Unit 3 final exam (entrepreneurship)

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

a. True

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

a. True

A business plan is the written document that details the proposed venture. a. True b. False

a. true

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

a. true

_____ looks at financial statements and ratios over time. a. Inventory analysis b. Horizontal analysis c. Vertical analysis d. Specific efficiency ratio analysis

b. horizontal analysis

One of the easiest capital budgeting methods to understand is a. the strategic analysis approach. b. the payback method. c. the internal rate of return. d. net present value

b. the payback method

Every business at some point needs the services of an attorney. a. True b. False

a. True

Several aspects distinguish social media marketing from traditional marketing. The textbook discusses all of the following except a. control versus contributions. b. trust building. c. relevancy. d. two-way communication

c. relevancy

In the simple linear regression analysis equation, Y = a + bx, Y represents a. the vertical intercept. b. the slope of the line. c. the dependent variable. d. expected sales

c. the dependent variable

Pricing for the product life cycle correlates with customer demand and sales volume. a. True b. False

a. true

How many months of the year should be illustrated in the first pro forma income statement? a. twelve b. six c. eight d. three

a. twelve

It is typical for a firm to prepare an operating budget but not a cash budget. a. True b. False

b. false

A method that discounts future cash flows at a rate that makes the net present value of the project equal to zero is known as a. internal rate of return. b. break-even point. c. net present value. d. payback method

a. internal rate of return

From an entrepreneur's standpoint, preparing financial statements is useful because a. it is a way to anticipate conditions. b. it is helpful in creating the the R & D budget. c. it only displays a series of various ratios. d. it is good for predicting the future

a. it is a way to anticipate conditions

Gross margin measures profitability at the gross profit level: the number of dollars of gross margin produced for every $1 of sales. a. True b. False

a. true

The principle objective of capital budgeting is to a. maximize the assets of the firm. b. optimize the number of project requests. c. maximize the value of the firm. d. minimize the risks of the firm

c. maximize the value of the firm.

An inventory turnover ratio of 9.81 means that the average dollar volume of inventory is used up almost _____ times during the fiscal year a. 10 b. 1.2 c. 1 d. 100

a. 10

The registration of a trademark has a lifetime of a. 10 years plus 10-year renewable periods. b. 20 years plus 5-year renewable periods. c. 25 years. d. the lifetime of the owner

a. 10 years plus 10-year renewable periods

Patents that are not design patents have _____ years of protection. a. 20 b. 25 c. l5 d. 2

a. 20

The completed business plan provides the entrepreneur with a. a tool for communicating with financial sources. b. a sense of well-being. c. a nicely designed booklet. d. a product-launch timetable

a. a tool for communicating with financial sources

The recommended length of a business plan is a. about 20 to 25 pages. b. no more than 150 pages. c. 10 pages, at the maximum. d. about 100 pages

a. about 20 to 25 pages

The appendix and/or bibliography segment is not mandatory, but it allows for a. additional documentation not appropriate in the main parts of the plan. b. additional capital funding. c. additional incorporation of the venture. d. additional completion of design and development

a. additional documentation not appropriate in the main parts of the plan

Which of the following is not an important aspect of an entrepreneurial venture? a. family support b. current status c. projected results d. expected needs

a. family support

Which of the following statements about a business plan is true? a. It is the minimum document required by any financial source. b. It is the entrepreneur's road map for profits. c. It allows the entrepreneur to avoid pitfalls in starting a new venture. d. It describes the entrepreneur's ideas and thoughts

a. it is the minimum document required by any financial source

A business plan a. may help an entrepreneur avoid a project that is "doomed" from the start. b. forces the venture capitalist to prepare an effective strategy to use in case of trouble. c. is a loan application. d. provides a foolproof "blueprint" for a small business

a. may help an entrepreneur avoid a project that is "doomed" from the start

It is recommended that the final copy of the business plan be a. spiral bound. b. paper clipped. c. professionally typeset and bound. d. stapled

a. spiral bound

Which of the following is part of the marketing segment? a. the competitive analysis b. entry barriers c. plans for specific TV ads d. plans for gaining shelf space

a. the competitive analysis

To an entrepreneur, one of the benefits of a business plan is a. the identification of critical risks. b. the comprehensive overview of the entire operation. c. the benchmarking measure for comparing forecasts with actual results. d. the development of profit strategies for outside evaluators

a. the identification of critical risks

A business plan should illustrate a. the projected needs of the new business. b. changes in their borrowing practices c. the current status of a related enterprise. d. the desires of competitors

a. the projected needs of the new business

The major thrust of the business plan, as defined in the textbook, is a. to encapsulate the strategic development of the project in a comprehensive document. b. to outline capital needs for the new venture. c. to provide a working document for the venture. d. to serve as a communication tool for the entrepreneur

a. to encapsulate the strategic development of the project in a comprehensive document

