entr 187
Which of the following businesses should be most concerned with property, plant, and equipment? A. A wholesaler B. A rancher C. A retailer D. A hairstylist
A rancher
Many businesses have either relatively few large sales events or highly seasonal sales that complicate forecasting cash inflows. Which of the following is not an example of such a company? A. A restaurant B. Retailing C. Real estate brokers D. Water parks
A restaurant
Economic order quantity (EOQ) helps a business to think in terms of: A. factoring receivables. B. ordering costs and carrying costs. C. pledging receivables. D. ordering costs and operating lease.
B
After being in business for 24 months, Paul's auto spare parts company Chromson Inc. grows to a relatively stable size. Which of the following would be Paul's primary financial management need at this stage? A. Building owner's wealth B. Clearing all debts C. Implementing bootstrapping techniques D. Establishing internal control over assets
Building owner's wealth
Which among the following is an example of an on-the-job training method? A. Lectures B. Case studies C. Coaching D. Role playing
C
Which of the following statements is true of joint ventures? A. It requires both partners involved to allocate revenues and expenses equally between them. B. It is not considered a separate entity from any of the partners that own it. C. It does not require its partners to lose more than what each partner has invested in it. D. It is never taxed as a partnership.
C
Responsibility for the actions of another is referred to as: A. direct liability. B. limited liability. C. exculpatory clause. D. vicarious liability.
D
Which of the following explains the difference between limited partnership and general partnership? A. In limited partnerships, all partners are equally liable to the firm's debt unlike general partnerships. B. In limited partnerships, partners incur single taxation on earnings unlike general partnerships. C. In general partnerships, whenever the mix of partners is changed, that partnership is dissolved unlike limited partnerships. D. In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.
D
Which of the following is a recommended fair personnel policy guideline across family and non-family members? A. Owners should compare the family member hired to the nonfamily member who was not hired for a given position. B. Owners should not hold expectations that their family should work longer and harder than anyone else, because it is the family's business. C. Owners should have clearly differentiated personnel policies for family and non-family members. D. Owners should let family and nonfamily members pick and choose from a set of privileges or benefits.
D
Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost? A. Benchmarking B. Factoring C. Pull-push strategy D. Economic order quantity
D
_____ is an arbitrary, but regular and systematic, method used to take asset value as an expense for the purpose of calculating net income or loss. A. Inventory valuation B. Capital budgeting C. Benchmarking D. Depreciation
D
_______ is collected by the IRS and state agencies as a percentage of tax upon payroll. A. Liability insurance B. Workers' compensation insurance C. Malpractice insurance D. Unemployment insurance
D
Everyone responds differently to risk. When it comes to business risk, small business owners are mostly risk seeking rather than risk averse.
FALSE
_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity
Outside equity
Which of the following is one of the disadvantages of the return on investment (ROI) analysis? A. The profits received are not the same as cash. B. The calculations involved in the method are complex. C. It does not consider annual profits in its calculations. D. It does not rely on accounting information with which investors are comfortable.
The profits received are not the same as cash.
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Jane purchases a picture frame from Tammy using a credit card. She notices a crack in the frame and returns it to Tammy. Jane contacts the credit card service provider for a refund. The credit card company removes the sale amount from Tammy's account which is referred to as a(n) _____. A. incentive B. liquidity C. overdraft D. charge back
charge back
Customers can never be a source of risk for businesses.
false
The employee referral method is an example of an overused, high-cost recruitment method.
false
We use many electronic forms of money: debit cards, online bill payments, electronic bank drafts, and wire transfers. These forms of money make an important point - the essence of money is that it is a form of ______. A. cash B. currency C. information D. growth trap
information
Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _____. A. discount projects B. charge backs C. noncore projects D. consignments
noncore projects
The amount that revenues exceed expenses is referred to as _____. A. profit B. cash flow C. operating margin D. debt
profit
Percentage of concession in gross invoice amounts provided to encourage prompt payment are called _____. A. receivables B. noncash incentives C. trade discounts D. charge backs
trade discounts
All business contracts have to be in writing to be enforceable.
false
Contingency fees are a fixed amount paid for a certain task.
false
The Sarbanes-Oxley Act only covers small businesses that are not publicly traded.
false
Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio? A. 2:1 B. 1:1 C. 1:3 D. 3:1
3:1
Making ______ work requires giving employees permission to act, the knowledge to act, and the skill to act. A. nepotism B. training C. empowerment D. teamwork
C
Which of the following is true of insuring the property of a business? A. All the value of a property has insurable value. B. The value of land is the most commonly insured property. C. The value of the historical significance of a building often cannot be insured. D. The lower the deductible, the lower the policy premium payments will be.
