This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 5 ENTREPRENEURSHIP: STARTING AND MANAGING YOUR OWN BUSINESS
TRUE-FALSE QUESTIONS
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
1. An entrepreneur is a person who opens and manages his or her own business.
a. True
b. False
Title: ANSWER: F REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1 RATIONALE: By definition,
entrepreneurs are risk takers.
2. Entrepreneurs, as a general group, dislike risk taking.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
3. Entrepreneurs are people with vision, drive, and creativity, who are willing to take the risk of starting
and managing a business to make a profit.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
4. Entrepreneurs typically are innovators who start companies to pursue their ideas for a new product or
service.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
5. Micropreneurs are entrepreneurs who start small and plan to stay small.
a. True
b. False
Title: ANSWER: F REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1 RATIONALE: Multipreneurs
are entrepreneurs who start a series of companies.
6. Multipreneurs are businesspeople who have tried a succession of entrepreneurial start-ups without
finding an area in which they could be successful.
a. True
b. False
Title: ANSWER: F REFERENCE: Characteristics of Successful Entrepreneurs LEARNING OUTCOME: 2
RATIONALE: Entrepreneurs need the managerial ability required to organize a company.
7. A positive aspect of opening a small business is that it takes very little management skill because it is
small.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business: Driving America's Growth LEARNING OUTCOME: 3
RATIONALE: Established small businesses are defined as companies that have been in business at least five
,years and employ at least one, but less than 50, employees.
8. Established small businesses are defined as companies that have been in business at least fifteen years
and employ between 50 to 500 employees.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business: Driving America's Growth LEARNING OUTCOME: 3
9. More than half of small businesses have between one and four employees.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE:
The first step in starting your own business is a self-assessment.
10. The first step in starting your own business is the creation of a unique marketable idea.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE: All
types of businesses need a business plan.
11. Unlike large corporations, sole proprietorships do not need a business plan.
a. True
b. False
Title: ANSWER: T REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4
12. The most common use of a business plan is to persuade lenders and investors to finance the venture.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE:
Those are the two sources of equity financing.
13. The two sources for debt financing are angel investors and venture capitalists.
a. True
b. False
Title: ANSWER: T REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4
14. Inadequate early planning is often at the core of small business failures.
a. True
b. False
Title: ANSWER: F REFERENCE: Managing a Small Business LEARNING OUTCOME: 5 RATIONALE: One way to
ease the burden of managing a business is to hire outside consultant.
15. It is not advisable for small businesses to use the services of CPAs and lawyers because most businesses
are too small to afford the expense.
a. True
b. False
Title: ANSWER: T REFERENCE: Managing a Small Business LEARNING OUTCOME: 5
16. Many small businesses that sell their products internationally use the services of export management
This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
October 22, 2018 2
, companies (EMCs).
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
17. An advantage of a small manufacturer over a large manufacturer is the speed with which new products
can be introduced to the marketplace.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6 RATIONALE: Small
businesses tend to have greater flexibility than large businesses.
18. Due to their size large businesses tend to have greater flexibility than small businesses.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
19. One of the reasons small businesses continue to thrive in the United States is outsourcing.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
20. One of the biggest advantages that a small business has over a large business is a greater ability to
serve specialized markets.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6 RATIONALE: Complying
with federal regulation is one of the disadvantages to being a small business owner.
21. In the past few years, the federal government has cut back burdensome government regulations and
paperwork to the point that they are almost non-existent for small business owners.
a. True
b. False
Title: ANSWER: T REFERENCE: The Small Business Administration LEARNING OUTCOME: 7
22. The Small Business Administration (SBA) assists small businesses by providing advice in management
and financial matters.
a. True
b. False
Title: ANSWER: F REFERENCE: The Small Business Administration LEARNING OUTCOME: 7
23. Direct Small Business Administration (SBA) loans are made from funds set aside each year by Congress.
a. True
b. False
Title: ANSWER: F REFERENCE: Trends in Entrepreneurship and Small-Business Ownership LEARNING
OUTCOME: 8 RATIONALE: Changes in demographics, technology, and society all have led to increases in
entrepreneurship.
24. Entrepreneurial activities are not influenced by changes in the external environment.
October 22, 2018 3
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 5 ENTREPRENEURSHIP: STARTING AND MANAGING YOUR OWN BUSINESS
TRUE-FALSE QUESTIONS
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
1. An entrepreneur is a person who opens and manages his or her own business.
a. True
b. False
Title: ANSWER: F REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1 RATIONALE: By definition,
entrepreneurs are risk takers.