Which of the following statements would not be an appropriate guideline for successful business plan development? a. Write the plan in first person. b. Do not over-diversify. c. Avoid exaggeration. d. Highlight critical risks

a. write the plan in first person

The contribution margin approach formula is a. SP (FC - VC)S b. (SP - VC) S - FC c. (FC - VC) S -SP d. FC = (SP - VC)

b. (SP-VC) S-FC

Business owners normally prefer Chapter 7 bankruptcy over any other form of bankruptcy. a. True b. False

b. False

In some professional areas, the business plan is referred to as a. a proposal for economic development. b. an investment prospectus. c. a strategic development project. d. a proposal for organizational growth

b. an investment prospectus

Which of the following is a critical factor that should be discussed in the management segment? a. size of manufacturing operation b. board of directors and consultants c. unfavorable trends in the industry d. competitive analysis

b. board of directors and consultants

`To avoid the pitfall of "no market niche" (segment), do what? a. conduct a market analysis b. clearly target a niche c. create a market niche d. the expected needs of the new business

b. clearly target a niche

Which of the following is a pitfall to avoid in planning, according to the textbook author? a. lack of illustrations b. lack of priorities c. lack of profit orientation d. lack of future vision

b. lack of priorities

qAn indicator of the planning pitfall of "failure to anticipate roadblocks" is a. having a contingency or alternative plan. b. making no recognition of future problems. c. pursuing a good work force. d. ignoring opinions of investors

b. making no recognition of future problems

The business plan provides the details of the ______ potential of a business. a. financial growth b. market c. entrepreneurial d. product growth

b. market

Which of the following is something an entrepreneur should not do when preparing for the oral presentation of a business plan? a. Practice the presentation. b. Memorize the presentation. c. Organize the presentation. d. Develop an outline of the plan

b. memorize the presentation

Comparing financial numbers in order to make decisions is referred to as: a. descriptive statistics. b. ratio analysis. c. comparable fractions. d. debt reduction

b. ratio analysis

The comprehensive business plan should be the result of a. the entrepreneur's best guesses. b. reflections on the direction of the venture. c. investor's promises of capital. d. continuous operations of the venture

b. reflections on the direction of venture

Which of the following questions should an entrepreneur ask when a business plan is turned down? a. "Can I ask you why you didn't like me?" b. "Can't you recognize a good plan when you see one?" c. "If you were in my position, how would you proceed?" d. "Can you identify friends who would like this kind of deal?"

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

One thing that should be included in the business description is a. potential disadvantages of the venture. b. a list of suppliers. c. industry background. d. the name of each investor

c. industry background

An indicator of the planning pitfall of "no commitment or dedication" is a. no recognition of future problems. b. no experience in the business. c. no interest in researching the idea. d. lack of understanding about the industry

c. no interest in researching the idea

In planning, there are a number of pitfalls that must be avoided. One of these is a. not having enough employee zeal. b. not having a timetable involved. c. not having a commitment. d. not having a calendar

c. not having commitment

The day before the presentation, the entrepreneur should a. read the paper to relieve nervousness. b. have snacks delivered to attendees. c. practice the complete presentation by moving through each slide. d. arrange to have breakfast and coffee catered in

c. practice the complete presentation by moving through each slide

Which of the following is not a pitfall that should be addressed in planning a venture? a. flexibility b. realistic goals c. specific profit goals d. milestones

c. specific profit goals

Which of the following describes advantages of the business plan for financial sources? a. The plan helps assess the entrepreneur's family. b. The plan helps investors learn about the future fixed and variable costs. c. The plan identifies critical risks. d. The plan identifies sources of capital

c. the plan identifies critical risks

Sometimes a business plan is referred to as a. a receivables exchange. b. a novelization. c. an encyclopedia. d. a loan proposal

d. a loan proposal

A business plan is a. a blueprint of the product. b. the result of the new business. c. an instance of entrepreneurial passion d. a written document that details the proposed venture

d. a written document that details the proposed venture

The entrepreneur must be a. able to criticize the evaluators. b. interesting and humorous. c. able to deftly avoid answering certain questions. d. able to handle questions from the evaluators

d. able to handle questions from the evaluators

The textbook recommends which of the following devices to help in the oral presentation of a business plan? a. index cards b. mnemonics c. rote memorization cues d. an outline

d. an outline

How can entrepreneurs best orient their plans toward the future? a. by planning 20 years ahead. b. by informing investors of how wealthy they will be in five years. c. by identifying opportunities are for future investment d. by developing trends and forecasts that describe what the venture intends to do

d. by developing trends and forecasts that describe what the venture intends to do