C
Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____. A. articles of organization B. contracts of partnership C. articles of association D. articles of partnership
D
Documenting the operations of your business, you must understand how three items relate to each other. Which of the items below is not one of those three related items? A. procedure B. property C. work instructions D. process
D
In _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings. A. check the box taxation B. double taxation C. single taxation D. pass through taxation
D
Which of the following is true of 401(k) plans? A. They refer to the leave policies which make no distinction between sick, vacation, and personal days and allow employees a set number of days off each year. B. They are compensation plans which take no more than 3 percent of the annual personnel budget. C. They allow the employee to have no control over the amount of their contribution and how the money is invested. D. They are typically easier to administer and are less expensive than traditional pension plans.
D
Which of the following is true of insurance? A. All risks are insurable. B. An insurance company only charges a fee for large businesses with over 100 employees. C. Insurance companies make profits by requiring a relatively large fee compared to the amount of loss that is possible. D. The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
D
A legal obligation to pay money in the future is called equity capital.
False
_____ refers to the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business. A. Goodwill B. Collateral C. Inventory D. Debt
Goodwill
The SBIR and the STTR programs require that every U.S. agency that makes research grants provide a minimum of 2 percent of its grant budget to small businesses, as defined by the SBA.
True
Making training an ongoing process is a good way to encourage dialog with employees when their learning curve goes flat.
true
Managing risks to tools, equipment, inventory, and other physical assets is largely a function of developing and enforcing appropriate business policies and procedures.
true
Meritocracy is the management philosophy of selecting and promoting people based solely on their being the most capable person for the job.
true
The business-to-consumer (B2C) contract is an example of an Internet contract.
true
When determining the cost of a capital asset, the _______ is the sum of everything that you spend to acquire and prepare the asset for its first productive use. A. acquisition cost B. costs of owning C. costs of disposition D. costs of operating
A
A _____ is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive. A. copyright B. trade secret C. patent D. trademark
B
There are three elements to most aspects of business law - finding the right information, negotiating the specific outcome you want, and: A. choosing the right attorney. B. taking care of the paperwork associated with it. C. checking the law. D. come to an agreement about a particular outcome.
B
A _____ describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized to date. A. fair market value B. disposal value C. book value D. replacement value
C
A _____ is an agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements. A. business interruption insurance B. credit insurance C. surety bond D. fidelity bond
C
During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.
True
Investing in multiple businesses increases the chances of offsetting possible losses incurred from one business.
True
Many small businesses experience problems in cash flow management because of the mismatch between the timing of the receipt of cash and the timing of the need to expend cash
True
Obtaining outside equity financing can only be done if your business is organized as: a partnership, a corporation, or a limited liability company.
True
Payments of profits to the owners of corporations are called dividends.
True
The total cost of obtaining an asset, including such costs as purchase price, transportation, installation, testing, and calibrating in order to ready it for its first productive use is termed as _____. A. replacement cost B. cost of operating C. cost of disposition D. acquisition cost
acquisition cost
When determining the cost of a capital asset, the _______ is the sum of everything that you spend to acquire and prepare the asset for its first productive use. A. acquisition cost B. costs of owning C. costs of disposition D. costs of operating
acquisition cost
On-the-job techniques include orientations, job instruction training, lectures, and case studies.
false
There are two general sources of gift financing: A. institutional and personal. B. friends and family. C. consumer and commercial banks. D. angel and venture investors.
institutional and personal.
The total cost of keeping inventory is the sum of the cost to buy the inventory, the cost to store, protect, and maintain inventory, and the cost of making an order to purchase inventory.
true
According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of: A. delayed payments from customers. B. lack of seasonal fluctuation in sales. C. delayed payments from vendors. D. unexpected increases in taxes.