2. Entrepreneurs, as a general group, dislike risk taking.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
3. Entrepreneurs are people with vision, drive, and creativity, who are willing to take the risk of starting
and managing a business to make a profit.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
4. Entrepreneurs typically are innovators who start companies to pursue their ideas for a new product or
service.
a. True
b. False
Title: ANSWER: T REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1
5. Micropreneurs are entrepreneurs who start small and plan to stay small.
a. True
b. False
Title: ANSWER: F REFERENCE: Entrepreneurship Today LEARNING OUTCOME: 1 RATIONALE: Multipreneurs
are entrepreneurs who start a series of companies.
6. Multipreneurs are businesspeople who have tried a succession of entrepreneurial start-ups without
finding an area in which they could be successful.
a. True
b. False
Title: ANSWER: F REFERENCE: Characteristics of Successful Entrepreneurs LEARNING OUTCOME: 2
RATIONALE: Entrepreneurs need the managerial ability required to organize a company.
7. A positive aspect of opening a small business is that it takes very little management skill because it is
small.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business: Driving America's Growth LEARNING OUTCOME: 3
RATIONALE: Established small businesses are defined as companies that have been in business at least five
,years and employ at least one, but less than 50, employees.
8. Established small businesses are defined as companies that have been in business at least fifteen years
and employ between 50 to 500 employees.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business: Driving America's Growth LEARNING OUTCOME: 3
9. More than half of small businesses have between one and four employees.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE:
The first step in starting your own business is a self-assessment.
10. The first step in starting your own business is the creation of a unique marketable idea.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE: All
types of businesses need a business plan.
11. Unlike large corporations, sole proprietorships do not need a business plan.
a. True
b. False
Title: ANSWER: T REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4
12. The most common use of a business plan is to persuade lenders and investors to finance the venture.
a. True
b. False
Title: ANSWER: F REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4 RATIONALE:
Those are the two sources of equity financing.
13. The two sources for debt financing are angel investors and venture capitalists.
a. True
b. False
Title: ANSWER: T REFERENCE: Ready, Set, Start Your Own Business LEARNING OUTCOME: 4
14. Inadequate early planning is often at the core of small business failures.
a. True
b. False
Title: ANSWER: F REFERENCE: Managing a Small Business LEARNING OUTCOME: 5 RATIONALE: One way to
ease the burden of managing a business is to hire outside consultant.
15. It is not advisable for small businesses to use the services of CPAs and lawyers because most businesses
are too small to afford the expense.
a. True
b. False
Title: ANSWER: T REFERENCE: Managing a Small Business LEARNING OUTCOME: 5
16. Many small businesses that sell their products internationally use the services of export management
This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
October 22, 2018 2
, companies (EMCs).
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
17. An advantage of a small manufacturer over a large manufacturer is the speed with which new products
can be introduced to the marketplace.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6 RATIONALE: Small
businesses tend to have greater flexibility than large businesses.
18. Due to their size large businesses tend to have greater flexibility than small businesses.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
19. One of the reasons small businesses continue to thrive in the United States is outsourcing.
a. True
b. False
Title: ANSWER: T REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6
20. One of the biggest advantages that a small business has over a large business is a greater ability to
serve specialized markets.
a. True
b. False
Title: ANSWER: F REFERENCE: Small Business, Large Impact LEARNING OUTCOME: 6 RATIONALE: Complying
with federal regulation is one of the disadvantages to being a small business owner.
21. In the past few years, the federal government has cut back burdensome government regulations and
paperwork to the point that they are almost non-existent for small business owners.
a. True
b. False
Title: ANSWER: T REFERENCE: The Small Business Administration LEARNING OUTCOME: 7
22. The Small Business Administration (SBA) assists small businesses by providing advice in management
and financial matters.
a. True
b. False
Title: ANSWER: F REFERENCE: The Small Business Administration LEARNING OUTCOME: 7
23. Direct Small Business Administration (SBA) loans are made from funds set aside each year by Congress.
a. True
b. False
Title: ANSWER: F REFERENCE: Trends in Entrepreneurship and Small-Business Ownership LEARNING
OUTCOME: 8 RATIONALE: Changes in demographics, technology, and society all have led to increases in
entrepreneurship.
24. Entrepreneurial activities are not influenced by changes in the external environment.
October 22, 2018 3
