Deck 13: Home-Based Businesses

Question 1

Home-based businesses were very common before the industrial revolution.

Answer 1

True

Question 2

Home-based businesses are distributed evenly across the United States.

Answer 2

False

Question 3

increase in home businesses has occurred because of the increasing use of the Internet, recessions and corporate downsizings, and greater concern for family issues.

Answer 3

True

Question 4

working at home becomes more commonplace, home-based businesses have developed a better image than in the past.

Question 5

people who are successful with a home-based business are those who are outgoing self-starters who enjoy going out to market their businesses.

Question 6

of the biggest problems encountered by the home-based entrepreneur is isolation.

Question 7

home-based entrepreneurs are successful working less than 30 hours per week.

Question 8

Home-based entrepreneurs have usually found it easy to balance working time and family time.

Question 9

Home-based franchises have declined because of the increase in independent home-based businesses.

Question 10

Cities and municipalities have a legal right to ban home-based businesses.

Question 11

An apartment complex cannot ban home-based businesses if home-based businesses are legal in the municipality in which the apartment is located.

Question 12

Property is usually zoned in one of four ways including residential, commercial, restaurant, and agricultural.

Question 13

A home-based business will automatically have insurance coverage if the entrepreneur has home-owner's insurance.

Question 14

Taking a home-office tax deduction may result in a tax liability if the home is sold at a profit.

Question 15

The Taxpayer Relief Act allowed more businesses to take a home office deduction.

Question 16

If a home office is very successful, the entrepreneur may need to decide whether to scale back the business or relocate to commercial space.

Question 17

Home-based businesses were very common

A) during the 1960s.
B) during the 1930s.
C) before the development of railroads and communications systems.
D) right after World War II.

Question 18

Which of the following is FALSE?

A) Home-based businesses were very common before the development of railroads.
B) Home-based businesses are now evenly distributed across the United States.
C) In recent years, there has been an increase in the number of home-based businesses.
D) All of the above.

Question 19

Before the development of railroads and communication systems in the U.S., the economy depended on

A) large corporations.
B) cottage industries.
C) industrial parks.
D) office complexes.

Question 20

An industry in which the labor force works from home is known as a(an)

A) cottage industry.
B) economic industry.
C) self-employed industry.
D) industrial revolution industry.

Question 21

As industrial parks and office complexes became more common the number of cottage industries

A) decreased.
B) increased rapidly.
C) remained the same.
D) was not measured.

Question 22

The increase in home businesses has occurred for several reasons. Which of the following is not one of the reasons?

A) The increasing use of the Internet.
B) Recessions and corporation downsizing.
C) Greater concern for family issues.
D) Fewer people seeking financial security.

Question 23

The increase in home businesses has occurred because of

A) the increasing use of the Internet.
B) recessions and corporate downsizing.
C) greater concern for family issues.
D) all of the above.

Question 24

In the past ten years the image of home-based businesses has

A) improved.
B) declined.
C) remained the same.
D) not been determined.

Question 25

Which of the following is not an advantage of home-based businesses?

A) less time spent commuting.
B) decreased wardrobe costs.
C) flexible hours.
D) lack of structure.

Question 26

Because of the lack of structure in a home-based business the entrepreneur must be

A) financially independent.
B) able to live on a very limited budget.
C) self-disciplined.
D) family-oriented.

Question 27

A home-based entrepreneur must

A) be able to tolerate isolation.
B) be self-disciplined.
C) consider the effects on family life
D) all of the above.

Question 28

In the early years of a home-based business, the entrepreneur's ability to combat ___________ may make the difference between success and failure.

A) sales rejections
B) poor marketing skills
C) isolation
D) financial losses

Question 29

One of the biggest problems encountered by the home-based entrepreneur is

A) poor marketing skills.
B) isolation.
C) financial losses.
D) personnel problems.

Question 30

Many successful home-based entrepreneurs are those who

A) are out-going self-starters who enjoy selling.
B) are introverted and like to be alone.
C) do not have children to distract them.
D) did not have any other previous jobs.

Question 31

According to an article in Kiplinger's Personal Finance Magazine, the most successful home entrepreneurs had a tendency toward

A) workaholism.
B) idealism.
C) skepticism.
D) negativism.

Question 32

In a home-based business, the lack of separation between work and home makes it easier to become a(an)

A) optimist.
B) pessimist.
C) workaholic.
D) self-disciplined entrepreneur.

Question 33

A home-based entrepreneur must

A) be able to tolerate isolation.
B) be self-disciplined.
C) be prepared for family interruptions.
D) all of the above.

