their own business but are concerned about the possibility of losing their personal assets if the business fails. One way for Traci and Sally to avoid this risk would be to organize their company as a ________.
The government agency whose sole purpose is to cater to the needs of small businesses is ________.
the Entrepreneurs Organization
Service Corps of Retired Executives
the Small Business Administration
the Small Business Agency
National Business Incubators Association
Unlike trademarks and patents, trade secrets ________.
are not protected under state laws
are not protected under federal statutes
cannot be processes
are protected only when the secret is disclosed
must be physical devices
James lives near a university and observes that almost every student uses a cell phone. He decides to open a small shop offering repair services for cell phones. His shop is an instant success. James has satisfied an area of need called ________.
an opportunity niche
a bandwidth need
an unconscious demand
Which of the following is NOT an advantage of buying an existing business?
It might be easier to obtain financing to purchase the existing business.
An existing business has an existing customer base.
An existing business has less competition.
There is a reduction in start-up time and energy.
It is simpler than beginning a new business from scratch.
Which of the following is NOT one of the elements of a contract that must be in place for it to be valid?
consideration must be given
the terms must be formally drafted
the offer must be accepted
the parties must understand and agree on the terms
an offer must be made
Rick’s business plan cover sheet includes basic company information, the month and year of the business plan, and the names of the people who prepared his plan. What key information did Rick not include on the cover sheet?
anticipated challenges and planned responses
unique record number
brief description of the owner(s)
brief description of the business
the mission statement
Which section contains an analysis of whether there will be enough customers to purchase the product in the future?
Which of the following is ALWAYS TRUE about the purchases of existing businesses?
Once under new ownership, remaining staff are suspicious or fearful of the new owner.
Once under new ownership, consumer curiosity about the new ownership will cause a spike in sales.
Once under new ownership, existing customers will be resentful toward the new owner.
Once under new ownership, existing businesses outperform initial revenue projections.
Once under new ownership, any underlying problems are the responsibility of the new owner.
All of the following are reasons why people start small businesses EXCEPT ________.
more control of business decisions
lack of other employment opportunities
idea for product or service not currently available
reduced levels of responsibility
Rashan has been working as a pharmacist at a large drug store chain. He would like to open his own small pharmacy but is not sure if he could be successful given the predominance of large competitors. What part of his business plan would best address his concern?
________ is the process of performing research and analysis of a business to uncover any hidden problems associated with it.
When a not-for-profit corporations dissolves, its assets are ________.
seized by the state
transferred to the federal government
passed to the owners’ families
given to a similar not-for-profit group
distributed among major donors
Which of the following is the limit of liability of a limited partner?
the amount of their personal assets
the amount of his/her share of the profits
the amount of their investment
the amount of business capital
the amount of their shared profits
Why did the FTC block the merger of Staples and Office Depot?
The merger would have increased the number of competing stores in some parts of the country.
The merger would have made it easier for other competitors to enter the market.
The merger would have resulted in new efficiencies by combining operations.
The merger would have allowed for higher pricing, costing consumers millions of dollars.
The merger would have resulted in a decrease in the variety and quality of products offered to consumers.
Which of the following is a disadvantage of forming a corporation?
difficult transfer of ownership
unlimited liability of owners
less flexibility raising capital
The Nike swoosh, McDonald’s golden arches, and Apple’s apple are all examples of ________.
The United States is a federalist system, meaning ________.
only the U.S. government is divided into executive, legislative, and judicial branches
states don’t have written constitutions
the fifty states have no autonomy
the national government has complete authority
there is government authority at both the national and state levels
A ________ business is one that has at least 20 percent sales growth per year for five years, starting with a base of at least $100,000.
A disadvantage of a limited liability company is that it ________.
requires earnings to be taxed at the corporate rate
has more restrictive ownership rules than S corporations
requires the division of profits in a fixed proportion
is required to hold annual meetings
must dissolve when an owner leaves the company
A cooperative is a type of business that is owned by ________ who use its products or services.
The following are all components of a business plan EXCEPT ________.
the table of contents
sales and promotion details
the executive summary
the chapter summary
All of the following are advantages of sole proprietorship EXCEPT ________.
control and flexibility
ease of formation
no separate tax form
Alex Garcia has an idea for an Internet technology business that involves innovative search engine tools. He was referred to an organization that helps start-up businesses by offering resources such as administrative services, technical support, and business networking. This type of organization is called ________.
the Small Business Administrative Assistants
the Service Corps of Retired Executives
the Entrepreneurs Organization
a business incubator
an angel investor group
A merger involving a computer manufacturer and an electronics retailer that sells its computers would be an example of a ________.
product extension merger
market extension merger
Which of the following does NOT apply to intellectual property law?