The process of preparing a pro forma balance sheet is _____. a. simple. b. done first. c. optional. d. complex

d. complex

Which of the following statements is not part of the "five-minute reading" by venture capitalists? a. Determine the characteristics of the venture and industry. b. Determine the financial structure of the plan. c. Read the latest balance sheet. d. Determine the strengths and weaknesses of the entrepreneur

d. determine the strengths and weaknesses of the entrepreneur

What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to indicate how the business will increase in value. b. It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise. c. It is important for the entrepreneur to know how to buy up troubled companies. d. It is important for the entrepreneur to plan for a liquidity event as an exit strategy

d. it is important for the entrepreneur to plan for a liquidity even as an exit strategy

It is important that an entrepreneur a. develop a rough business plan and then seek outside professional assistance. b. develop an entrepreneurial team to organize the plan. c. seek the assistance of outside professionals to prepare a business plan. d. prepare his or her own plan

d. prepare his or her own plan

The second section of a business plan is a. a statement of purpose and goals. b. the summary. c. a statement of financing goals. d. the business description

d. the business description

Which of the following is the most common viewpoint in business plans? a. the financial source's viewpoint b. the marketplace's viewpoint c. the competitor's viewpoint d. the entrepreneur's viewpoint

d. the entrepreneur's viewpoint

Which of the following are needed in preparing a pro forma balance sheet? a. liabilities b. assets c. owners equity d. the last balance sheet prepared before the budget period began

d. the last balance sheet prepared before the budget period began

The cover page should bear a. the month and year. b. the phone number of each supplier. c. a customer endorsement. d. the name of the company

d. the name of the company

The financial segment includes a. the profit statement. b. the cost statement. c. the R & D statement. d. the pro forma balance sheet

d. the pro forma balance sheet

Which of the following is not one of the steps in reading a business plan discussed in the text? a. the reading of the latest balance sheet. b. the brief review the history of the company. c. the establishment of the unique feature in this venture. d. the thorough reading of each section

d. the thorough reading of each section

After the operating budget has been prepared, an entrepreneur can proceed to the next phase of the budget process, the cash-flow budget. a. True b. False

a. 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. a. True b. False

a. true

An investment prospectus is the same as a business plan. a. True b. False

a. true

Babies and career are indicative of the priorities that shape the buying decisions of persons in the nestbuilding stage of the family life cycle. a. True b. False

a. true

Shopping goods are products that consumers take time to examine carefully and compare for quality and price. a. True b. False

a. true

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

a. true

The typical business will have cash inflows from three sources: cash sales, cash payments received on account, and loan proceeds. a. True b. False

a. true

Three primary legal forms of organization are the sole proprietorship, the partnership, and the corporation. a. True b. False

a. true

More established ventures will use a sales forecast model where the estimation of current sales will increase a certain percentage over the prior period's sales. This percentage is based upon a. a trend line analysis. b. newly established sales only. c. an inventory analysis. d. past experience

a. a trend line analysis

One type of budget used by the entrepreneur is a. an operating budget. b. a cost budget. c. an R & D budget. d. a project budget

a. an operating budget

The traditional accounting equation that verifies the accuracy of the entrepreneur's balance sheet is a. assets = liabilities + owners' equity. b. assets = liabilities - owner's equity. c. assets + owner's equity = liabilities. d. assets + liabilities = owner's equity

a. assets = liabilities +owners' equity

Which of the following balance sheet ratios measure solvency? a. cash b. debt-to-worth c. quick d. current

a. cash

Who defined the corporation as "an artificial being, invisible, intangible, and existing only in contemplation of the law." a. Thomas Jefferson b. Justice John Marshall c. Henry Ford d. Karl Marx

b. Justice John Marshall

One of the indicators of the failure to anticipate roadblocks is a lack of priorities. a. True b. False

b. false

Pro forma statements show the firm's present financial position. a. True b. False

b. false

Sales forecasting is a process of projecting future sales through educated guesses. a. True b. False

b. false

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

b. false

The set of assumptions on which financial projections are based have little meaning. a. True b. False

b. false

Which of the following is not a common characteristic of financial statements? a. They are accurate. b. They are complex c. They are holistic. d. They are realistic

b. they are complex.

