Exam 2 Small Business Mgmt.

Juan's Auto Repair is preparing its income statement. The report shows sales revenue of $80,000, cost of goods sold at $30,000, and sales, general, and administrative expenses of $25,000. Since Juan uses the single step format for his income statement, what is Juan's net income?

$25,000

Karla's Koffee shop has $70,000 in assets and $30,000 in liabilities. What is the owners equity?

$40,000

Claude is thinking about starting an online business selling high end men's leather accessories-wallets, boots, hats, and belts. When looking at market size during his secondary research, Claude is first interested in the TAM. Which statistic would help Claude determine the TAM for his business?

49.2 percent of the U.S Population is male.

Which statement about handling an early termination is true?

A cap or limit on how long to continue paying rent aids in easy lease termination.

After being in business for 24 months, Paul's auto spare parts company Chromson Inc. grows to a relatively stable size. Which of the following would be Paul's primary financial management need at this stage? A. Building owner's wealth B. Clearing all debts C. Implementing bootstrapping techniques D. Establishing internal control over assets

A. Building owner's wealth

Which business location option requires you giving them a stake in your company?

Accelerator

Which answer option is a disadvantage of choosing an LLC as a business form?

Adding or reducing members requires consent from all other members

Orion Inc. was started as a small organization with five employees. After the first year's profits were made, the owners decided to invest the profits in expanding the business. This is an example of financing the business using _____. A. benchmarking B. bootstrapping C. piggybacking D. outside equity

B. bootstrapping

For an owner, the main financial management emphasis while transferring a business to family members must be to: A. increase the cash-to-cash cycle to the highest time possible. B. increase asset value. C. optimize capital structure for profits. D. maximize debt.

B. increase asset value

One customer may buy a pair of jeans because of the brand name, while another may buy the jeans for the fit. If you market to both of these customers, you would be marketing to them based on the

Benefit segmentation

Setting the price for an item relatively low and then charging much higher prices for the expendables it uses is called

Captive pricing

When Shay bought his new phone, he also bought a screen cover and a protective case to keep it in. This is an example of

Cross selling

If a contractor subcontracts a portion of the work and the subcontractor fails to produce the work, the contractor is off the hook for any legal responsibilities.

False

It is preferable to hire a moderately qualified person if there is an immediate need for someone.

False

Perks is a great way to provide long-term boosts in motivation.

False

Services have separability of production and consumption.

False

Something that is essential to how you live and does not have many substitutes or alternatives is called an elastic product.

False

The close of a scale is the end of the sale.

False

Values listed in the balance sheet reflect an asset's current value.

False

When a business enters a phase of rapid growth, one of the challenges it faces is that very few sources of money are available to support its growth.

False

______refers to the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business.

Goodwill

Which of the answer options is an example of a typical behaviorally based interview question?

How have you adapted to a difficult situation?

Which of the following statements is true of sales forecasting?

In many cases, the best sales forecast you can come up with is an educated guess.

Which answer option is an example of debt financing?

Incubators

Which scenario would implicate employee empowerment?

Letting employees make on the spot decisions for the companies best interest.

_______ratios measure the relative risk that a business setback could cause bankruptcy.

Leverage

Alana, the owner of a small dress-making establishment called Mantua Fab, decides to hire assistants for design, sewing, and other tailoring jobs. After Mantua Fab finishes basic design, Alana sends certain items of clothing to be embroidered and hemmed by another company in the same city. This strategy is referred to as

Outsourcing

To avoid breaking the _______ with employees, a small business owner should denote strict limits on what is promised to employees and how and when those promises will be delivered.

Psychological contract

Ty ran a shop that sold and traded sports cards and sports memorabilia. He bought space on a billboard overlooking one of the main highways into the city and included the shops phone number (555-CARDS). The shop soon received a flood of phone calls inquiring about his location, stock, and business hours. The number of customers entering the store increased by tenfold and his sales doubled. Every person who called the shop because they saw the billboard are

Sales leads

Which answer option is an example of a variable cost?

Shipping

Which answer option is more indicative of a business's financial strength?

Short term investments

_______is provided by state and local governments, primarily to encourage to improve the blighted areas to provide additional employment.

Tax abatement

Some hotels offer beds made by specific manufacturers, such as Sleep Number beds or Tempur-Pedic beds. The bed manufacturers benefit because it has the potential to move a prospective customer (anyone who recently comparison shopped for a new mattress) to which step of the customer development funnel?

