Small Business Management: Launching and Growing Entrepreneurial Ventures

5. An entrepreneur can best build social capital by
a. joining several social networking sites.
b. building contacts through community organizations.
c. letting others know when the company has done something well.
d. using reciprocation.
ANS: D PTS: 1 REF: p. 234 OBJ: 8-1 TYPE: C
NAT: Analytic | Dynamics
6. Reciprocation is
PTS: 1 REF: p. 234 OBJ: 8-1 TYPE: D
NAT: Analytic | Dynamics
7. Millie has a sole proprietorship which is her sole source of income What legal action should she do to
prevent the business from being ruined if she became incapacitated?
PTS: 1 REF: p. 236 OBJ: 8-2 TYPE: A
NAT: Analytic | Ethical and Legal
8. Unlimited liability for business debts is imposed on

PTS: 1 REF: p. 235 OBJ: 8-2 TYPE: C
NAT: Analytic | Ethical and Legal
9. Max chose to operate his production studio as a sole proprietorship even though his attorney cautioned
that he was
a. reducing its overall profit potential.
b. increasing his taxable income.
c. exposing himself to unlimited personal liability.
d. violating an existing partnership agreement.
ANS: C PTS: 1 REF: p. 235 OBJ: 8-2 TYPE: A
NAT: Analytic | Ethical and Legal
10. Which legal form allows owners to contribute no capital but still play a part in managing the business
and share in its profits?
PTS: 1 REF: p. 236 OBJ: 8-2 TYPE: D
NAT: Analytic | Ethical and Legal
11. Which group best defines a partnership?
PTS: 1 REF: p. 236 OBJ: 8-2 TYPE: A
NAT: Analytic | Ethical and Legal