A
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who would manage the budgets and expenses of the business. Tammy buys her craft materials on credit from her supplier but clears all her debts at the end of every month. The amount that Tammy owes her supplier is referred to as _____. A. payables B. charge backs C. deposits D. receivables
A
Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business? A. Creating provisions for subcontracting work B. Developing an informal code of ethics for all employees to follow C. Ensuring that all employees have easy access to all assets D. Securing valuable assets from low-level employees
A
The practice of acquiring inventory only in response to a completed sale is called a(n) _____. A. pull-through system B. economic order quantity C. optimum stocking level D. point-of-sale system
A
The rule of thumb is that perks should take no more than _____ of the annual personnel budget. A. 3 percent B. 15 percent C. 50 percent D. 75 percent
A
Which of the following is an advantage to renting capital assets? A. Renting usually protects you from unexpected costs of repairs. B. You have an ownership position. C. You can exercise control over cash outflows. D. The dollars paid in rent will not exceed the dollars you would spend to own the asset.
A
Which of the following is true of the ADA Technical Assistance Program? A. It provides specific advice to a business concerning how to comply with the pertinent requirements. B. It provides inspection of the workplace to determine compliance. C. It provides affirmation services to all businesses. D. It provides its services only to large businesses that have more than 500 employees.
A
Which of the following represents the problem with legal protection methods for intellectual property? A. There is no governmental agency that will assist small business owners in maintaining their legal rights. B. The cost of legal protection for intellectual property is so high that it is practically useless for a small business owner. C. Legal protection methods for intellectual property are primarily "reserved" for large businesses. D. Legal protection methods can only be offered for tangible property and not intellectual property. E. Holding legal rights to intellectual property provides the owner solely with grounds to pursue lawsuits against infringement.
A
Which of the following should be included in an employee contract for a key employee? A. Offer rewards for providing adequate termination notice B. Specify that the employee must work at the organization for a minimum of two years C. Detail the consequences of insubordination within the workplace D. Encourage employees to poach clients from competitors
A
Which of the following statements is true of documenting the operations of your business? A. Every business process does not have to be extensively documented. B. You will not have to give up any personal control of your business, even if you have employees. C. Businesses with no employees use a different process than do those businesses with employees. D. A typical start to the task of documenting the processes of an operating business is to start from the bottom up.
A
Which of these is a disadvantage of a corporation? A. It incurs relatively high incorporation fees and high taxes. B. It requires its owners to have unlimited liability to the firm's debt. C. It is considered a separate, legal entity from its owner. D. It is automatically terminated upon the death of its owner.
A
Jacob has started a graphic design company called Interon Graphics. As Interon Graphics moves into the growth phase, which of the following would be Jacob's dominant financial management need? A. Obtaining increasing amounts of cash inflows B. Establishing internal control over assets C. Conserving the money that the business has D. Clearing all debts
A. Obtaining increasing amounts of cash inflows
A(n) _____ is a type of contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform. A. exculpatory agreement B. subcontract C. unilateral contract D. option contract
B
A(n) _____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions. A. noncompete clause B. exculpatory clause C. hold harmless clause D. power of sale clause
B
After determining an organization's compensation philosophy, the next step in developing a compensation plan is to: A. develop a job description. B. find comparison factors for salary. C. provide stock options or stock grants to employees. D. offer employer-sponsored health insurance.
B
Crux Inc. and Synapse Inc. are two competing businesses in the same city. They use the services of the same insurance company and have taken the same policy. Crux has a higher deductible than Synapse for the policy. Which of the following statements would be true in this case? A. Both companies are not paying any premium. B. Synapse pays a higher premium than Crux. C. Both the companies pay the same premium. D. Crux pays a higher premium than Synapse.
B
Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for. Trent, the accounts manager, accepts fake bills and assists Jacob in deceiving the company. They split the profits made this way. This is an example of theft by: A. adverse possession. B. employee collusion. C. employee nonfeasance. D. vendor fraud.
B
Martin, an employee at a boutique store, is required to handle store displays and also ensure that all the sales records tally at the end of each business day. However, he committed fraud by recording fake sales and then keeping the products to himself. Which of the following managerial concepts would have helped the store avoid this deception? A. Adverse possession B. Separation of duties C. Accession D. Rule against perpetuities
B
To treat family and nonfamily employees as similarly as possible in a business, it is important to: A. have separate personnel policies for family and nonfamily members. B. create career ladders for nonfamily members. C. provide favorable treatment to nonfamily members. D. guarantee the possibility of employee ownership.
