MGT302 - Exam 2 (Ch.6-9)

The focus of an income statement is on: A. Profits B. Assets C. Cash D. Liabilities

A

When a company starts making money, this is called: A. Break-Even Point B. Assets minus Liabilities C. Positive Cash Flow D. Cash Flow Statement

A

Which of the following is the best definition of supplier credit? A. Suppliers often will provide credit to a small business owner to make it easier for him or her to purchase physical assets and/or actual supplies. B. It is a credit that does not tie a person or business to any particular asset. C. They are special funds budgeted by a business that are designed to save money to purchase supplies from a vendor. D. None of these.

A

_________ is a fund that is organized as a limited partnership. A. Venture Capital B. Business Angel C. Equity D. Asset Capital

A

A _________ projects all the expenses incurred by a business over a specified period of time. A. cash flow statement B. budget C. financial map D. float

B

Which of the following is NOT a reason for the small business owner to measure the firm's performance? A. Suppliers and vendors change their offerings and/or prices. B. All of these. C. Customers' preferences and needs change. D. An existing business is subject to competitors' moves.

B

An institution in a country is a _________. A. law B. business C. all of these D. culture

C

Which of the following questions should a new business owner examine when considering leases? A. What exactly is the new business owner leasing? B. Who is responsible for maintenance and improvements? C. All of these D. Is there an ability to renew the lease?

C

A _________ is a contractual agreement where the business receives money and must be repaid over a period of time. A. lease B. credit card C. compact D. loan

D

Financing the start of a new business and establishing the accounting systems are _________ operational concerns in the start-up of a new business. A. none of these B. minor C. secondary D. central

D

Generating a cash flow statement starts with: A. predicting losses B. estimating profits C. predicting debts D. estimating expenses

D

If the current ratio is just over 1.0, it reveals to the company they have just enough money to meet _________ percent of their short-term obligations. A. 75 B. 50 C. 0 D. 100

D

In the case study Friend's Home Health, in order for the owners to pay for all the additional expenses related to this opportunity, the business should have _________. A. financial cushion B. financial buffer C. initial funding D. all of these

D

_________ is(are) a form of non-equity funding. A. Credit Cards B. Supplier Credit C. Debt D. All of These

D

A board of advisors should have both _________ and _________ to assist small business owners. A. insight; experience B. money; legal experience C. insight; legal experience D. money; insight

A

A cash flow statement is the exact opposite of a _________. A. Budget B. Cash Plan C. Cash Flow D. Float

A

A firm's financial liquidity can be measured by its: A. current ratio B. turnover ratio C. sensitivity ratio D. total asset ratio

A

According to the book, the most dangerous situation for a new business is _________. A. rapid growth B. no growth C. sales growth D. uneven growth

A

An excellent source of information on rules and regulations a business must comply with can be found at the _________. A. Small Business Assistance Center B. Chamber of Commerce C. Local Information Center D. Government Relations Center

A

Credit cards have all the following EXCEPT: A. equity investment B. no repayment schedule C. not tied to a particular asset D. high interest rate

A

In a lease a landowner can enter your business for all the following reasons EXCEPT: A. whenever the landowner wants to B. checking to see if anything is illegal C. the landowner wanting to inspect it D. the owner taking care of the rental property

A

The _________ ratio provides information on the portion of a business owned by the lenders and that portion owned by the founders. A. Debt-to-equity B. Times interest owned C. equity-to-profit D. debt-to-assets

A

The advantage of factoring for a small business is: A. receiving money from accounts receivable immediately B. not receiving the full amount of bill due C. operating the company on minimal outlay D. segmenting all the company's accounts receivable

A

The biggest disadvantage to leasing over time is: A. spending more money for equipment maintenance B. factoring C. saving money over time D. good only for certain number of months

A

There are various methods to analyze the business, its activities, and its performance. All of the following methods focus on analyzing financial data of the business EXCEPT: A. short surveys B. deviation analysis C. ratio analysis D. sensitivity analysis

A

To obtain accurate and useful data from surveys, the people who are asked to complete the survey should be selected _________. A. Randomly B. Bias C. Multilevel D. Stratified

A

Venture capitalists are seeking a(n) _________. A. all of these B. IPO C. high growth business that has the opportunity to cash out D. sale to a larger company within a relatively short time

A

What are the advantages of leasing equipment for a new business? A. all of these B. no hassles of an aging asset C. ability of the business to trade up as newer, higher-quality machines become available D. beginning operations with a minimum cash outlay

A

What is the major difference between board of directors and board of advisors? A. Board of directors have fiduciary responsibility, whereas board of advisors advise the firm. B. Boards of directors are individuals from outside the firm, whereas board of advisors are individuals from inside the firm. C. Board of directors always direct large companies, whereas board of advisors are usually found in small firms. D. There is no difference between the two.

