ENT Exam 1 & 2 Missed Questions, CH. 11, CH. 12

The cash flow budget describes a. cash outflows/accounts receivables. b. cash inflows/cash outflows. c. interest income/interest expense. d. profits/costs.

cash inflows/cash outflows.

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

maximize the value of the firm.

A(n) __________ approach indicated the importance of people's awareness of their daily lives for developing new business ideas. a. new-new b. old-old c. old-new d. new-old

new-new

A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an a. entrepreneurial budget. b. anticipated budget. c. expected results budget. d. operating budget.

operating budget.

Which of the following is a critical factor to be considered in the management segment? a. product design b. organizational structure c. location of the plant d. suppliers

organizational structure

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

ratio analysis.

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

reflections on the direction of the venture

Contribution margin is the difference between a. purchase price and fixed cost per unit. b. selling price and variable cost per unit. c. purchase price and variable cost per unit. d. selling price and fixed cost per unit.

selling price and variable cost per unit.

Which of the following can help speed up the idea process? a. working harder b. seeing new movies c. taking breaks while working d. intuition

taking breaks while working

Which of the following statements may be the most important in new venture creation? a. the income statement b. the pro forma balance sheet c. the cash flow statement d. the profit statement

the cash flow statement

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

the payback method.

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

the pro forma balance sheet

In the production budget for a manufacturing firm, the number of units needed in inventory is determined by a. the sum of beginning inventory and expected sales. b. the sum of the desired ending inventory and the number of units to be sold. c. the sum of beginning inventory and the desired ending inventory. d. an inventory model.

the sum of the desired ending inventory and the number of units to be sold.

An important guideline in putting the plan together is a. to impress with excessive detail b. to identify the target market. c. to over diversify. d. to not highlight critical risks.

to identify the target market

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 a. assets minus liabilities. b. assets minus (liabilities plus owner's equity). c. zero. d. assets minus owner's equity.

zero.

individualize

An aspect of global social media strategy directing customized messages to different users based on location, taste preferences, and shopping habits.

blog monitoring

Analysing blog content to identify prominent terms or themes

Contains support material such as blueprints and diagrams

Appendix

guerrilla marketing

Applying nonconventional tactics and unorthodox practices to marketing research

Describes the potential of the new venture

Business decription segment

Provides industry background

Business description Segment

consumer pricing

Combining penetration and competitive pricing to gain market share.

Discusses price-cutting by the competition

Critical Risk Segment

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

Determine the strengths and weaknesses of the entrepreneur

Most crucial part of the plan

Executive Summary

Should be written after the business plan is completed

Executive Summary

(T/F) A business plan must illustrate the current status of the venture but not the projected results.

False

(T/F) After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

False

(T/F) Contribution margin is the difference between the selling price and the fixed cost per unit.

False

(T/F) Pro forma statements show the firm's present financial position.

False

(T/F) 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

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

False

(T/F) The first step in the preparation of the cash flow budget is the identification and timing of cash outflows.

False

(T/F) The pro forma balance sheet is used in the critical risk segment of the business plan.

False

(T/F) The set of assumptions on which financial projections are based have little meaning.

False

(T/F) The traditional accounting equation is: assets + liabilities = owner's equity.

False

(T/F) There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.

False

The Executive Summary should be the first part of the business plan that is written. (T/F)

False

The pro forma balance sheet is used in the critical risk segment of the business plan. (T/F)

False

Provides balance sheet and income statement

Financial Segment

Provides a budget

Finanical Segment

freemium model

Generates revenue by offering a basic service for free while charging for a premium service with advanced features to paying members.

advertising model

Generates revenue by selling advertisements against the traffic of the site.

Provides strategy for an initial public offering

Harvest Strategy Segment

Which of the following describes advantages of the business plan for financial sources? a. The plan identifies critical risks. b. The plan helps assess the entrepreneur's family. c. the plan identifies sources of capital. d. all of these.

The plan identifies critical risks

(T/F) 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

(T/F) A budget is one of the most powerful tools that an entrepreneur can use in planning business operations.

True

(T/F) 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

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

True

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

True

(T/F) Financial information pulls together all the information presented in the other segments of the business.

True

(T/F) The business plan is the entrepreneur's road map for a successful enterprise.

True

(T/F) The cash-flow budget provides an overview of cash inflows and outflows for the budget period.

True

(T/F) The principal objective of capital budgeting is to maximize the value of the firm.

True

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

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

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

a tool for communicating with financial sources

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

a written document that details the proposed venture

involve

an aspect of global marketing strategy engaging the user interactively with a type of story or game

initiate

an aspect of global social media strategy creating user-generated content in order to start a meaningful dialogue between different consumers as they communicate online

integrate

an aspect of global social media strategy inserting the application into the daily life of the user by offering incentives, prices, or discounts

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

assets = liabilities + owner's equity.

