Business Essentials 9th Edition By Ebert – Test bank
Business Essentials, 9e (Ebert/Griffin)
Chapter 3 Entrepreneurship, New Ventures, and Business
... [Show More] Ownership
1) The Small Business Administration is the government agency charged with owning small businesses.
Answer: FALSE
Explanation: The Small Business Administration is a government agency that assists small businesses.
Page Ref: 60 Difficulty: Easy Objective: 3.1
Learning Outcome: Describe the role of small businesses in the economy Skill: Concept
2) Small businesses produce more patents per employee than large patenting firms. Answer: TRUE
Explanation: Small businesses are an important source of innovation as evidenced by the production of patents.
Page Ref: 61 Difficulty: Moderate Objective: 3.1
Learning Outcome: Describe the role of small businesses in the economy Skill: Concept
3) Most businesses in the United States are large businesses with more than 500 employees. Answer: FALSE
Explanation: Almost 86 percent of all U.S. businesses have no more than 20 employees. Page Ref: 61
Difficulty: Moderate Objective: 3.1
Learning Outcome: Describe the role of small businesses in the economy Skill: Concept
4) Major innovations are most likely to come from large corporations. Answer: FALSE
Explanation: Most major innovations come from small businesses. Page Ref: 61
Difficulty: Moderate Objective: 3.1
Learning Outcome: Describe the role of small businesses in the economy Skill: Concept
5) Manufacturing is overwhelmingly handled by big business. Answer: TRUE
Explanation: Small business manufacturers account for less than 5 percent of the manufacturing industry.
Page Ref: 63 Difficulty: Easy
AACSB: Dynamics of the global economy Objective: 3.1
Learning Outcome: Describe the role of small businesses in the economy Skill: Application
6) People who assume the risk of business ownership with a primary goal of growth and expansion are called entrepreneurs.
Answer: TRUE
Explanation: Entrepreneurs are people who assume the risk of business ownership. Page Ref: 64
Difficulty: Easy Objective: 3.2
Learning Outcome: Explain the entrepreneurship process Skill: Concept
7) Most successful entrepreneurs have a strong desire to be their own bosses. Answer: TRUE
Explanation: Many entrepreneurs are attracted to small business because of opportunities for independence.
Page Ref: 64 Difficulty: Easy Objective: 3.2
Learning Outcome: Explain the entrepreneurship process
Skill: Concept
8) A business plan demonstrates how an entrepreneur’s business strategy will be implemented. Answer: TRUE
Explanation: A business plan documents business strategy and implementation procedures. Page Ref: 65
Difficulty: Easy Objective: 3.3
Learning Outcome: Explain the entrepreneurship process Skill: Concept
9) Franchisees may be obligated to contribute a percentage of sales to parent corporations. Answer: TRUE
Explanation: The obligation to contribute a percentage of sales is a disadvantage from the franchisee’s perspective.
Page Ref: 67 Difficulty: Moderate Objective: 3.3
Learning Outcome: Describe the role of small businesses in the economy Skill: Concept
10) Loans are the most important sources of money for new businesses. Answer: FALSE
Explanation: According to the National Federation of Independent Business, personal resources are the most important sources of money for new businesses.
Page Ref: 67 Difficulty: Moderate Objective: 3.3
Learning Outcome: Discuss the functions of different types of financial institutions in the monetary system
Skill: Concept
11) Lending institutions are more likely to help finance the purchase of an existing business rather than the start-up of a business from scratch.
Answer: TRUE
Explanation: This is the case because the risks are typically better understood for an existing business.
Page Ref: 67 Difficulty: Moderate
AACSB: Dynamics of the global economy Objective: 3.3
Learning Outcome: Discuss the functions of different types of financial institutions in the monetary system
Skill: Application
12) A group of small investors who invest money in companies in return for partial ownership is known as a small-business development company.
Answer: FALSE
Explanation: A group of small investors who invest money in companies in return for partial ownership is called a venture capital company.
Page Ref: 68 Difficulty: Easy Objective: 3.3
Learning Outcome: Explain the entrepreneurship process Skill: Concept
13) Small-business investment companies (SBICs) may be sponsored by the federal government. Answer: TRUE
Explanation: SBICs are federally licensed to borrow money from the SBA and to invest it in or lend it to small businesses, and they are themselves investments for their shareholders.
Page Ref: 68 Difficulty: Moderate Objective: 3.3
Learning Outcome: Explain the entrepreneurship process Skill: Concept
14) The least common type of partnership is the general partnership. Answer: FALSE
Explanation: The most common type of partnership is the general partnership. Page Ref: 73
Difficulty: Easy Objective: 3.5
Learning Outcome: Explain the entrepreneurship process Skill: Concept
15) A limited liability corporation is a hybrid of a publicly held corporation and a partnership. Answer: TRUE
Explanation: A limited liability corporation combines features of a publicly held corporation which benefits from limited liability and a partnership in which owners are taxed as partners.
Page Ref: 77 Difficulty: Easy Objective: 3.6
Learning Outcome: Explain the entrepreneurship process Skill: Concept
16) Many new businesses are started by people who have left big corporations. Answer: TRUE
Explanation: More and more businesses are being started by people who have left big corporations and who want to put their experience to work.
Page Ref: 69 Difficulty: Moderate
AACSB: Dynamics of the global economy Objective: 3.4
Learning Outcome: Explain the entrepreneurship process Skill: Application
17) The failure rate among small businesses has been increasing in recent years. Answer: FALSE
Explanation: The failure rate for small businesses has been decreasing in recent years. Page Ref: 69
Difficulty: Moderate Objective: 3.4
Learning Outcome: Explain the entrepreneurship process Skill: Concept [Show Less]