Ch 12

Question 1

The process of starting a new business

Answer 1

entrepreneurship

Question 2

A conventional or basic form of corporate organization

Answer 2

C corporation

Question 3

A hybrid entity that is organized like a corporation, with stockholders, directors, and officers, but taxed like a partnership, with income and losses flowing through to the stockholders and taxed as their personal income

Answer 3

S corporation

Question 4

A hybrid organization that offers the same liability protection as a corporation but may be taxed as a partnership, corporation, or as part of its owner’s tax return

Answer 4

LLC

Question 5

A legally recognized for-profit corporate entity specifically created to offer a benefit to the public

Answer 5

Benefit corporation

Question 6

The process of combining two companies, resulting in only one entity remaining

Answer 6

merger

Question 7

The process of buying another company, thus resulting in the sold company becoming owned by the buyer (parent company)

Answer 7

aquisition

Question 8

A problem-solving method that encourages people to engage in a step-by-step process to develop and refine ideas before taking them to market

Answer 8

Design thinking.
Empathize
Define
Ideate
Prototype
Test

Question 9

A business with under 500 employees that is independently managed, owned by an individual or a small group of investors, based locally, and not a dominant company in its industry

Answer 9

Small business

Question 10

Employees who apply their creativity, vision, and risk-taking within a large corporation, rather than starting a company of their own

Answer 10

Intrapraneuer

Question 11

A formal written statement that describes in detail the idea for a new business and how it will be carried out in nine parts; includes a general description of the company, the qualifications of the owner(s), a description of the product or service, an analysis of the market, and a financial plan

Answer 11

Business plan

Question 12

This element of a business plan provides an overview of the total document. This is written after the other sections are completed, as it highlights significant points and (ideally) creates enough excitement to motivate the reader to keep reading

Answer 12

Executive summary

Question 13

This element of a business plan states an organization’s purpose, reason for existing, and describes its basic philosophy

Answer 13

Vision and mission statement

Question 14

This element of a business plan explains the type of company that is envisioned, provides background information on the company if it already exists, and includes the proposed form of organization

Answer 14

Company overview

Question 15

This element of a business plan describes the product and/or service and points out any unique features, as well as explains why people will buy the product or service

Answer 15

Product and/or service plan

Question 16

This element of a business plan shows who the firm’s customers will be and what type of competition it will face; outlines the marketing strategy and specifies the firm’s competitive edge; and describes the strengths, weaknesses, opportunities, and threats of the business.

Answer 16

Marketing plan

Question 17

This element of a business plan identifies key players—active investors, management team, board members, and advisors—citing their experience and competence

Answer 17

Management plan

Question 18

This element of a business plan explains the type of manufacturing or operating system to be used and describes facilities, labor, raw materials, and processing requirements

Answer 18

Operating plan

Question 19

This element of a business plan specifics the financial needs and contemplated sources of financing, as well as presents projections of revenues, costs, and profits

Answer 19

financial plan

Question 20

This element of a business plan provides any materials that supplement the full plan

Answer 20

Appendix of supporting documents

Question 21

A business that is established, owned, operated, and often financed by one person

Answer 21

Sole prop

Question 22

An association of two or more individuals who agree to operate a business together for profit

Answer 22

Partnership

Question 23

A partnership in which all partners share in the management and profits; each partner can act on behalf of the firm and has unlimited liability for all its business obligation

Answer 23

General partnership

Question 24

A partnership with one or more general partners, who have unlimited liability, and one or more limited partners, whose liability is limited to the amount of their investment in the company

Answer 24

Limited partnership

Question 25

A partner within a business who has unlimited liability

Answer 25

General partner

Question 26

A business partner whose liability is limited to the amount of their investment

Answer 26

Limited partner

Question 27

Similar to a general partnership except that partners are not held responsible for the business’s debt and liabilities

Answer 27

Limited liability partnership

Question 28

Basically, a limited partnership that extends limited liability to all partners, hence protecting the general partner from the partnership’s debt and liabilities

Answer 28

Limited liability limited partnership

Question 29

A legal entity with an existence and life separate from its owners, who are not personally liable for the entity’s debts. A corporation is chartered by the state in which it is formed and can own property, enter into contracts, sue and be sued, and engage in business operations under the terms of its charter

Answer 29

Corporation