B
Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case? A. It will convert Bradham Corporation into a separate legal entity. B. It will dissolve the corporation into a sole partnership under Bradham. C. It will change Bradham's liability in the business to one that of a limited partner. D. It will hold that Bradham has no personal liability for Bradham Corporation's debt.
B
Which of the following is true of partnerships? A. It does not get terminated upon the death of one or more partners. B. It does not allow one partner to obtain bonding protection against the acts of the other partner(s). C. It cannot obtain financial resources from more than one person. D. It does not incur unlimited liability on its partners for the firm's debt.
B
Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations? A. Understate revenues and overstate deductible expenses B. Reconcile the cash register tape to the cash register contents every day C. Take cash from the businesses before it is recorded as revenue D. Borrow from tax money in order to make payments to creditors
B
Which of the following would implicate employee empowerment? A. Providing learning opportunities at every level of the organization through training B. Letting employees make on-the-spot decisions for the companies' best interest C. Providing meaningful work for employees and keeping them occupied D. Showing appreciation for a job well done or giving credit to an employee who introduced a great idea
B
________ is the series of steps and activities required to complete a process. A. Work instructions B. A procedure C. Operations D. GAAP
B
_____ is the name given to the bank's accounting system for all recognized transactions that affect the account, including deposits, electronic transfers, service fees, and checks presented to the bank for payment. A. Bank ledger balance B. Company book balance C. Overdraft balance D. Bank available balance
Bank ledger balance
Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes? A. Book value B. Salvage value C. Replacement value D. Disposal value
Book value
According to the IRS, to be an independent contractor the person must: A. decide how the work must be done in consultation with an employer. B. have all his expenses paid for by an employer. C. perform a service that is not central to the operation of the business. D. not be employed for a distinct term or project.
C
In evaluating potential employees, a small business owner: A. should hire a moderately qualified person in case filling the position is an urgent requirement. B. should ensure that only a single interviewer meets with a candidate in order to avoid conflicting evaluations. C. should design interview questions such that "yes" or "no" answers are not applicable. D. should accept the candidate's word that he or she possesses a certain skill or knowledge base.
C
Small businesses use the periodic inventory method because it: A. gives instant access to accurate inventory records. B. records the receipt and sale of each item as it occurs. C. meets the requirements of local and federal taxing agencies. D. uses bar codes that are unique to each item of inventory.
C
The practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer is termed as _____. A. perpetual inventory B. point-of-sale system C. just-in-time inventory D. optimum stocking level
C
Which of the following concepts is based on the perception that promises have been made in exchange for certain employee obligations such as giving of their energy, time, and technical skills? A. Open-book policy B. Work facilitation C. Psychological contract D. Autonomy
C
Which of the following is a management philosophy of selecting and promoting people based solely on their being the most capable person for the job? A. Nepotism B. Capitalism C. Meritocracy D. Democracy
C
Which of the following is not a benefit of correctly documenting your business processes? A. There should be less waste and scrap in your processes. B. There should be fewer employee mistakes. C. The process is self-sufficient and does not require much time to review or update. D. Extensive documentation will make selling your business much easier.
C
Which of the following is true about trade name? A. There can be only one business using the same name within a state. B. Assumed name is completely different from trade name. C. Most states allow several firms to use the same trade name, as long as the firms are in different lines of business. D. Most states allow several firms to use the same trade name even if they are in the same town and have received a service mark.
C
Which of the following statements is not true of psychological contracts? A. Small business owners often implicitly or explicitly communicate conflicting terms when making psychological contracts. B. To avoid breaking a psychological contract, denote strict limits on what you promise employees. C. Putting a psychological contract in writing is unnecessary and ill-advised. D. A psychological contract refers to an employees' beliefs about the promises between the employee and the company.
