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Indicate whether the statement is true or false.
1. Financial bootstrapping maximizes the need for financial capital.
a. True
b. False
2. Service marks refer to services such as those provided by a sorority or a labor union.
a. True
b. False
3. Collective marks cover memberships in groups (e.g., a sorority or a labor union).
a. True
b. False
4. There are four types of marks that can be used to try to protect intellectual property.
a. True
b. False
5. Trade secrets are intellectual property rights in the form of inventions and information not generally known to others
that convey economic advantages to the holders.
a. True
b. False
6. An idea is enough to be patented.
a. True
b. False
7. Beginning in 2018, the income tax laws provided for a flat personal income tax rate.
a. True
b. False
8. A trademark must be novel in order to receive protection.
a. True
b. False
9. A limited liability company (LLC) is owned by shareholders with limited liability, and its earnings are taxed at the
corporate rate.
a. True
b. False
10. A basic C corporation is also known as an S corporation.
a. True
b. False
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11. The income received by a proprietorship is taxed at personal tax rates.
a. True
b. False
12. Nondisclosure agreements prohibit the creator of an idea or other form of intellectual property from sharing it with
others once it has been presented the first time.
a. True
b. False
13. Patents are intellectual property rights granted for inventions that are useful, novel, and obvious.
a. True
b. False
14. Based on the 2018 tax laws, the tax rate for corporations is less than the highest marginal tax rate for individuals.
a. True
b. False
15. A color mark is considered to be one of four types of marks used to try to protect intellectual property.
a. True
b. False
16. The marginal tax rate for the first dollar of personal taxable income is higher for “single filers” relative to “married,
filing jointly.”
a. True
b. False
17. In a corporate legal entity, the personal assets of the owners are separate from the assets of the business.
a. True
b. False
18. Design patents cover most inventions pertaining to new products, services, and processes.
a. True
b. False
19. The equity capital sources for a proprietorship are partners, families, and friends.
a. True
b. False
20. Business angels are wealthy individuals who invest in early-stage ventures in exchange for the excitement of
launching the business, as well as a share of the firm’s financial gains.
a. True
b. False
21. Limited liability in the corporate business structure means creditors can seize only some of the corporation’s assets.
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a. True
b. False
22. Business method patents protect a specific way of doing business and the underlying computer codes, programs, and
technology.
a. True
b. False
23. The maximum number of owners in a subchapter S corporation is 150.
a. True
b. False
24. A limited partnership limits certain partners’ liabilities to pay the venture’s obligations to the amount each paid for
their partnership interests.
a. True
b. False
25. An income tax law passed in 2017 provided for a 21% flat corporate income tax rate beginning in 2018.
a. True
b. False
26. Confidential disclosure agreements are used to protect intellectual property when disclosure must be made to an
outside individual or organization.
a. True
b. False
27. The type of financing available at a venture’s survival stage in its life cycle is first-round financing.
a. True
b. False
28. The articles of incorporation are the basic legal declarations contained in the corporate charter.
a. True
b. False
29. The difference between a limited partnership and a general partnership is that a limited partnership has partners who
actively manage the day-to-day operations but also has passive investors.
a. True
b. False
30. An S corporation provides unlimited liability for its shareholders.
a. True
b. False
31. Most trademarks take the form of names, words, or graphic designs.
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a. True
b. False
32. Patents, trade secrets, trademarks, and copyrights are intangible assets.
a. True
b. False
33. An employment contract is an agreement between an employer and employee about the terms and conditions of
employment, including the employee’s agreement to keep confidential information secret and to assign ideas and
inventions to the employer.
a. True
b. False
34. Trademarks are intellectual property rights that allow firms to differentiate their products and services through the use
of unique marks.
a. True
b. False
35. Certification marks provide indications of quality.
a. True
b. False
36. Intellectual property refers to a venture’s intangible assets and human capital.
a. True
b. False
37. The highest federal marginal income tax rate for personal taxable income is 40 percent.
a. True
b. False
38. Partnerships are treated with pass-through taxation. This means that profits and losses of the business pass directly
through to investors on the basis specified in the partnership agreement.
a. True
b. False
39. Certification marks are intellectual property rights in the form of inventions and information (e.g., formulas,
processes, customer lists, etc.) not generally known to others.
a. True
b. False
40. There are four kinds of patents.
a. True
b. False
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41. If you are an inventor with a patent, the burden of enforcing the patent is yours.
a. True
b. False
42. A work does not need to be registered to receive copyright protection; the work’s creation is enough to provide
copyright protection.
a. True
b. False
43. Certification marks cover memberships in groups (e.g., a sorority or a labor union).
a. True
b. False
44. The Leahy–Smith America Invents Act of 2011 was passed, in part, to alleviate the backlog of patent-related lawsuits.
