Chapter 15 + 16 Deck

Question 1

In the “Marketing” section of a business plan, the ( ) section describes the proposed business’s typical business customer.

Answer 1

“Target Market”

Question 2

The Small Business Administration offers an array of programs to help small business owners and prospective business owners. Services include all of the following except assistance in ( ).

Answer 2

interviewing job candidates

Question 3

A small business that buys goods from other firms and sells them to consumers is known as a ( ).

Answer 3

retailer

Question 4

The ( ) section of the business plan describes the fundamental beliefs about what is and isn’t appropriate in conducting company activities.

Answer 4

“Core Values”

Question 5

The monthly fee that a franchisee must pay to keep the company’s trade name is called a ( ).

Answer 5

royalty fee

Question 6

Which of the following is not an advantage of buying an existing business?

Answer 6

You have access to current cash flow.

Question 7

The ( ) section of the business plan is designed to convince the reader that the company will be operated by well-qualified and experienced people.

Answer 7

“Management Plan”

Question 8

The ( ) section of a business plan specifies the firm’s cash needs and explains how the owners will be able to repay its debts.

Answer 8

“Financial Plan”

Question 9

The ( ) section of your business plan tells the reader where you will purchase products for resale.

Answer 9

“Goods, Services and the Production Process”

Question 10

In a ( ) partnership, a single partner runs the business and any number of other partners have little involvement in it.

Answer 10

limited

Question 11

Maria Martin owns an advertising company. She gets to keep all of the income earned by the business. She operates it as a ( ).

Answer 11

sole proprietorship

Question 12

The number and severity of disputes between partners can be lessened if the partners have executed ( ) that specifies everyone’s rights and responsibilities.

Answer 12

a partnership agreement

Question 13

Which of these statements is true in regard to the sole proprietorship form of business?

Answer 13

it makes financing more difficult

Question 14

Who is considered hostile in a hostile takeover?

Answer 14

1. the targeted company’s management

2. the targeted company’s board of directors

Question 15

Which of the following is a disadvantage of the corporate form of organization?

Answer 15

owners and managers are not always the same people

Question 16

The major problem with general partnerships is:

Answer 16

unlimited liability

Question 17

Many people are reluctant to enter into partnerships because of ( ).

Answer 17

unlimited liability

Question 18

As attorneys who share equal ownership, profits, and losses in their firm, Raymond James and Alexander Doss have opted for which legal form of business ownership?

Answer 18

partnership

Question 19

A local bakery is acting as a ( ) when it sells desserts to a restaurant.

Answer 19

wholesaler

Question 20

An ( ) is someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it.

Answer 20

entrepreneur

Question 21

There are three characteristics of entrepreneurial activity:

Answer 21

1. Innovation
2. Running a business
3. Risk-taking

Question 22

A ( ) is one that is “independently owned and operated, is organized for profit, and is not dominant in its field.”

Answer 22

small business

Question 23

The twenty-eight million small businesses in the United States generate about ( ) of our gross domestic product.

Answer 23

50%

Question 24

An ( ) is a group of companies that compete with one another to sell similar products.

Answer 24

industry

Question 25

The ( ) includes all businesses that produce tangible goods.

Answer 25

goods-producing sector

Question 26

The ( ) includes all businesses that provide services but don’t make tangible goods.

Answer 26

service-producing sector

Question 27

A ( ) a document that identifies the goals of your proposed business and explains how it will achieve them.

Answer 27

business plan

Question 28

An ( ) is a one- to three-page overview in a business plan.

Answer 28

executive summary

Question 29

A sole proprietorship is the most common form of business and accounts for ( ) of all U.S. businesses.

Answer 29

72%

Question 30

A ( ) is a legal entity that’s separate from the parties who own it.

Answer 30

corporation

Question 31

Corporations are owned by ( ) who invest money in them by buying shares of ( ).

Answer 31

shareholders/stock

Question 32

Corporations elect a ( ) that’s legally responsible for governing the corporation.

Answer 32

board of directors

Question 33

Corporations are taxed on their earnings so they're subjected to ( ).

Answer 33

double taxation

Question 34

The ( ) gives small business owners limited liability protection, but taxes company profits only once, when they are paid out as dividends. It can’t have more than one hundred stockholders.

Answer 34

S-corporation

Question 35

A ( ) is similar to an S-corporation: its members are not personally liable for company debts and its earnings are taxed only once, when they’re paid out as dividends. But it has fewer rules and restrictions than does an S-corporation. For example, an LLC can have any number of members.

Answer 35

limited-liability company (LLC)

Question 36

A ( ) is a business owned and controlled by those who use its services. Individuals and firms who belong to the cooperative join together to market products, purchase supplies, and provide services for its members.

Answer 36

cooperative

Question 37

A ( ) is an organization formed to serve some public purpose rather than for financial gain. It enjoys favorable tax treatment.

Answer 37

not-for-profit corporation

Question 38

A ( ) occurs when two companies combine to form a new company.

Answer 38

merger

Question 39

An ( ) is the purchase of one company by another with no new company being formed.

Answer 39

acquisition

Question 40

Companies merge or acquire other companies for the following reasons:

Answer 40

1. to gain complementary products 2. attain new markets or distribution channels 3. realize more-efficient economies of scale

Question 41

A ( ) is an act of assuming control that is resisted by the targeted company’s management and its board of directors.

Answer 41

hostile takeover