C
Tammy has just opened a donut shop called The Rabbit Hole. Given that The Rabbit Hole is in its start-up phase, which of these would be Tammy's immediate financial management need? A. Building owner's wealth B. Conserving what little money the business has C. Obtaining increasing amounts of cash inflows D. Minimizing debt and increasing asset value
Conserving what little money the business has
_____ refers to the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold. A. Barter B. Consignment C. Noncash incentive D. Benchmarking
Consignment
According to the six factors most valuable to employees, which of the following is a reason employees leave a company? A. Being put through different types of training B. Being asked to make on-the-spot decisions for the companies' best interest C. Being shown that the decisions employees make and the work they perform have a direct impact on the product or service provided D. Being denied professional development and learning opportunities to expand their job responsibility
D
Arbitration differs from mediation in that arbitration: A. works outside the court system. B. is less costly than mediation. C. requires that both parties represent themselves. D. has limited appeal possibilities.
D
Axion Inc. is a small business started by Robert. As the business grew, he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion. Which of the following techniques should he adopt to achieve this? A. Lay off employees who seem most likely to go into competition with Axion B. Groom other candidates to replace the employees currently working at Axion C. Cross train the employees to neutralize job specialization D. Negotiate contracts with key employees that limit their freedom to go into competition
D
Ted, a 46-year-old IT professional, recently attended a job interview at Acton Org. He was not offered the job. Ted tried to find the reasons for his disqualification and the company could not provide a satisfactory explanation. He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college. Which of the following laws protect Ted from such discriminations? A. ADA B. OSHA laws C. Sarbanes-Oxley Act D. ADEA
D
Which of the following forms of business requires no government permission to set up? A. Limited partnerships B. C Corporation C. Professional corporation D. Sole proprietorship
D
_____ means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard. A. Job basics B. Job metrics C. Benchmarking D. Line of appeal
D
When financing with debt, small businesses should first apply for a Small Business Administration guaranteed loan before approaching their own bank as the SBA loans have lower interest rates.
False
A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the sales price in advance. In this example, which of the following techniques is the store using to increase cash inflows? A. It is offering discounts to customers for prompt payment. B. It is taking deposits and progress payments. C. It is factoring all receivables. D. It is taking on noncore paying projects.
It is taking deposits and progress payments.
_____ measure a management's effectiveness in using the invested capital of the business to provide profits. A. Profitability ratios B. Gross margin ratios C. Return on investments D. Return on equity
Return on investments C
Which of the following is defined as the practice of "pocketing" money from customers and hiding the theft by not recording the sale? A. Embezzlement B. Larceny C. Skimming D. Phony disbursement
Skimming
Mr. Hill, who runs a key-chain manufacturing unit, buys raw materials from his supplier during the first week of every month. The supplier's policy states that all payments need to be cleared within 50 days of buying the materials. This schedule ensures that Mr. Hill gets an extended period to make payments thus controlling when the payment is made. Which of the following strategies is Mr. Hill using to control cash outflow? A. Taking a consignment B. Offering trade discount C. Gaming the payment process D. Timing the purchase
Timing the purchase
A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by: A. purchasing and accepting inventory before it is sold to a customer. B. delaying the shipment of the completed product to the customer. C. keeping safety stock in case the estimate exceeds the demand. D. assembling the product in the absolute minimum time possible.
assembling the product in the absolute minimum time possible.
Orion Inc. was started as a small organization with five employees. After the first year's profits were made, the owners decided to invest the profits in expanding the business. This is an example of financing the business using _____. A. benchmarking B. bootstrapping C. piggybacking D. outside equity
bootstrapping
An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the: A. inventory level is not affected by demand. B. delivery times never fluctuate. C. sales volumes are not constant. D. estimate never exceeds demand.
c
Kevin has taken an apartment on lease for five years with a monthly rental of $3,500. At the end of five years, Kevin will be the legal owner of the apartment after an additional payment of $80,000. This type of lease is an example of a(n) _____ lease. A. leveraged B. capital C. direct D. operating
capital
Approximately 90 percent of small businesses that fail do so because of ________. A. not enough money flowing out of the business B. too much money flowing in to the business C. lack of profitability D. cash flow problems
cash flow problems
In a business, accepting payments by credit card causes significant differences between the bank and book balances because the credit card service provider: A. records the gross amount of each credit card sale. B. deposits the amount of the sale in the business's account on the date of the sale itself. C. deposits the sale amount in the business's account after deducting a service fee. D. retains the sale amount in the business's account in the event of customer challenge.
deposits the sale amount in the business's account after deducting a service fee.
Operations management is primarily concerned with: A. directing and controlling. B. planning and organizing. C. staffing and planning. D. controlling and organizing.
directing and controlling.
