EPS Chapter 8 Study Guide

They key to strong management in a new firm is

• a balance, with each member having competence in at least one area.

• financial competence of the chief executive.

• a strong marketing manager who understands financial statements.

• close friendship among all members of the team

Vicenzo is the sole owner and manager of a startup company. As the business grows, he finds it more difficult to fulfill the needs of all the management positions. Although he is the creative genius behind the company, he lacks experience in other areas. At this point, Vincenzo should

• seek advice of an investment banker.

• hire a management team with his expertise in complementary areas.

• encourage his advisors to take an active role in managing the company.

• form an alliance with another startup company.

The number of small business owners who are choosing to go it alone is increasing significantly because this option has been made increasingly manageable by

• new tax incentives

• emerging technologies

• expanding social networks

• balanced management teams

Reciprocation is

• responding to competitor's marketing efforts

• a powerful sense of obligation to repay what has been done for you

• not important when building social capital

• only important once you have established your business

Which of the following organizational types results in the business owner having unlimited liability?

• Sole proprietorship

• LLC

• Limited partnership

• Corporation

For a corporate charter to be obtained

• one or more persons must apply to the secretary of state for permission to incorporate

• the owner(s) must agree to be interviewed by a state department official

• the owner(s) must negotiate an incorporation fee

• the partners involved must outline a division of assets

Becky wants to organize her startup as a regular corporation. One of the first steps Becky should take is to

• hire the officers (president, treasurer, etc.) of her company

• file her corporate charter with the secretary of state

• apply for permission to incorporate in her state

• obtain financing for her venture

To maintain status as a corporation, the corporation must

• reapply for a charter annually

• submit its bylaws to the secretary of state of incorporation every year

• hold annual meetings of both the shareholders and board of directors

• properly declare annual dividends

The right to buy new shares of stock in proportion to stock already owned is called a

• stock right

• stock option

• Section 1244 right

• preemptive right

Because the corporation is a legal entity, one of its responsibilities is to

• have its accounting records audited

• sell stock

• pay dividends

• file annual tax returns