Entrepreneurship

By: Robert D. Hisrich, Michael P. Peters, Dean A Shepherd

MCQs For Chapter 9

1. The management team of a new venture:

A) is encouraged to operate the business as a sideline.
B) must operate the business full-time.
C) can expect to draw a large salary.
D) should be employed elsewhere to assure adequate income.

2. Some customers prefer to do business with a _______________ because this form of

business is sometimes viewed as a more stable form than the others.
A) proprietorship
B) limited partnership
C) full partnership
D) corporation

3. _____________ have unlimited liability for the actions of the business.

A) General partners
B) Corporate shareholders
C) Limited liability company members
D) Limited partners

4. In a limited partnership, the limited partners:

A) are liable only for the amount of their capital contributions.
B) share the amount of personal liabilities equally.
C) have only insurance as protection against liability suits.
D) are allowed to decide on the amount of individual liabilities.

5. Liability is one of the most critical reasons for establishing a:

A) corporation.
B) limited liability company.
C) partnership.
D) sole proprietorship

6. In a limited liability partnership (LLP) death or withdrawal of a partner:

A) results in automatic transfer of ownership to surviving partner(s).
B) may result in problems trying to find a market for the shares.
C) always results in termination of the partnership.
D) has no effect on the partnership.

7. Which of the following types of ownership has the most continuity?

A) Corporation
B) General partnership
C) Limited partner
D) Sole proprietorship
8. Sole proprietorships:
A) have no time limit on how long they may exist.
B) are perpetual.
C) continue even upon the death of the owner.
D) allow a member of the deceased partner’s family take over as a partner.

9. In which of the legal forms of ownership is transferability of interest the easiest?

A) Sole proprietorship
B) Limited partnership
C) General partnership
D) Corporation

10. In an S corporation, the transfer of interest can occur:

A) only with the consent of the other shareholders.
B) only if there is a charter provision for doing so.
C) only as long as the buyer is an individual.
D) depending on the agreement.

11. The legal form of business with the most alternatives for raising capital is the:
A) proprietorship.
B) corporation.
C) limited partnership.
D) full partnership.

12. Bonds can be used to raise capital in which form of ownership?

A) Sole proprietorship
B) Limited partnership
C) General partnership
D) Corporation

13. In which form of organization does the owner have greatest control?
A) Sole proprietorship
B) Limited partnership
C) General partnership
D) Corporation

14. When it comes to decision making, in a limited partnership:

A) there is no separation of ownership and control.
B) limited partners have no control over business decisions.
C) limited partners have an equal say, but no liability.
D) the partners have control based on invested capital.

15. Corporations distribute profits to owners through:

A) bonds.
B) taxes.
C) dividends.
D) interest.
16. Organization costs in a proprietorship are:
A) amortizable over a period of 60 months.
B) amortizable over a period of 45 months.
C) not amortizable.
D) amortizable for a period of a year.

17. Which of the following statements is (are) true?

A) Corporates are not able to take deductions and expenses available to the
proprietorship or partnership.
B) Distribution of dividends is taxed once, as income of the corporation.
C) Bonuses, incentives,and profit sharing are allowable ways to distribute income of
the corporation.
D) Corporate tax may be higher than the individual rate.

18. Which of the following ways of distributing the income of corporations is taxed
twice?
A) Bonus
B) Salary
C) Dividends
D) Profit sharing

19. A limited liability corporation:

A) has unlimited liability.
B) is automatically taxed as a partnership.
C) is decreasing in popularity among venture capitalists.
D) had been the most popular choice of organization structure by new ventures and
small businesses.

20. S corporation status means:

A) shareholders do not have limited liability.
B) the corporation is subject to a minimum tax of 34 percent.
C) consent by a majority of shareholders is required for the election of this form of
business.
D) the corporation pays no tax.

21. In an S corporation:
A) gains or losses of the business are separate from the personal income of the
shareholder.
B) shareholders retain unlimited liability.
C) only one class of stock is permitted.
D) most fringe benefits for shareholders can be deducted.

22. In a limited liability company:

A) owners are called shareholders.
B) members may transfer their interests at any time.
C) members are not allowed to share income, profit, expense, deduction, loss and
credit among themselves.
D) laws governing its formation differ from state to state.
23. As an organization grows, submanagers are hired to coordinate the various aspects
of
the business. The text describes this as:
A) Stage 1.
B) Management Phase.
C) Stage 2.
D) Organizing Phase.

24. Our text tells us that much of an entrepreneur's time during start-up is spent:
A) delegating.
B) negotiating.
C) putting out fires.
D) allocating resources.

25. To build a successful organization culture the entrepreneur:

A) should focus and not try out different things.
B) needs to remember that it is easier to change a person’s attitude than it is to
change the person’s behavior.
C) should spend extra time in the hiring process.
D) must create a workplace where communication from the top down is encouraged.

26. The board of directors:

A) lacks voting authority.
B) has responsibilities to represent all shareholders.
C) is less objective than the entrepreneur.
D) are always volunteers and need not be compensated.

27. The _________ imposes oversight responsibilities on members of the board of

directors.
A) Social Security Act
B) Fair Labor Practices Act
C) Sarbanes-Oxley
D) Taft-Hartley Act

28. The difference between a board of directors and a board of advisors is that:
A) the board of advisors meets less frequently.
B) the board of directors lacks voting authority.
C) the board of directors is subject to less pressure of litigation.
D) the board of advisors are compensated.

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B D A A A D A D D C B D A B

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C C C C B D C D C C C B C A