Money contributed to businesses in return for part ownership of the business is called a(n) _____. A. debt B. equity capital C. gift D. loan
equity capital
A process is what a business does when it takes some raw material and converts it into a valuable output. This does not apply to service businesses.
false
All businesses within an industry have to pay the same amount, as decided by the state, as unemployment insurance.
false
Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes.
false
Business risk is the probability that the future state of the business will be better than planned.
false
By agreeing to an exculpatory clause in a contract, one party is agreeing not to hold the other responsible for his or her actions.
false
Copyrights, trademarks, and patents provide automatic full protection to small business owners.
false
Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market.
false
Factoring is a method of borrowing against payables
false
For a small business, the amount and type of inventory held for resale is not important because the supply of inventory and demand of customers can be matched at all times.
false
If your business is wholesale or retail merchandising, the issues of property, plant, and equipment (PPE) constitute your greatest investments and your greatest costs.
false
In a negotiation process, proposing solutions that provide value and balance for all parties involved is considered the easiest step.
false
In a professional corporation, the shareholders are responsible for debts of the corporation.
false
In employee leasing, the leased employees actually work for the hiring company rather than the leasing company.
false
In the U.S., government programs are the number one source for financing small businesses.
false
In the case of mediation, the dispute is put to a neutral third party who has the powers of a judge.
false
In the context of employee rewards, if entrepreneurs work based on an open-book policy and the company hits a downturn and promises cannot be met, employees are more likely to react badly since they have little or no understanding of the firm's situation.
false
It is preferable to hire a moderately qualified person if there is an immediate need for someone.
false
Knowing one's personal worth is not important when starting a business.
false
Lines of communication means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard.
false
Of the strategies employed by small businesses for handling money shortages, the three most common, in order of use, are (1) sell investments, (2) sell receivables, and (3) lay off employees
false
Off-the-job techniques include apprenticeships, internships, and job rotation.
false
One technique to increase cash inflow is to offer discounts for delayed payments.
false
Planning, organizing, and staffing are primarily the responsibility of operations management.
false
Reviewing employees' performance is a one-time process done after the probationary period.
false
Small businesses never experience any cash flow problems
false
The ADA Technical Assistance Program provides inspection and affirmation services to help small businesses.
false
The Family and Medical Leave Act applies to all employers.
false
The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act.
false
The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights.
false
The primary advantage of bartering is that it is essentially tax-free as long as no cash is involved
false
When a business enters a phase of rapid growth, one of the challenges it faces is that very few sources of money are available to support its growth.
false
When interviewing a promising prospective employee, it is best to only have one interviewer. This helps you be sure that you understand the individual as well as possible.
false
Uncertainty of returns in a business is referred to as _____. A. financial risk B. accelerated cash-out C. overpayment D. collateral
financial risk
Josh, the owner of a software company, is facing cash flow problems. To control the cash outflow, he avoids paying the bills to his vendors. After much delay, he sends a check in payment but intentionally forgets to sign the check. To prevent the cash from going out of his business, Josh is applying the strategy of _____. A. gaming the payment process B. timing the purchases C. noncash incentives D. trade discount payments
gaming the payment process
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Within a few months, the sales increase exponentially which results in a shortage of cash needed to expand their business. This crisis is termed _____. A. nonsufficient funds B. growth trap C. charge back D. reconciling
growth trap
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who manages the budgets and expenses of the business. Within a few months, David notices problems in cash flow. Although not the primary strategy of her business, Tammy takes up craft projects for kindergarten schools in an effort to increase cash inflow. This kindergarten project is an example of a(n) _____. A. consignment B. noncore project C. charge back D. arraignment
noncore project
A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease. A. leveraged B. operating C. finance D. capital
operating
A(n) _____ is the amount of inventory that results in the minimum cost, considering the cost of lost sales resulting from running out of stock, the number of units sold per day, and the number of days required to receive inventory. A. optimum stocking level B. periodic inventory C. economic order quantity D. micro inventory
optimum stocking level
Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan within two weeks. The amount that Lucy owes Susan is termed _____. A. receivables B. deposits C. charge backs D. payables
receivables
Maintaining an inventory helps a business to have an optimal level of cash flow by: A. increasing the cost of carrying inventory. B. reducing the cost of processing orders. C. reducing cash inflow due to being out of stock. D. increasing cash outflow due to waste resources.
reducing the cost of processing orders.
