Business Essentials 9th Edition By Ebert - Test Bank

Business Essentials 9th Edition By Ebert – Test bank Business Essentials, 9e (Ebert/Griffin) Chapter 3 Entrepreneurship, New Ventures, and Business 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