Chapter 4

Question 1

What does every business have to do?

Answer 1

• get a business license with local government

- register business with secretary of state

Question 2

LLC

Answer 2

limited liability company!

Question 3

Corporations are the only business structure that is double taxed.

Answer 3

!

Question 4

What documents does a corporation need?

Answer 4

• artciles of incorporation

- bylaws

Question 5

What is a general partner?

Answer 5

UNlimited liability

Question 6

What is a limited partner?

Answer 6

limited liability, can lose this if they open their mouth

Question 7

Stock issued in a corp?

Answer 7

common stock stock owned
by individuals or firms who may
vote on corporate matters but
whose claims on profits and assets
are subordinate to the claims of
others

Preferred Stock:
preferred stock stock owned by
individuals or firms who usually do
not have voting rights but whose
claims on dividends are paid
before those of common-stock
owners

Question 8

Advantages and disadvantages of a corporation:

Answer 8

• limited liability
  each owners financial liability is limited to the amount they have invested.
• greater funds

disadvantges:

• double tax (profit and personal income)
• lack of secrecy

Question 9

S corp

Answer 9

S-corporation is a corporation that
is taxed as though it were a partnership. In other words, the corporation’s income is
taxed only as the personal income of its stockholders.

Question 10

LLC

Answer 10

limited liability COMPANY!!

taxed like a partnership

Question 11

Advantages of a small business

Answer 11

personal service

lots of resources:

• Small business administration
• SCORE
• SB investment companies

disadvantages:

• less profit
• harder to attract employees

Question 12

Why do strategic plans fail:

Answer 12

Lack of follow through and commitment from

top management”.

Question 13

WHat do you need when performing a SWOT

Answer 13

genuine encouragement from highest ranking officer.

Question 14

Interim financial statement

Answer 14

Balance sheet and income statement over specific period of time.

Question 15

Management functions:

Answer 15

Planning 
Organiazing
Leading
Ccontrolling
Doing

Question 16

Key skills of a manager

Answer 16

Conceptual Skills
Analytical Skills
Interpersonal Skills
Technical Skills
Communication Skills

Question 17

Key parts of delegation:

Answer 17

• assign responsibility

- grant authority!!!!!

Question 18

Example of a mixed type of authority

Answer 18

Up to $50k loan officer
$50 to $250k loan committee (made up of the loan officer and a senior loan officer)
$250k to $500k senior loan committee (CFO, CEO, chief lending officer)
Over $500k board of directors.

Question 19

span of management

Answer 19

the number of workers who report directly to one manager.

Narrow:
one manager, few employees

Wide:
One manager, many employees