a. True
b. False
45. Chapter 3 begins the focus on the startup and survival stages of a venture’s life cycle.
a. True
b. False
46. Professional corporations (PCs) and service corporations (SCs) are corporate structures that states provide for
professionals such as physicians, dentists, lawyers, and accountants.
a. True
b. False
47. Copyrights are intellectual property rights to writings in printed and electronically stored forms.
a. True
b. False
48. A copyright must be registered with the U.S. Copyright Office in order for a work to be protected.
a. True
b. False
49. The 2018 flat corporate tax rate was higher than the lowest personal marginal income tax rate.
a. True
b. False
50. Patent trolls are firms authorized by the U.S. Congress to help reduce the number of patent-related lawsuits.
a. True
b. False
51. A business method patent is one kind of patent.
a. True
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b. False
Indicate the answer choice that best completes the statement or answers the question.
52. Which of the following business organizational forms provides the owners with limited investor liability and passes its
income before taxes through to the owners?
a. partnerships and S corporations
b. S corporations and C corporations
c. C corporations and limited liability companies (LLCs)
d. S corporations and limited liability companies (LLCs)
53. The term that refers only to words, symbols, shapes, and similar items associated with products is:
a. trademarks
b. service marks
c. collective marks
d. certification marks
54. Intellectual property rights to writings in printed and electronically stored forms are protected by:
a. patents
b. copyrights
c. trade secrets
d. trademarks
55. Following is a partial personal taxable income schedule for a single filer:
Over— But Not
Over— Difference Marginal
Tax Rate
$ 0 $ 9,525 $ 9,525 0.10
9,525 38,700 29,175 0.12
38,700 82,500 43,800 0.22
What would be the maximum dollar amount of income taxes in the $38,700–$82,500 bracket paid by a single filer with
taxable income of $82,500?
a. $952.50
b. $3,501.00
c. $4,453.50
d. $9,636.00
56. If you are an inventor with a patent, the:
a. U.S. Patent Office will enforce your rights
b. U.S. government will enforce your rights
c. burden of enforcing your patent is yours
d. Leahy–Smith America Invents Act provides patent protection
57. Which form of business organization is characterized as having unlimited life?
a. proprietorship
b. limited partnership
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c. limited liability company (LLC)
d. subchapter S corporation
58. Which of the following is not a right of general partners?
a. participation in profits
b. no participation in management
c. veto right on new partners
d. access to partnership books
59. Wealthy individuals who invest in early-stage ventures in exchange for the excitement of launching a business and a
share in any financial rewards are known as:
a. creditors
b. white knights
c. business angels
d. stakeholders
60. Which of the following are intellectual property rights that allow firms to differentiate their products and services
through the use of unique marks which allow consumers to easily identify the source and quality of the products and
services?
a. patents
b. trademarks
c. copyrights
d. trade secrets
61. Which of the following are intellectual property rights in the form of inventions and information, such as formulas,
processes, and customer lists, that are not generally known to others and that convey economic advantages to the holders?
a. patents
b. trademarks
c. copyrights
d. trade secrets
62. Based on 2018 tax schedules, the first dollar of personal taxable income is taxed at which of the following marginal
tax rates?
a. 5.0%
b. 10.0%
c. 15.0%
d. 20.0%
63. The total dollar amount of federal income taxes paid by a corporation with taxable income of $50,000 under the 2018
tax law would be:
a. $5,000
b. $7,500
c. $10,500
d. $12,500
64. Which of the following are intellectual property rights to writings in printed and electronically stored forms?
Name:
Class:
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chapter 3
a. patents
b. trademarks
c. legal disclaimers
d. copyrights
65. Which of the following forms of protecting intellectual property had its protection limit increased from 17 to 20 years?
a. copyrights
b. trademarks
c. patents
d. trade secrets
66. Based on 2018 tax schedules, the first dollar of corporate income is taxed at which of the following tax rates?
a. 10.0%
b. 15.0%
c. 21.0%
d. 25.0%
67. Which of the following is not a kind of patent?
a. utility
b. design
c. mark
d. business method
68. Which of the following are not sources of seed and startup financing?
a. family and friends
b. the entrepreneur’s physical and financial assets
c. business angels and venture capitalists
d. stock and bond markets
69. Following is a partial personal taxable income schedule for a single filer:
Over— But Not
Over— Difference Marginal
Tax Rate
$ 0 $ 9,525 $ 9,525 0.10
9,525 38,700 29,175 0.12
38,700 82,500 43,800 0.22
What would be the cumulative dollar amount of income taxes paid by a single filer who has taxable income of $38,700?