Which of the following is not a method of collecting primary data? a. telephone b. review of government publications c. mail survey d. observation

b. review of government publications

Ratio analysis can be applied from which of the following directions? a. vertical only b. horizontal only c. vertical and horizontal d. external and internal

c. vertical and horizontal

The concept of the net present value method works on the premise that a. a dollar today is worth less than a dollar in the future. b. a dollar today cannot be measured in future dollars. c. a dollar today is worth the same in the future. d. a dollar today is worth more than a dollar in the future

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

When developing a survey, you should consider a. ask leading and biased questions. b. the personality of the respondents. c. giving concise but incomplete instructions. d. including questions only pertaining to the study

d. including questions only pertaining to the study

It is usually more expensive to gather secondary data than primary data. a. True b. False

b. false

The cash flow does not come from a. cash sales. b. loan proceeds. c. goods purchased on account. d. cash payments received on account

c. goods purchased on account

Net present value method is a capital budgeting technique that helps to minimize some of the shortcomings of the payback method by a. recognizing future cash flows beyond the payback period. b. recognizing the payback dollars over again. c. discounting all future projects. d. recognizing past cash flows of projects

a. recognizing future cash flows beyond the payback period.

When using regression analysis, the entrepreneur may draw conclusions about the relationship between product sales and advertising expenditures. a. True b. False

a. true

The role of the customer in social media marketing is as an external source of intelligence and feedback. a. True b. False

b. false

The traditional accounting equation is: assets + liabilities = owner's equity. a. True b. False

b. false

Capital budgeting is designed to show a. which of several mutually exclusive projects should be selected b. how many projects, in total, should be selected. c. which project is most profitable. d. how to evaluate projects based on rates of return

b. how many projects, in total, should be selected

Which one of these survey methods typically has the lowest respondent cooperation? a. personal interviews, mall intercept b. mail surveys c. phone surveys d. personal interviews, door to door

b. mail surveys

The text of a patent application is known as the a. concept. b. specification. c. value. d. particulars.

b. specification

Because of the competition for funding, an entrepreneur's business plan needs to capture the reader's interest right away by stating the uniqueness of the venture. a. True b. False

a. true

The first step in the preparation of the cash-flow budget is the identification and timing of cash outflows. a. True b. False

b. false

For a manufacturing firm, the production budget represents a. the number of units that must be produced in order to meet the sales forecast. b. the number of units that must be produced to achieve the desired profit level. c. the number of units that must be produced to cover R & D costs. d. the number of units that must be produced to break even

a. the number of units that must be produced in order to meet the sales forcast

An entrepreneur must graph at least two numbers: total sales and total expenses, when using the graphic approach for break-even analysis. a. True b. False

b. false

__________ is the use of portable wireless devices to connect to the Internet. a. Mobile computing b. Entrepreneurial marketing c. Social media marketing d. Networking

a. Mobile computing

A patent is an intellectual property right. a. True b. False

a. True

At present, the courts have held that the unauthorized use of another's mark in a domain name may constitute trademark infringement. a. True b. False

a. True

A summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than three pages. a. True b. False

a. true

Copyrights have to be registered with the Copyright Office. a. True b. False

b. False

Design patents last for 20 years. a. True b. False

b. False

The patent process is not complex; neither does it require careful planning. a. True b. False

b. False

According to the U.S. Patent Office, the process of obtaining a patent takes how many years? a. about 2 years b. about 4 years c. about 3 years d. about 6 years

c. about 3 years

Which of the following is not one of the most common methods used in capital budgeting? a. internal rate of return (IRR) method b. payback method c. anticipated change in net income method d. net present value (NPV) method

c. anticipated change in net income method

How does death affect the duration of a corporation? a. A corporation is usually unaffected by the death of a shareholder unless a general partner dies. b. A corporation is usually unaffected by the death of a shareholder. c. A corporation usually terminates on the death of a founding shareholder. d. A corporation is unaffected by the death of a shareholder

d. A corporation is unaffected by the death of a shareholder

Which of the following is a marketing philosophy that focuses on research? a. sales-driven philosophy b. computer-driven philosophy c. cost-driven philosophy d. consumer-driven philosophy

d. consumer driven philosophy

Which of the following statements about the marketing skills of great entrepreneurs is true? a. They are inattentive to details, focusing continually on the big picture. b. They have no fears. c. They demonstrate persistence in their strategies. d. They have clear visions of what they want to achieve next

d. they have clear visions of what they want to achieve next

Financial information is important to entrepreneurs because: a. it pulls together all the information presented in other segments of the business. b. it answers all questions about the business and the entrepreneur. c. it takes away the assumptions concerning business operations. d. it doesn't follow any clear process about the financial operations