Question 34

The number of home-based franchises

A) has decreased in recent years because independent home-based businesses have increased.
B) has increased in recent years to capitalize on the home-based business trend.
C) has not been measured because they are relatively new.
D) has not changed in the past ten years but is likely to show a decrease over the next ten years.

Question 35

Which of the following is true?

A) Home-based franchises combine the flexibility of a home-based business with the experience of the franchiser.
B) Many home-based franchises can be started for less than $20,000.
C) A home-based franchise is often simpler to operate than those with a commercial location.
D) All of the above.

Question 36

Compared to franchises that have a commercial location, home-based franchises are usually

A) less expensive.
B) simpler to operate.
C) more accommodating to the owner's lifestyle.
D) all of the above.

Question 37

The ideal home-based franchisee was described as one who

A) loves sales and is self-motivated.
B) is able to work alone.
C) is willing to follow the franchiser's plan.
D) all of the above.

Question 38

Cities and municipalities have a legal right to

A) prohibit home-based businesses.
B) limit the amount of space in a home that can be used for business purposes.
C) prohibit home-based businesses from hiring employees.
D) all of the above.

Question 39

Local ordinances that restrict the use of property for specific purposes are called

A) zoning laws.
B) real estate restrictions.
C) occupancy laws
D) industrial legislation.

Question 40

If an entrepreneur gets legal permission to operate a home-based business in a municipality where it is otherwise illegal, this is known as a

A) zoning restriction.
B) variance.
C) ordinance.
D) revision.

Question 41

Most laws against home-based businesses were

A) recently developed to protect quiet neighborhoods.
B) enacted decades ago to protect neighborhoods from factories.
C) enacted recently to protect agricultural areas.
D) were enacted before the industrial revolution.

Question 42

Property is usually zoned in one of four ways. Which of the following is not one of those ways?

A) Residential
B) Commercial
C) Wholesale
D) Agricultural

Question 43

Property is usually zoned in one of four ways. Which of the following is not one of those ways?

A) Industrial
B) Commercial
C) Institutional
D) Agricultural

Question 44

A home-based business is usually legal in all but the ____________ zoning.

A) residential
B) commercial
C) industrial
D) agricultural

Question 45

Which of the following might restrict home-based businesses?

A) Apartments
B) Townhouses
C) Condominiums
D) All of the above

Question 46

Before beginning a home-based business entrepreneurs should consider

A) utility requirements.
B) zoning ordinances.
C) insurance requirements.
D) all of the above.

Question 47

Home-based businesses

A) have special insurance needs.
B) may need liability insurance if customers come to the home.
C) are usually not covered by regular homeowners insurance.
D) all of the above.

Question 48

Insurance for a home-based business

A) is automatically included with regular home-owner's insurance.
B) is usually not necessary.
C) must be purchased in addition to homeowner's insurance.
D) is necessary only if the entrepreneur maintains an inventory.

Question 49

A recent survey found many home-based entrepreneurs

A) were overinsured.
B) were underinsured.
C) had the right amount of insurance.
D) did not believe insurance was a good investment.

Question 50

Prior to the Taxpayer Relief Act of 1997, an entrepreneur who spent most of the day at customers' locations could

A) not take a take a tax deduction for a home office.
B) take a large deduction for a home office.
C) take a deduction for a home office only if the business was in the service industry.
D) take a deduction for a home office as long as it was furnished with appropriate office furniture.

Question 51

According to the U.S. Small Business Administration, the Taxpayer Relief Act

A) could save small businesses a lot of money.
B) could cost small business owners a lot of money.
C) will have no effect on small businesses.
D) is unconstitutional.

Question 52

If an entrepreneur uses a home office for his company's administrative tasks a tax deduction may be allowed if the entrepreneur

A) has sales of greater than $100,000.
B) does not conduct substantial administrative or management activities anywhere else.
C) has sales of less than $100,000.
D) is not in the service industry.

Question 53

Because of the Taxpayer Relief Act entrepreneurs

A) cannot take a tax deduction for a home office if the business is very small.
B) may qualify for the tax deduction even if they use their home office mainly for administrative tasks.
C) will not qualify for the tax deduction if they use their home office mainly for administrative tasks.
D) will not qualify for the tax deduction if they are in a townhouse or condo.

Question 54

If a home is depreciated as part of the home office tax deduction and the entrepreneur sells the home

A) a capital gains tax may be due.
B) no tax deduction can be taken for a home office in the next home that is purchased.
C) the home-office tax deduction may not be taken for the next five years.
D) the IRS will automatically audit the business.

Question 55

The home office tax deduction is advantageous in the short run, but may result in a tax burden if

A) the company loses money.
B) the home is sold at a profit.
C) there is no separate business phone.
D) the home office is used for mailing advertising literature.