A

When a corporation suffers losses, the founders will: A. lose only their investment in the business B. be responsible for all debts of the company C. have unlimited liability D. share equity investments

A

Which of the following statements about deviation analysis is NOT correct? A. Any drops in a factor that is being charted should be cause for alarm. B. Deviation analysis quickly shows the performance on factors deemed important by a business owner. C. A deviation analysis chart should be maintained at least monthly. D. None of these.

A

A _________ analysis is the development of a chart (using a current cash flow statement, income statement, or balance sheet) to create pro forma projections of a dramatic increase in sales or a major complication that might be experienced by a business. A. Deviation B. Sensitivity C. Leverage D. Financial

B

A bank provides John money for the necessary hamburger maker for his business. This is called _________. A. contractual assets B. asset-based lending C. necessary funding D. debt-asset lending

B

All of the following are benefits of a Subchapter C Corporation EXCEPT: A. owners being treated as employees of the company B. fringe benefits being treated as income C. no limit to the number of shareholders D. health benefits paid by the corporation

B

All of the following are benefits of a Subchapter S Corporation EXCEPT: A. easy formation B. limited number of shareholders C. legitimacy in the market D. limited liability

B

Dennis wants to measure the short-term ability of his company to meet its financial obligations. He would use _________. A. Leverage Rations B. Liquidity Ratios C. Activity Ratios D. Profitability Ratios

B

Dennis's stockholders want him to constantly improve his firm's _________ ratio as it improves the future value of their investment in the firm. A. return on total assets B. return on equity C. fixed asset turnover D. profit margin on sales

B

General partnership differs from sole partnership in: A. easy to dissolve B. new equity investment C. liability D. easy to form

B

In the Numi Organic Tea case study, Numi Organic Tea was founded on principles based on: A. Equality B. Fair Trade C. Justice D. None of These

B

James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n) _________. A. payout B. draw C. cash out D. expected outlay

B

New businesses need to be aware of what issue(s) related to start-up? A. flow of information B. all of these C. funding D. accounting system

B

New businesses should try to _________ the amount of both fixed and total assets in order to conserve cash. A. maximize B. minimize C. increase D. decrease

B

The assets minus the liabilities of a firm reflected on the balance sheet should total: A. Current Liabilities B. Zero C. One Half of Profits D. The number of pro forma

B

The major benefit of a sole proprietorship is: A. It is easy to form. B. All of these C. There is no separation between the owner and the business. D. It is easy to dissolve.

B

What are the benefits to a business owner of using deviation analysis? A. helps to develop realistic forecasts B. all of these C. helps to know these differences in a given point of time D. helps to know differences between actual performances and predicted performances

B

When evaluating the financial foundation of a business, the owner should consider: A. comparison of current activities with industry standards B. all of these C. comparison of current activities with the firm's mission statement D. whether the firm is exploiting its key competitive advantages

B

When forming a sole proprietorship or a partnership, the business debts are: A. paid the first day of the month B. responsibility of the owners C. accumulated D. paid by purchase order

B

Which of the following financial statements is NOT a part of the financial reports that established businesses develop over a period of time? A. Cash Flow Statement B. Cash Loss Statement C. Balance Sheet D. Income Statement

B

_________ is a series of ratios along four areas of company performance (liquidity, activity, leverage, and profitability) that provides a picture of the health of the company. A. Profitability analysis B. Ratio analysis C. Deviation analysis D. Sensitivity analysis

B

_________ is calculated on the value of an investment in time and money, if the owner did not do the proposed venture. A. Calculated rate of money B. Time value of money C. Accurate rate of money D. Future value of money

B

A cash flow statement is used to describe _________ percent of the activities that provide and use cash during a specified period of time. A. 50 B. 75 C. 100 D. 25

C

A common form of debt for a small business can be classified as follows: A. supplier credit B. loans C. all of these D. credit cards

C

In a limited partnership, there must be a(n) _________. A. unlimited liability B. limited liability C. general partner D. active investor

C

In a partnership it is expected that the founders will contribute _________ to the founding of the firm. A. property B. cash C. all of these D. services

