Entrepreneurship: Ethical and Legal Foundations Quiz

What is the purpose of an ethics training program in a business?

• To reduce operational costs

• To increase sales

• To improve employee productivity

• To teach business ethics and improve ethical conduct

Which of the following is NOT a recommended action when choosing an attorney for a start-up?

• Contact the local bar association for recommendations

• Interview several attorneys

• Choose an attorney based on their fees alone

• Select an attorney who understands your business

What is a founders' agreement primarily concerned with?

• Marketing strategies

• Hiring employees

• Equity distribution and compensation among founders

• Customer service policies

What is one way to avoid legal disputes in a business?

• Ignore contractual obligations

• Rely on verbal agreements

• Get everything in writing

• Trust your partners and avoid written agreements

What type of agreement prevents an employee from disclosing trade secrets?

• Nondisclosure agreement

• Partnership agreement

• Noncompete agreement

• Founders' agreement

Which of the following is a requirement for obtaining a business license?

• Creating a marketing plan

• Hiring a lawyer

• Registering with the state

• Having a physical office

What is a significant drawback of a sole proprietorship?

• No double taxation

• Unlimited liability for the owner

• Easy to set up

• Complete control of the business

In a general partnership, what is a primary disadvantage?

• Easier to raise capital

• Limited liability for partners

• Unlimited liability for each partner

• Shared decision-making can lead to disagreements

What is a key feature of a C corporation?

• Unlimited liability for shareholders

• Separate legal entity from its owners

• No double taxation

• Easier to set up than a sole proprietorship

What is a requirement for a business to qualify as a subchapter S corporation?

• All shareholders must be U.S. citizens

• Must be a subsidiary of another corporation

• Must have more than 100 shareholders

• Must issue multiple classes of stock