Which of the following is the MOST compelling argument for incorporating a business?
to complete minimal legal requirements
to avoid paying federal taxes
to avoid lots of paperwork
to hire more employees
to protect the owners’ personal assets
When a wealthy individual invests his or her own money into a business project or start-up company with little intention to influence decision making, he or she is MOST often called a(n) ________.
Which of the following is NOT covered under copyright law?
Which of the following statements about S corporations is MOST accurate?
S corporation are easier to set up than sole proprietorships and partnerships.
S corporations enable owners to avoid the problem of double taxation.
S corporations must have fewer than 5 employees.
S corporations can have an unlimited number of owners.
S corporations have unlimited liability.
A ________ is a formal document that states the goals of the business as well as the intended process for reaching those goals.
Mr. Gonzales wants to help fellow farmers in his community, but he is not interested in making a personal profit. His main goal is to join with other farmers so they can have better bargaining power when purchasing supplies. Which of the following business types will Mr. Gonzales MOST likely form?
Chapter 11 bankruptcy ________.
requires that the business ceases operation
allows a business to pay its creditors over time
is the most common form of bankrupty for individuals
demands that creditors be paid within 3-5 years
can only be filed voluntarily
Small business owners can seek professional advice at no cost through ________.
the Volunteer Corps of America
Fortune 500 companies
the Service Corps of Retired Executives
the Better Business Bureau
McKinsey & Company management consulting
Which of the following types of entrepreneurs does NOT become involved in starting his or her own business?
All of the following EXCEPT ________ would be an advantage to partnership.
increased financial resources
no separate tax return required
increased available time
Small businesses are important to the economy because ________.
they are more innovative than larger companies
they improve productivity by hiring less-expensive staff in countries outside the United States
they create more than two-thirds of the U.S. gross domestic product
they generate about 65 percent of net new jobs in the United States
they export more than one-half of total U.S. exported goods and services
It’s important for partners to spell out the details of their partnership arrangements in writing because ________.
the law requires these arrangements to be filed with state and federal authorities
doing so will make it easier to convert the business to a corporation at a later date
a written agreement will help reduce misunderstandings and disagreements among the partners
the partnership is not a legally recognized business until the arrangement is in writing
putting the agreement in writing will limit the liability of each partner to a specified level
An advisory board is composed of ________.
a group of individuals who offer guidance to the new business owner
a group of experts who make decisions on behalf of the new business owner
a group of professionals who provide expertise in return for a share of the new business’s profits
a group of individuals who fill in for the management team members when needed
a group of interns who assist with administrative duties
All of the following are reasons business owners consider using a corporation structure of ownership EXCEPT ________.
protection from significant loss of personal assets
ease of transferring ownership
eased ability of raising capital
the appearance of stability and legitimacy
ease of forming and setting up the structure
Kris and Amy own a workout facility in which they are co-owners. Both take an active role in the management of the business and each accepts unlimited liability. Kris and Amy operate as a ________.
A(n) ________ occurs when two companies of about the same size mutually agree to create a new combined company.
Kyle is an entrepreneur who runs his own advertising agency. He can see the whole picture of what is involved in growing his company, and he has developed a solid plan for every aspect of the business, including production, financing, and marketing. This approach to his business indicates that Kyle is a ________.
Which of the following statements is TRUE about the components of a business plan?
All business plans are unique and share no common characteristics or components.
Potential business owners can use a common template to write a business plan because all plans share the same components.
All business plans are different depending on the business; however, most have a few components in common.
Business plans all have the same key components; however, some may be included in a different order.
All business plans discuss the specific product before analyzing how the product fits the market.
________ form the basis for much personal and business interaction, including when a company hires another company or individual to do work for them or when property is bought and sold.
Many new business owners prefer a limited liability structure because there are ________.
fewer corporate formalities
limits on the number of members
typically higher profits than other forms of ownership
more informal agreements
Which of the following is a benefit of forming a corporation?
Owners of a corporation are subject to unlimited liability.
Owners of a corporation are passive investors.
Corporations can offer stock options to employees.
Corporations can be double taxed.
There is little paperwork to file when forming a corporation.
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