NASCLA Contractors Guide Arkansas 8th Edition Exam Questions with Correct Answers

NASCLA Contractors Guide Arkansas 8th Edition Exam Questions with Correct Answers Poor _________ and inadequate ____________ are overriding factors in business failure - answerPlanning; Management entrepreneur - answerA person engaged in strategic activities that involve the initiation and development of a new business, created to build long term value and steady cash flow Calculated risk - answera risk that is well - thought through where all outcomes are considered rewards of owning your own business - answer- being your own boss -having flexibility of time -having more freedom and independence -making your own decisions -receiving personal satisfaction from completing a job A business plan should be a _________ ____________ that changes as your business and the market change - answerliving document Business plan key functions - answer1. Planning tool 2. Loan or investor document 3. Benchmark tool Elements of a business plan - answer1. cover page 2. Executive summary 3. Company summary 4. Products and Services 5. Market analysis 6. Market strategy 7. Financial plan Business Plan Pitfalls - answer- make sure your assumptions are realistic - keep the language simple - cover the risk as well as the opportunities - analyze your competition thoroughly Sole Proprietorship - answerthis business structure offers easy formation and operation, however, unlimited personal liability is a concern because the business and owner are considered the same legal entity Advantages of a Sole Proprietorship - answer- Minimal legal restrictions - simple ownership form - low startup cost - sole ownership profits - freedom in decision making process Disadvantages of Sole Proprietorship - answer- unlimited personal liability - less available capital - possible difficulty obtaining long-term financing -dissolution of the business in the event of the owners death Partnership - answercan bring together two or more people with strengths and resources in different areas but also allow for unlimited personal liability of general partners. to reduce conflicts among partners, responsibilities and business goals must be clearly outlined at the beginning of the business arrangement Advantages of a general partnership - answer-ease of formation -direct profit rewards -larger management base than that of a sole proprietorship General partnership - answercan be formed through an oral agreement, but it is recommended that a written partnership agreement be made limited partnership - answerA partnership with one or more general partners and one or more limited partners. disadvantages of a General Partnership - answer- Unlimited personal liability of general partners - multiple decision makers - limited life of the business - Changes of partners or partnership agreement may be difficult - partnership dissolves in the event of the death of a general partner Partnership, Limited liability partnerships, and Limited liability partnerships must register through the..... - answerArkansas secretary of state C Corporation - answerOffer liability protection to the owners and easy ownership transfer through stock sales. this business structure is more complex to operate and shareholders may be "double-taxed" on their earnings Advantages of a C Corporation - answer- Separate legal entity - Limited liability for stockholders - Unlimited life of the business - Availability of capital resources - Transfer of ownership through sale of stock Disadvantages of a C Corporation - answer- Complex and expensive organization - Limitation on corporate activities and decisions by the corporate charter - Extensive regulation and record keeping - Double taxation Arkansas based business use _______ ________ - answerDomestic forms To incorporate a business in arkansas, Articles of incorporation must be filed with the: - answerSecretary of state, business and commercial services division S corporation - answerSimilar to C corporations but offer special tax considerations. Can be filed with the IRS, if companies meet specific criteria Requirements of an S Corporation - answer- Domestic corporation with one class of stock - No more than 100 shareholders who are citizens or legal residents of the U.S - All shareholders must consent to S corporation status - Use of permitted tax