The consideration step

Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case? A. It will convert Bradham Corporation into a separate legal entity. B. It will dissolve the corporation into a sole partnership under Bradham. C. It will change Bradham's liability in the business to one that of a limited partner. D. It will hold that Bradham has no personal liability for Bradham Corporation's debt.

The court will dissolve the corporation into a sole partnership under Bradham.

The weighted average cost refers to

The expected average future cost of funds

Each June, a small chocolate shop in a busy downtown area sold chocolate covered fresh strawberries. They bought the strawberries for .20 cents apiece and sold them in store for 1.50. The shop owner discovered that when he offered the strawberries delivered directly to people working in the office buildings near him, he could charge $12 for a box of four. When he introduced delivery, he sold 800 boxes for gross sales of 9,600 and received customer feedback to please repeat the delivery option next June. Which statement best describes the premium the shop could charge?

The price customers are willing to pay is determined by their perception of value received.

Which statement is true of a probationary period?

The time period allowed for probationary periods are typically dictated by state laws.

A_______is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive.

Trade secret

If the business is a corporation or an LLC, the owner can only low what he or she has invested in the business.

True

If your company is internet based, your serviceable available market could be as large as your total available market.

True

Liquidity is a measure of the ability of a business to meet both short term and longer term obligations.

True

One of the reasons bootstrapping is so common among small business start ups because external equity capital is not available for most start-ups

True

There is a general formula for generating interest in your product or service, and the first step involves putting together a list of potential clients called prospecting

True

Which statement is true of the total product approach?

Using the total product approach can help you get inside your customers heads.

In which situation might the balance sheet under report a firm's financial strength?

When R&D is a major strength of a company

Which financial report provides the value of the things the business owns and who has a claim on that value?

balance sheet

An inconsistency between experience and belief refers to

cognitive dissonance

Arbitration differs from mediation in that arbitration:

has limited appeal possibilities.

The first time Jena visited Blue Corals Inn, a restaurant in her neighborhood, she was delighted with the food and service quality. However, the next time she dined at the same place, the restaurant's food and service seemed to have lost its quality. This scenario best illustrates the _____ characteristic of services.

heterogeneity

________ analysis is based on the concept that a dollar to be received right now has more utility than does a dollar to be received at some time in the future.

net present value

An implication of the bounded rationality models of management is that

the more information available to be included into the decision process, the less efficient that process will be

Which of these is an advantage of sole proprietorship?

unique tax advantages

Which of these arguments would be helpful in deflecting vicarious liability?

Independent contractor argument

When evaluating job prospects, if you look up one job candidate on social media, you must

Look up every candidate

Price competition starts to rise, and manufacturers find ways to cut costs or introduce new features to keep or gain market share in the ——— stage of the product life cycle.

Maturity

Which statement is true regarding a small-claims court?

Most small-claims court are designed so that ordinary citizens can bring their cases in.

Neil places an advertisement for his pastry shop, Neil's Pastries, in the local newspaper. He includes his phone number, website, e-mail address, and postal address in the advertisement so that prospective customers have the option to contact him in the way they feel most comfortable. Neil is a _____.

Multichannel marketer

Bob has been running the Handy Hardware Store for a few years now. As the business grew, he hired several mechanics who are now middle aged and good at their jobs. Bobs son, Billy, is just out of college. Bob would like his son to take over the business, but is concerned that the middle aged workforce might not receive the right guidance for the execution of the business from young Billy. He is also concerned about the displeasure the other employees might have at hiring Billy to run the business. If bob hands over the business to inexperienced Billy in spite of having several well qualified, deserving, and experienced successors among his other staff, his management philosophy would be an example of

Nepotism

Making no distinction between sick, vacation, and personal days and allowing employees a set number of days off each year to be used at their discretion A. prevents employees from abusing sick days. B. causes employees to lie more often when they need to take the day off. C. increases absenteeism in the workplace. D. reduces workplace satisfaction.

Prevents employees from abusing sick days

Joshua suffered a serious knee injury at work after a machine he was using malfunctioned. Joshua plans to sue for compensation from Milch Enterprises, the company that built that machine. Joshua's attorney wants a percentage of the compensation if it is proven that Milch Enterprises' negligence caused the accident. Which of the following types of legal fee would Joshua be paying to his attorney?

contingency fees