Entrepreneurial Persistence is related to: a. the entrepreneur's outcomes meeting his or her expectations b. focusing on personal goals c. implementing problem-solving techniques d. avoiding counter influences to entrepreneurship

avoiding counter influences to entrepreneurship

Which of the following is a form of the pro forma statement? a. cash flow statement b. costs of goods sold c. balance sheet d. budget

balance sheet

Which of the following questions should an entrepreneur ask when a business plan is turned down? a. "That means you do not know how to evaluate a good plan?" b. "Can you identify friends who would like this kind of deal?" c. "If you were in my position, how would you proceed?" d. none of these.

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

The ten major segments of a business plan are below. Identify the order in which each segment will appear in the plan by placing a 1 next to the first part, a 2 next to the second part, and so on (through 10).

1. Summary 2. Business description segment 3. Marketing segment 4. Operations segment 5. Management segment 6. Financial segment 7. Critical-risks segment 8. Harvest strategy segment 9. Milestone schedule segment 10. Appendix

It is reported that __________ new firms have emerged in the United States every year since 2010. a. 400,000 b. 100,000 c. 22,000 d. 230,000

400,000

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

A corporation is unaffected by the death of a shareholder.

consumer-driven philosophy

A marketing philosophy that relies on research to discover consumer preferences, desires, and needs before production actually begins

demand-oriented pricing

A pricing method in which the price of a product is changed according to its demand; a product will have a higher price when the demand is strong and a lower price when it is weak.

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

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

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

It is important for the entrepreneur to plan for a liquidity event as an exit strategy.

Which of the following economists wrote about entrepreneurship and its impact on economic development? a. Richard Dailey b. Joseph Schumpeter c. Paul Samuelson d. Robert McConnell

Joseph Schumpeter

Describes legal structure of the venture

Management Segment

Provides résumés of all key personnel

Management Segment

Analyzes case if any sales projections are not attained

Marketing Segment

Discusses pricing strategy

Marketing Segment

Identifies target markets

Marketing Segment

Describes any prototypes developed

Milestone Schedule Segment

Sets forth timetables for completion of major phases of the venture

Milestone Schedule Segment

Shows the relationship between events and deadlines for accomplishment

Milestone Schedule Segment

In the Lean Start-up context, the acronym MVP stands for: a. Most Valuable Player b. Minimum Viable Process c. Minimum Virtual Product d. Minimum Viable Product

Minimum Viable Product

Discusses the advantages of location

Operations Segment

Explains proximity to suppliers

Operations Segment

Which of the following statements would not be an appropriate guideline for successful business plan development? a. Highlight critical risks. b. Orient the plan to the present. c. Avoid exaggeration. d. Do not overdiversify.

Orient the plan to the present

Which one of the following is not a benefit of a business plan to the entrepreneur? a. Allows the entrepreneur to view the venture critically and objectively. b. Provides a comprehensive product-launch timetable. c. Quantifies objectives, providing benchmarks for comparing forecasts with actual results. d. Provides a communication tool for outside financial sources.

Provides a comprehensive product-launch timetable

Explains costs involved in testing

Research and Development Segment

The Regulation D exemptions include all of the following except: a. Rule 504—placements of up to $1 million. b. Rule 503—placements of less than $500,000. c. Rule 505—placements of up to $5 million. d. Rule 506—placements in excess of $5 million.

Rule 503—placements of less than $500,000.

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

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

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

clearly target a niche

The rate used to adjust future cash flows to determine their value in present period terms is the: a. current interest rate. b. cost of capital. c. rate determined by the ratio of assets to liabilities. d. present value.

cost of capital.

A fixed cost a. changes in response to changes in activity for a given period of time. b. does not change in response to changes in activity for a given period of time. c. changes inversely to changes in activity for a given period of time. d. does not do any of these.

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

Break-even analysis is a technique commonly used to assess the a. expected product profitability. b. net present value. c. total costs. d. rate of return on investment.

expected product profitability.

A key concept in developing an expense budget is that of a. fixed costs. b. rent. c. labor costs. d. taxes.

fixed costs.

affiliate model

generate revenue by driving traffic, leads, or sales to another, affiliated company's website

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

goods purchased on account.

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

how many projects, in total, should be selected.

Financial information is important to entrepreneurs because it pulls together all the information presented in other segments of the business and: a. it predicts the competitive environment in which the business operates. b. it justifies long term commitment to the business. c. it quantifies all the assumptions concerning business operations. d. it answers all questions about the business and the entrepreneur.

it quantifies all the assumptions concerning business operations.

Which of the following terms would not be associated with the right hemisphere of the brain? a. synthesizing b. linear c. spacial d. intuitive

linear

An indicator of the planning pitfall of "failure to anticipate roadblocks" is a. pursuing a good work force. b. recognition of future problems. c. having a contingency or alternative plan. d. making no admission of possible flaws in the plan.

making no admission of possible flaws in the plan

Competitive analysis, advertising plan, and pricing policy are all part of the a. research, design, and development segment. b. financial plan segment. c. marketing segment. d. milestone schedule segment.

marketing segment