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

The 4Ps of marketing include all the following except a. principle. b. promotion. c. product. d. price

a. principle

A variable cost a. changes in the opposite direction and in direct proportion to changes in operating activity. b. is synonymous with labor costs c. changes in the same direction and in inverse proportion to changes in operating activity. d. changes in the same direction and in direct proportion to changes in operating activity

d. changes in the same direction and in direct proportion to changes in operating activity

Legal protection is granted to computer programs in what form? a. trademark b. patent c. service mark d. copyright

d. copyright

The last step in preparing the operating budget is to a. estimate R & D costs. b. estimate current sales. c. estimate variable costs. d. estimate operating expenses

d. estimate operating expenses

In handling questionable costs, the cost in question is substituted first as a _____ and then as a _____. a. mixed cost; fixed cost b. total cost; fixed cost c. variable cost; total cost d. fixed cost; variable cost

d. fixed cost; variable cost

Financial information pulls together all the information presented in the other segments of the business. a. True b. False

a. true

Secondary data consists of a. newly developed primary research. b. existing information. c. external data only. d. internal data only

b. existing information

Break-even analysis is used to assess a. expected capital expenditures. b. expected product profitability. c. revenue. d. future sales

b. expected product profitability

A business plan should be no more than l50 pages. a. True b. False

b. false

A consumer driven marketing philosophy often relies on direct selling. a. True b. False

b. false

A marketing information system compiles and organizes data according to a customer's sex, age, and geographic location. a. True b. False

b. false

Contribution margin is the difference between the selling price and the fixed cost per unit. a. True b. False

b. false

A fixed cost a. does not change in response to changes in activity for a given period of time. b. changes inversely to changes in activity for a given period of time. c. never changes. d. changes in response to changes in activity for a given period of time

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

Because of the doctrine, it is sometimes difficult to establish infringement. a. fair use b. acquisition c. right to publish d. freedom of information

a. fair use

When using trend line analysis, how many periods are required? a. five b. three c. one d. two

a. five

A common mistake in business planning is using acronyms and technical jargon without clearly explaining them early in the business plan. a. True b. False

a. true

Anyone who violates an author's exclusive rights under a copyright is liable for a. a prison term. b. a monetary payment equal to proven damages. c. two times annual sales. d. infringement

d. infringement

Many companies continue to use the payback method. It is a. a longer loan program. b. an immediate cash payment. c. inexpensive to use. d. more favorable in its short-term effects on earnings

d. more favorable in its short term effects on earning

Loan proceeds are not directly tied to a. planned expansion of a firm. b. expenses. c. meeting cash flow problems. d. sales revenue

d. sales revenue

A lack of demonstrated experience, no clear market niche, a failure to anticipate roadblocks, no realistic goals set, and a lack of commitment are pitfalls or common points of failure that occur before an entrepreneur ever gets a plan reviewed. a. True b. False

a. true

Horizontal analysis looks at financial statements and ratios over time. a. True b. False

a. true

In the marketing shift from the 4Ps to the 4Cs, price shifts to choice and promotion shifts to communities. a. True b. False

a. true

Marketing research involves the gathering of information about a particular market, followed by analysis of the information. a. True b. False

a. true

What part of the marketing plan emphasizes the factors that contribute to a firm's competitive edge? a. the conducting market research b. the setting of pricing structures c. the development of marketing strategies d. the appraisal of marketing strengths and weaknesses

d. the appraisal of marketing strengths and weaknesses

In the simple linear regression analysis equation, Y = a + bx, b represents a. expected sales. b. the factor on which sales are dependent. c. the constant. d. the slope of the line

d. the slope of the line

Which of the following statements is not true about financial assumptions? a. They should be clear and precise. b. They are the most integral part of the financial segment. c. They explain how the numbers are derived. d. They do not necessarily correlate with information from other parts of the business

a. they do not necessarily correlate with information from other parts of the business