QUESTION 1

1. The personal finances of the nascent entrepreneur and the finances of the start-up venture he creates are inextricably linked. One of the reasons this is true is because most new ventures are founded as:

   	a.	corporations
   	b.	pass-through entities
   	c.	non-profits
   	d.	virtual entities

2. Working capital is:

   	a.	a fund that invests in a basket of assets, such as stocks or bonds, and trades on a regulated exchange like the New York Stock Exchange
   	b.	when a customer uses a credit card to buy something and then cancels the transaction
   	c.	the capital required to sustain operations and support business growth after a companys start-up phase
   	d.	equal to current assets divided by current liabilities

3. A hybrid legal business entity authorized by state law featuring some of the characteristics of both partnerships and corporations is a _______________.

   	a.	limited liability corporation
   	b.	limited liability company
   	c.	hybrid partnership
   	d.	hybrid joint venture

4. Before starting a business, in order to increase his chances for entrepreneurial success, the aspiring entrepreneur should:

   	a.	quit his job
   	b.	isolate himself from distractions like friends and family
   	c.	work in and learn about the industry in which he intends to start the business
   	d.	prepare a will

5. There are two major causes of business failure that, with some effort on the part of the entrepreneur, are, in many cases, avoidable. They are:

   	a.	lack of resources and fierce industry competition
   	b.	ineffective business partners and economic downturns
   	c.	inability to find needed talent and currency fluctuations
   	d.	poor timing and lack of proper preparation

6. Two examples of business models with which many entrepreneurs are currently finding success are:

   	a.	the subscription-based business model and the technological innovation business model
   	b.	the subscription-based business model and the marketplace business model
   	c.	the marketplace business model and the technological innovation business model
   	d.	the technological innovation business model and the diversification business model

7. . _______________ financial statements are financial statements that attempt to estimate the future financial situation of a company based upon certain identified assumptions.

   	a.	traditional
   	b.	historical
   	c.	comparative
   	d.	pro forma

8. One of the top 10 legal and financial mistakes entrepreneurs make is:

   	a.	failing to sue other business owners when they should
   	b.	bringing outside investors into the business
   	c.	taking too long to review a written agreement before signing it
   	d.	failing to keep current with regard to filing tax returns and paying taxes

9. A legal entity authorized by state law to act as an artificial person in order to conduct business or engage in certain other activities is a _______________.

   	a.	limited liability corporation
   	b.	limited liability company
   	c.	partnership
   	d.	corporation

10. Those who reach the market first with a truly innovative new product or service tend to _______________ in the long run compared to later (copycat) entrants to the market.

    	a.	be less profitable and less able to hold onto market share
    	b.	be less profitable but better able to hold onto market share
    	c.	be more profitable and better able to hold onto market share
    	d.	be more profitable but less able to hold onto market share