Chapter 5 practice test introduce business
Large firms generally buy parts and assemblies from smaller firms because
it is less expensive than making their own.
Which of the following statements is true regarding the profitability of new businesses?
It may take several years for a new business to begin showing a profit.
A franchisor supplies all of the following except
Land to place the business on
What is the primary reason that so many new businesses fail?
Mismanagement resulting from lack of business know-how
Which of the following statements is not true about small businesses?
Small businesses create cyclical unemployment.
Which of the following is the most likely example of a production industry?
Subassembly plant
Daniel's business constructs storage sheds for new housing developments as requested by the builders. Daniel's business would best be classified as a
production business.
The main reason there are fewer production industries than distribution or service industries is that
production industries need a large initial investment.
Ben decides to start his own business designing websites for other businesses. Ben's business would be classified as a
service business.
The average size of an SBA-guaranteed business loan is about
$300,000.
Teenage entrepreneurship is growing especially in the _____ industry.
tech
To qualify as a small business, a retailing establishment may not exceed annual sales of
$7 million.
To qualify as a small business, an agricultural company's maximum annual receipts must be no more than
$750,000.
Approximately how many businesses are there in the United States?
27 million
A company generally needs more than ____ employees in order to be considered large.
500
Which form of franchising is the most common today?
A franchisor supplies brand names, techniques, or other services instead of a complete product.
A main disadvantage of a small business is that employees and customers usually develop too close of a relationship.
False
About three-quarters of all small businesses are in the service industry.
False
Economically, the U.S. government is not concerned with whether or not small businesses make it.
False
Few Americans take advantage of their freedom to start a business.
False
Franchising experienced tremendous growth during the early 1930s.
False
Franchising is a win-win combination; both franchisees and franchisors are guaranteed success.
False
Small businesses are generally managed by professional managers.
False
The various types of businesses attracting small business are generally grouped into service industries, distribution industries, and financial industries.
False
Which of the following is an advantage to the franchisor in a franchise agreement?
Fast and selective distribution of products
Which of the following would most likely be classified as a distribution industry?
Grocery store
Deborah compiles a business plan for a business she hopes to start. This plan should answer all of the following questions except
How often will the business have a sale?
What is a common mistake that small-business owners make when their businesses begin growing?
They overexpand without proper planning.
A new business is built around the entrepreneur.
True
According to a government source, more than half of this century's technological innovations came from small companies.
True
For those who like dealing with people, small business is the place to be.
True
Money invested in small firms with the potential to become very successful is known as venture capital.
True
Small businesses are prone to failure.
True
Small firms have traditionally added more than their proportional share of new jobs to the economy.
True
Some advantages of the sole proprietorship also apply to the small business.
True
The business plan should deceive neither investors nor loan officers and should convey accurate and realistic expectations of business potential.
True
The purchaser of a franchise is called the franchisee.
True
All of the following are franchise establishments except
Walmart.
Which of the following organizations would be considered a small business?
Wholesaler with 50 employees
Imagine that you want to open your own small business. You will probably be most concerned with having
a good source of capital and good management skills.
The SBA makes a special effort to
assist minorities wanting to start small businesses or expand existing ones.
Joel decides to purchase and operate a Subway restaurant. Joel is the
franchisee.
All of the following are advantages that small businesses have except
greater potential for making a profit.
All of the following are reasons people go into business except the
guaranteed return on investment
Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for entrepreneurs because they
have a relatively low initial investment.
Approximately what percentage of the jobs in the United States do small businesses provide?
over 50 percent
Most Small Business Administration loans are actually made by
private lenders.
Price Waterhouse, a large accounting firm, would be most properly classified in the ____ industry, whereas a grocery store such as Kroger would be included in the ____ industry.
service; distribution
An individual's desire to create a new business is referred to as
the entrepreneurial spirit.
Some of the entrepreneurs' personal factors in small-business success include
independence and a desire to determine one's own destiny.