C

In new business ventures, this is the only type of activity. A. Marketing B. Manufacturing C. Operations D. Floating

C

In the case study, VAVAVROOMONLINE.COM, the firm's evaluation began with their: A. none of these B. current activities C. mission statement D. key competitive advantages

C

Liquidity ratios allow the owner the short-term ability to meet the firm's financial obligations. These obligations are _________ and _________. A. inventory; accounts payable B. debt; accounts receivable C. debt; accounts payable D. inventory; accounts receivable

C

What is the disadvantage of choosing a sole proprietorship? A. It cannot have more than one founder. B. The law does not recognize other equity investors. C. all of these D. Liability is solely on the owner.

C

Which of the following items is an example of things that can be trademarked? A. names of the firm's products B. a symbol representing the firm C. all of these D. name of the firm

C

Which of the following terms is used to describe assets that can be easily converted to cash? A. Current Profits B. Fixed Liabilities C. Current Assets D. Fixed Assets

C

_________ examines how fast a company turns credit sales into cash. A. Total asset turnover B. Inventory control turnover C. Accounts receivable turnover D. Fixed asset turnover

C

_________ examines the ability of a firm to return an overall profit compared to the amount of assets that has been invested into the effort. A. Return on profit B. Return on equity C. Return on assets D.Return on debt

C

_________ include accounts payable, notes payable, or bank notes. A. Current Assets B. Long-Term Liabilities C. Current Liabilities D. Fixed Assets

C

_________ ties the firm to the supplier and usually stops the owner from shopping around for a lower price. A. Supplier grant B. Non-equity credit C. Supplier credit D. Equity funding

C

A cash flow statement determines the most likely case scenario, which is called: A. Deficit Analysis B. Forecast Analysis C. Gap Analysis D. Sensitivity Analysis

D

A pro forma _________ projects the future income of an entrepreneurial firm. A. Current Liabilities B. Cash Flow C. Balance Sheet D. Income Statement

D

All of the following items should be included in a contract EXCEPT: A. the timing of payment B. warranties C. parties that are in the contract D. the expiration date of business license

D

All of the following represents techniques used to perform an analysis of a business, its activities, and its performance EXCEPT: A. Deviation Analysis B. Sensitivity Analysis C. Ratio Analysis D. Management Analysis

D

An inventory account maintains an inventory record that lists all of the following items EXCEPT: A. Description of the item B. Unit Cost C. An Item Number D. Unit Loss

D

John needs to lease a van for his flower company; this is called _________. A. venture capital lease B. factoring C. equity-base D. asset lease

D

The United States Patent and Trademark Office issues which type(s) of patents? A. process patents only B. none of these C. physical invention only D. physical invention and process patents

D

The _________ ratio measures the percentage of the assets of a firm that are owned by the creditors. A. times-interest-earned B. equity-to-profit C. debt-to-equity D. debt-to-asset

D

What is the difference between venture capital companies and business angels? A. Venture capital companies have a philanthropic attitude, whereas business angels have a profit-minded attitude. B. Venture capital companies usually invest in small businesses, whereas business angels usually invest in big businesses. C. Venture capital companies make only small investments, whereas business angels make both small and big investments. D. Venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses.

D

What should a new business owner keep in mind when seeking investments from business angels? A. evaluate their business experience B. the contacts and relationships of these persons C. evaluate the nature of their advice D. all of these

D

Which of the following law's regulation affects companies with more than 15 employees? A. Civil Rights Activities Act B. Family and Medical Leave Act C. Fair Labor Act D. American with Disabilities Act

D

Which of the following statements about having a measurement focus is correct? A. Focus on unorthodox factors. B. Concentrate the analysis efforts on areas that are ordinary. C. Focus on orthodox factors. D. Concentrate the analysis efforts on areas that are extraordinary.

D

_________ accounting is a form of accounting that recognizes expenses as they are paid and recognizes revenue as it is generated. A. Credit-Based B. Accrual-Based C. Balance Sheet D. Cash-Based

D

_________ is an useful metric when there are differences of opinion between managers and owners about the business's performance. A. Accounts Receivable B. Cash Flows C. Contracts D. Profits

D

_________ is the difference between when the money goes out and when it comes in. A. Accounts payable B. Difference Gap C. Spending Gap D. Float

D

_________ percent of actual expenses must be accounted for in a cash flow statement. A. 33 1/3 B. 25 C. 50 D. 100

D