Entrepreneurship MCQ: September 2017

A business plan should consider what three perspectives?

Answer:

1. Entrepreneur's perspective
2. Marketing perspective
3. Investor's perspective

____ is more loosely tied to the organization than a Board of Directors and serves only in an advisory capacity for some functions or activities.

Answer: Board of Advisors

List the 6 Roles of the Board of Directors.

Answer:

1. Reviews operating and capital budgets
2. Develops longer-term strategic plan for growth and expansion
3. Supporting day-to-day activities
4. Resolving conflicts among owners or shareholders
5. Ensures the proper use of assets
6. Develops a network of information sources for the entrepreneurs

List 3 key functions of the management team.

Answer:

1. Execute the business plan
2. Identify fundamental changes in the business as they occur
3. Make adjustments to the plan based on changes in the environment and market that will maintain profitability

What is the major disadvantages of an LLC (Limited Liability Company)?

Answer: The major concern of this type of corporation is in international business, where the context of unlimited liability is still unclear

List 4 Advantages of LLC (Limited Liability Company).

Answer:

1. May have tax advantages in most states
2. Pass-through taxation (not taxed twice like a C corporation)
3. One or more individuals, corporations, partnerships, trusts, or other entities can join to organize or form an LLC. This is not feasible in an S corporation
4. Members are allowed to share income, profit, expense, deduction, loss and credit, and equity of the LLC among themselves; only form of organization that offers all of these features

List 4 Disadvantages of S Corporation.

Answer:

1. Some restrictions regarding qualification for this form of business
2. Depending on the actual amount of net income, there may be a tax advantage to the C corporation
3. Only one class of stock is permitted
4. Cannot have more than 100 shareholders

List 3 Advantages of S Corporation.

Answer:

1. Capital gains or losses treated as personal income or losses; corporation is thus not taxed
2. Shareholders have limited liability like in a C corporation
3. Stock may be voting or nonvoting

____ is a special type of corporation where profits are distributed to stockholders and taxed as personal income.

Answer: S Corporation

List 4 tax issues for Corporation.

Answer:

1. Treated as a separate entity
2. Can take advantage of deductions and expenses not available to proprietorships and partnerships
3. The disadvantage is the corporation is taxed twice: as income of the corporation and as income of the stockholder
4. Corporate tax may be lower than individual rate

List 2 tax issues for Partnership.

Answer:

1. Similar to proprietorship; general partners have unlimited liability
2. No double taxation

List 3 tax issues for Proprietorship.

Answer:

1. Income appears on the owner's personal tax return
2. Not treated as a separate tax entity
3. No double taxation

_____ is the most common form of corporation, regulated by statute (law) and treated as a separate legal entity for liability and tax purposes.

Answer: C corporation

_____ is a separate legal entity that is run by stockholders having limited liability.

Answer: Corporation

____ is when two or more individuals having unlimited liability who have pooled resources to own a business.

Answer: Partnership

_____ is the form of business with single owner who has unlimited liability, controls all decisions, and receives all profits.

Answer: Proprietorship

List the 3 basic legal forms of business.

Answer:

1. Proprietorship
2. Partnership
3. Corporation

List the Nine Steps in Preparing the Marketing Plan.

Answer:

1. Defining the Business situation
2. Defining the Target Market: Opportunities and Threats
3. Considering Strengths and Weaknesses
4. Establishing Goals and Objectives
5. Defining Marketing Strategy and Action Programs
6. Product or Service
7. Pricing
8. Distribution
9. Promotion