a. $922.50
b. $1,143.00
c. $3,501.00
d. $4,453.00
70. The total dollar amount of federal income taxes paid by a corporation with taxable income of $75,000 under the 2018
tax law would be:
a. $7,500
b. $10,500
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c. $15,750
d. $18,750
71. Patents are intellectual property rights granted for inventions that are:
a. not useful, novel, and nonobvious
b. not useful, not novel, and obvious
c. useful, novel, and nonobvious
d. useful, not novel, and obvious
72. Following is a partial personal taxable income schedule for a single filer:
Over— But Not
Over— Difference Marginal
Tax Rate
$ 0 $ 9,525 $ 9,525 0.10
9,525 38,700 29,175 0.12
38,700 82,500 43,800 0.22
What would be the dollar amount of income taxes paid by a single filer who has taxable income of $9,525?
a. $952.50
b. $1,143.00
c. $3,501.00
d. $4,453.00
73. Intellectual property can be protected by all of the following except:
a. patents
b. trademarks
c. legal disclaimers
d. copyrights
74. Which form of business organization is characterized by having the shortest startup time and lowest legal costs?
a. proprietorship
b. limited partnership
c. corporation
d. limited liability company (LLC)
75. Which of the following is not a type of mark?
a. trademark
b. service mark
c. collective mark
d. design mark
76. In which form of business organization is the taxation effects characterized by the income flowing to shareholders
taxed at personal tax rates?
a. proprietorship
b. limited partnership
c. corporation
d. subchapter S corporation
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Class:
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chapter 3
77. Based on 2018 tax schedules, the highest tax rate on corporate taxable income is:
a. 15.0%
b. 21.0%
c. 35.0%
d. 38.0%
78. Which of the following is not a likely source of first-round financing during the survival stage of a venture’s life
cycle?
a. venture capitalists
b. commercial banks
c. family and friends
d. suppliers and customers
79. In which form of business organization are the owners not offered the protection of limited liability?
a. proprietorship
b. limited partnership
c. corporation
d. subchapter S corporation
80. Business angels typically invest in:
a. early-stage ventures
b. rapid-growth stage ventures
c. maturity-stage ventures
d. going-public ventures
81. Certification marks are typically used to:
a. indicate membership in a trade group
b. indicate a certain brand of service
c. indicate quality
d. associate products to a specific brand
82. Following is a partial personal taxable income schedule for a single filer:
Over— But Not
Over— Difference Marginal
Tax Rate
$ 0 $ 9,525 $ 9,525 0.10
9,525 38,700 29,175 0.12
38,700 82,500 43,800 0.22
The average tax rate for a single filer with taxable income of $38,700 would be:
a. 10.0%
b. 11.5%
c. 12.0%
d. 17.1%
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Class:
Date:
chapter 3
83. Which of the following forms of protecting intellectual property currently has a protection limit of 20 years?
a. copyrights
b. patents
c. trade secrets
d. trademarks
84. Which form of business organization typically offers the easiest transfer of ownership?
a. proprietorship
b. general partnership
c. corporation
d. subchapter S corporation
85. Following is a partial personal taxable income schedule for a single filer:
Over— But Not
Over— Difference Marginal
Tax Rate
$ 0 $ 9,525 $ 9,525 0.10
9,525 38,700 29,175 0.12
38,700 82,500 43,800 0.22
The average tax rate for a single filer with taxable income of $82,500 would be:
a. 12.0%
b. 17.1%
c. 18.6%
d. 22.0%
86. The rules and procedures established to govern the corporation are called the:
a. corporate charter
b. articles of incorporation
c. corporate bylaws
d. confidentiality disclosure agreements
87. The Leahy–Smith America Invents Act of 2011 was the first major change since 1952 involving how:
a. patent trolls can operate
b. the U.S. patent system operates
c. patents differ from trademarks
d. trade secrets can be converted to patents
88. Which of the following are intellectual property rights granted for inventions that are useful, novel, and nonobvious?
a. patents
b. trademarks
c. copyrights
d. trade secrets
89. During the development stage, seed financing chiefly comprises:
a. funds from business angels and venture capitalists
b. the entrepreneur’s personal assets and funds from family and friends
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c. venture capitalists and the entrepreneur’s personal assets
d. business angels and funds from family and friends
90. Which of the following numbers of shareholders is allowed in a subchapter S (or S) corporation business form?
a. 100
b. 125
c. 130
d. 500
91. Based on 2018 tax schedules, the highest marginal tax rate on personal taxable income is:
a. 25.0%
b. 28.0%
c. 33.0%
d. 37.0%
92. In a general partnership, legal action that treats all partners equally as a group is called:
a. general liability
b. joint liability
c. limited liability
d. accrued liability
93. Patents that cover most inventions pertaining to new products, services, and processes are referred to as:
a. design patents
b. plant patents
c. utility patents
d. mechanical patents
94. During which of the following venture life cycle stages is the entrepreneur concerned with choosing the initial
organizational form?
a. development stage
b. startup stage
c. survival stage
d. rapid-growth stage
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Answer Key
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Name:
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