Question 1

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  True

Question 2

Corporations are organized as either:

Accepted Answer

A)  permanent corporations or temporary corporations 
B)  general corporations or limited corporations 
C)  voluntary corporations or statutory corporations 
D)  C corporations or subchapter S corporations 
E)  regular corporations or limited liability corporations 
A)  permanent corporations or temporary corporations 
B)  general corporations or limited corporations 
C)  voluntary corporations or statutory corporations 
D)  C corporations or subchapter S corporations 
E)  regular corporations or limited liability corporations D

Question 3

A ________ partnership is a modified form of a general partnership.

Accepted Answer

A)  restricted 
B)  limited 
C)  partial 
D)  constrained 
E)  fractional 
A)  restricted 
B)  limited 
C)  partial 
D)  constrained 
E)  fractional B

Question 4

Most founders' agreements include a ________, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested.

Accepted Answer

A)  redemption clause 
B)  buyback clause 
C)  statutory purchase clause 
D)  voluntary recoup clause 
E)  shareholder surrender clause 
A)  redemption clause 
B)  buyback clause 
C)  statutory purchase clause 
D)  voluntary recoup clause 
E)  shareholder surrender clause

Question 5

A disadvantage of a sole proprietorship is that it is subject to double taxation.

Accepted Answer

A) True 
 B)False

Question 6

The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.

Accepted Answer

A) True 
 B)False

Question 7

"Don't be evil" is the corporate motto for:

Accepted Answer

A)  Facebook 
B)  Twitter 
C)  Zynga 
D)  Apple Inc. 
E)  Google 
A)  Facebook 
B)  Twitter 
C)  Zynga 
D)  Apple Inc. 
E)  Google

Question 8

A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation.

Accepted Answer

A)  certificate of intent to incorporate 
B)  articles of business 
C)  corporate credentials 
D)  a corporation permit 
E)  articles of incorporation 
A)  certificate of intent to incorporate 
B)  articles of business 
C)  corporate credentials 
D)  a corporation permit 
E)  articles of incorporation

Question 9

A narrow group of businesses are required to have a federal business license, including investment advising, drug manufacturing, and interstate trucking.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an advantage of a C Corporation?

Accepted Answer

A)  Setting up and maintaining one is more difficult than for a sole proprietorship or a partnership. 
B)  Stock is liquid if traded on a major stock exchange. 
C)  Business losses cannot be deducted against the shareholders' other sources of income. 
D)  Income is subject to double taxation. 
E)  Small shareholders typically have little voice in the management of the firm. 
A)  Setting up and maintaining one is more difficult than for a sole proprietorship or a partnership. 
B)  Stock is liquid if traded on a major stock exchange. 
C)  Business losses cannot be deducted against the shareholders' other sources of income. 
D)  Income is subject to double taxation. 
E)  Small shareholders typically have little voice in the management of the firm.

Question 11

The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff.

Accepted Answer

A)  12 months 
B)  12 months to 24 months 
C)  24 months to 36 months 
D)  36 months to 48 months 
E)  48 months to 60 months 
A)  12 months 
B)  12 months to 24 months 
C)  24 months to 36 months 
D)  36 months to 48 months 
E)  48 months to 60 months

Question 12

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

Accepted Answer

A)  Conciliation 
B)  Reconciliation 
C)  Negotiation 
D)  Appeasement 
E)  Mediation 
A)  Conciliation 
B)  Reconciliation 
C)  Negotiation 
D)  Appeasement 
E)  Mediation

Question 13

A disadvantage of a general partnership is that the liquidity of each partner's investment is low.

Accepted Answer

A) True 
 B)False

Question 14

The major difference between a general and a limited partnership is that a limited partnership includes two classes of owners: general partners and limited partners.

Accepted Answer

A) True 
 B)False

Question 15

A disadvantage of corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.

Accepted Answer

A)  double taxation 
B)  dual toll 
C)  double duty 
D)  double assessment 
E)  dual harm 
A)  double taxation 
B)  dual toll 
C)  double duty 
D)  double assessment 
E)  dual harm

Question 16

Which of the following is a disadvantage of a C Corporation?

Accepted Answer

A)  Income is subject to double taxation. 
B)  limited liability 
C)  Raising capital is easier than a partnership or sole proprietorship. 
D)  Stock is liquid if traded on a major stock exchange. 
E)  No restrictions exist on the number of shareholders. 
A)  Income is subject to double taxation. 
B)  limited liability 
C)  Raising capital is easier than a partnership or sole proprietorship. 
D)  Stock is liquid if traded on a major stock exchange. 
E)  No restrictions exist on the number of shareholders.

Question 17

________ are a special form of incentive compensation. These plans provide employees the option or right to buy a certain number of shares of their company's stock at a stated price over a certain period of time.

Accepted Answer

A)  Corporate options 
B)  Collective plans 
C)  Share plans 
D)  Stock options 
E)  Dividends 
A)  Corporate options 
B)  Collective plans 
C)  Share plans 
D)  Stock options 
E)  Dividends

Question 18

Most C corporations have two classes of stock:

Accepted Answer

A)  premium and normal 
B)  common and preferred 
C)  standard and substandard 
D)  regular and special 
E)  ordinary and distinct 
A)  premium and normal 
B)  common and preferred 
C)  standard and substandard 
D)  regular and special 
E)  ordinary and distinct

Question 19

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 20

A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.

Accepted Answer

A) True 
 B)False

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.

Corporations are organized as either:

A ________ partnership is a modified form of a general partnership.

Most founders' agreements include a ________, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested.

A disadvantage of a sole proprietorship is that it is subject to double taxation.

The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.

"Don't be evil" is the corporate motto for:

A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation.

A narrow group of businesses are required to have a federal business license, including investment advising, drug manufacturing, and interstate trucking.

Which of the following is an advantage of a C Corporation?

The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff.

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

A disadvantage of a general partnership is that the liquidity of each partner's investment is low.

The major difference between a general and a limited partnership is that a limited partnership includes two classes of owners: general partners and limited partners.

A disadvantage of corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.

Which of the following is a disadvantage of a C Corporation?

________ are a special form of incentive compensation. These plans provide employees the option or right to buy a certain number of shares of their company's stock at a stated price over a certain period of time.

Most C corporations have two classes of stock:

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.

A noncompete 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

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Assessing a New Ventures 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

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.

Corporations are organized as either:

A ________ partnership is a modified form of a general partnership.

Most founders' agreements include a ________, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested.

A disadvantage of a sole proprietorship is that it is subject to double taxation.

The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.

"Don't be evil" is the corporate motto for:

A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation.

A narrow group of businesses are required to have a federal business license, including investment advising, drug manufacturing, and interstate trucking.

Which of the following is an advantage of a C Corporation?

The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on the topic of vesting company stock. According to the feature, a typical startup's vesting schedule lasts ________ and includes a 12-month cliff.

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

A disadvantage of a general partnership is that the liquidity of each partner's investment is low.

The major difference between a general and a limited partnership is that a limited partnership includes two classes of owners: general partners and limited partners.

A disadvantage of corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.

Which of the following is a disadvantage of a C Corporation?

________ are a special form of incentive compensation. These plans provide employees the option or right to buy a certain number of shares of their company's stock at a stated price over a certain period of time.

Most C corporations have two classes of stock:

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.

A noncompete 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

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Assessing a New Ventures 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