Ent 396 Exam 2 Ole Miss

The registration of a trademark has a lifetime of

10 years plus 10 years renewable period

Works created after January 1, 1978, have a copyright for the life of the author plus

70 years

The most common source of debt financing is

Commercial banks

Which of the following is a type of equity financing

Common Stock

The owner of a copyright may do all of the following except

Deduct the intrinsic value of the rights from one's taxes

Which of the following statements is not part of the "five-minute reading" by venture capitalists?

Determine the strengths and weaknesses of the entrepreneur.

Because of the _____ doctrine, it is sometimes difficult to establish infringement.

Fair Use

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

False

Because the advantages of going public outweigh the disadvantages, it is in a corporations best interest to go public.

False

It often is possible to obtain more capital and a better range of skills in a sole proprietorship than in a partnership.

False

Laws governing intellectual property rights include copyrights, trademarks, and leases.

False

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.

False

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.

False

Venture capitalists, surprisingly, require little information before they make an investment.

False

Which of the following are not trademarks?

Generic words

Which of the following describes advantages of the business plan for financial sources?

The plan identifies critical risks.

Which of the following statements is not true of venture capitalists?

They are interested in trying to manage firms themselves.

A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service).

True

A budget is one of the most powerful tools that an entrepreneur can use in planning business operations.

True

A copyright provides exclusive rights to creative individuals for the protection of their artistic productions.

True

An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.

True

Break-even analysis is used to tell how many units must be sold in order to break even at a particular selling price.

True

Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility.

True

Informal risk capitalists are often referred to as "business angels"

True

Informal risk capitalists are those who have already made their money and now seek to help new ventures.

True

One of the principal advantages of a corporate form of ownership is that liability (the most money a person can lose) is limited to an individual's investment.

True

Private placement is a method of raising capital through the private placement of securities.

True

Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early and lates stage ventures.

True

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.

True

The business plan is the entrepreneur's road map for a successful enterprise.

True

The cash-flow budget provides an overview of cash inflows and outflows for the budget period.

True

The principal objective of capital budgeting is to maximize the value of the firm.

True

The two parts of a patent application are specification and claims.

True

Three primary legal forms of organization are the sole proprietorship, the partnership, and the corporation.

True

Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of money.

True

Works created and copyrighted after January 1, 1978, are protected for the life of the author plus 70 years.

True

Which is one of the most important questions for entrepreneurs to ask regarding venture capitalist?

What is it like to work with their firm?

An informal risk capitalist is referred to as:

a business angel

The concept of the net present value method works on the premise that

a dollar today is worth more than a dollar in the future

The completed business plan provides the entrepreneur with

a tool for communicating with financial sources.

A business plan is

a written document that details the proposed venture.

The cash flow budget describes

cash inflows/cash outflows.

A variable cost

changes in the same direction and in direct proportion to changes in operation activity.

Break-even analysis is a technique commonly used to assess the

expected product profitability

A key concept in developing an expense budget is that of

fixed costs

When a trademark becomes the name of a general group of products or services, the trademark protection may be lost because of

generic meaning

Capital budgeting is designed to show

how many products in total should be selected

An indicator of the planning pitfall of "failure to anticipate roadblocks" is

making no admission of possible flaws in the plan.

Competitive analysis, advertising plan, and pricing policy are all part of the

marketing segment.

The principle objective of capital budgeting is to

maximize the value of the firm

All of the following are recognized as advantages of partnerships except:

possible tax advantages

Contribution margin is the difference between

selling price and variable cost per unit

There are two parts to a patent application, claims and

specification

The financial segment includes

the pro forma balance sheet

An important guideline in putting the plan together is

to identify the target market.

A trademark is a distinctive name, mark, or symbol that is identified with a company's product.

true

When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to

zero

Which of the following questions should an entrepreneur ask when a business plan is turned down?

"If you were in my position, how would you proceed?"

A business plan must illustrate the current status of the venture but not the projected results.

False

Chapter 7, Chapter 9, and Chapter 11 are the most common forms of bankruptcy.

False

Contribution margin is the difference between the selling price and the fixed cost per unit.

False

Equity financing is money invested in the venture with legal obligations to repay the principle amount of interest or the interest rate on it.

False

Pro forma statements show the firm's present financial position.

False

Regulation D augments the regulation for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, and local professionals.

False

The first step in the preparation of the cash flow budget is the identification and timing of cash outflows.

False

The pro forma balance sheet is used in the critical risk segment of the business plan.

False

The registration of a trademark lasts for 40 years, with continuous renewal every 10 years.

False

The set of assumptions on which financial projections are based have little meaning.

False

The traditional accounting equation is: assets + liabilities = owner's equity.

False

There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.

False

Financial information pulls together all the information presented in the other segments of the business.

True

A fixed cost

does not change in response to changes in activity for a given period of time.

Major trends in the venture capital field today include all of the following except

less specialized and more homogenous funds

Specific forms of partnership include which of the following?

limited partnerships and limited liability partnerships

A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an

operating budget

Which of the following is a critical factor to be considered in the management segment?

organizational structure

The comprehensive business plan should be the result of

reflections on the direction of the venture.

A disadvantage of debt financing is

regular interest payments

Which of the following statements may be the most important in new venture creation?

the cash flow statement

Which of the following falls under Chapter 7 bankruptcy?

the debtor is released of obligations

Financial information is important to entrepreneurs because it pulls together all the information presented in other segments of the business and:

it quantifies all the assumptions concerning business operations.

That part of a patent application which identifies the features that are protected is known as the

Claim

Which of the following is a form of the pro forma statement?

Balance Sheet

Which is an important question for entrepreneur to ask when evaluating the venture capitalist?

Is the person someone with whom the entrepreneur can work?

What is the significance of a harvest strategy segment in a business plan?

It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.

One of the advantages of public offering is

Liquidity

The main objective of Regulation D is

Make it easier and less expensive for small ventures to sell stocks

Which of the following statements would not be an appropriate guideline for successful business plan development?

Orient the plan to the present.

To effectively pursue a patent violation, experts recommend that the entrepreneur

Prepare a realistic budge for infringement

Which of the following is not a type of debt financing?

Private Placement

Which one of the following is not a benefit of a business plan to the entrepreneur?

Provides a comprehensive product-launch timetable.

Comparing financial numbers in order to make decisions is referred to as:

Ratio analysis

Advantages of debt financing include all of the following except

Regular interest payments

From where does an S corporation take its name?

Subchapter S of the Internal Revenue Code

Which of the following does not represent a category of angel investors?

amateur angels

The entrepreneur should ask the venture capitalist _______________ questions.

an unlimited number of

The traditional accounting equation that verifies the accuracy of the entrepreneur's balance sheet is

assets = liabilities + owner's equity

When considering bankruptcy, entrepreneurs as sole proprietors normally prefer

Chapter 13

All of the following are ways of invalidating a trademark except

clearing out proceeds

Which of the following terms is not synonymous with social lending?

commercially viable lending