The capital budgeting equation used to measure the relationship between initial investment and the profits that are expected to be received from making the investment is called _____. A. rate of investment B. return on equity C. return on investment D. net present value
return on investment
An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the: A. inventory level is not affected by demand. B. delivery times never fluctuate. C. sales volumes are not constant. D. estimate never exceeds demand.
sales volumes are not constant.
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who manages the budgets and expenses of the business. David prepares the quarterly budget and maintains a company book for recording all transactions. The company book balance that David regularly updates is the sum of: A. the actual amount of cash that is available to the firm at any specific time. B. the deposits and withdrawals recorded in a bank's accounting records. C. the cash inflows and cash outflows recorded in the firm's accounting records. D. the negative balance in a depositor's bank account.
the cash inflows and cash outflows recorded in the firm's accounting records.
The weighted average cost (WAC) refers to: A. a legal reduction in taxes by the government. B. the average equity capital costs incurred by a firm per year. C. the percentage cost of obtaining future funds. D. the expected average future cost of funds.
the expected average future cost of funds.
A common reason people leave a company is if they feel they are not developing professionally.
true
A job description defines and discusses all the essential knowledge, skills, and abilities that are needed to fill a position.
true
A lease is simply a rental agreement that specifies a minimum period of time for which one must make rental payments.
true
A sole proprietorship is not considered as a separate legal entity from its owner.
true
Adding employees in a firm increases both the amount of work that can be done and the demands on the owner.
true
Adverse possession occurs when an owner of real property does not enforce property rights and allows a non-owner to use the property as if it were his or her own.
true
After determining whether one is hiring someone for an hourly or salaried position, one of the first steps in developing a compensation plan is to determine the organization's salary philosophy.
true
All capital assets cause you to incur four costs over time: (1) the cost of acquiring the asset, (2) the cost of owning the asset, (3) the cost of operating the asset, and (4) the cost of disposing of the asset.
true
An arm's length transaction is a business deal where the parties have a prior relation or affiliation, but where the business is conducted as if they were unrelated.
true
An often overlooked cause of cash shortages is a surplus of good news: Your business has proven to be wildly successful, and sales are growing at an exponential rate
true
Clients and attorneys start with a natural conflict of interest related to money.
true
Contractual provisions of insurance policies that specify what risks the insurance company is assuming are called coverages.
true
Employees whose experience and skills are critical to the success of a business are called key employees.
true
Equifax is one of the four primary CRAs in the United States.
true
Identifying risks is the first task to be completed before a comprehensive insurance program can be developed for a business.
true
If the business is a corporation or an LLC, the owner can only lose what he or she has invested in the business.
true
In a C corporation and S corporation, the IRS expects the owner to pay himself or herself a salary that is roughly at market rates.
true
In managing risk from violation of tax regulations, small business owners should make paying taxes their first financial priority.
true
Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making.
true
Money borrowed for the purpose of investment in a business is called debt capital.
true
Networking is a relatively low-cost, although time-intensive, method of recruiting.
true
One of the policies for managing customer credit requires business owners to maintain constant "aging" of accounts to quickly identify customers who become delinquent.
true
Patents are essentially monopolies granted to inventors by the U.S. government giving patent owners the exclusive rights to make, use, or sell that invention for a certain period of time.
true
People who buy ownership rights but are not part of the management of the business are known as outside equity investors.
true
Reconciling the differences between the bank and book balances gives a corrected bank balance and a corrected book balance which are identical
true
Risk from loss of key personnel and former employees setting up competition against your business can be managed by negotiating employment contracts with those key employees.
true
Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer.
true
The best prevention method for avoiding a cash flow problem is attending to and understanding the operations of a business—its patterns of generating cash inflows and outflows
true
The majority of small business start-ups are funded by bootstrapping.
true
The time value of money is the concept that a dollar received today is worth much more than is a dollar to be received at some time in the future.
true
The total liability issue in general partnerships is similar to that of sole proprietorships.
true
The most common strategy employed by small businesses for handling money shortages is _____. A. adjusting scheduled payments B. using personal money C. selling investments D. laying off employees
using personal money
