Entrepreneurship Ch.9-Ch.15 Final study set

How many months of the year should be illustrated in the first pro forma income statement?

12

Patents that are not design patents have _____ years of protection.

20

The average life expectancy of a privately held business is _____ years.

24

According to the U.S. Patent and Trademark Office, the process of obtaining a patent takes about _____ years.

3

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

70 years

When considering financial difficulties, which of the following statements constitutes a forcing event?

A lender demands the removal of an owner/manager before lending the necessary funds

Which of the following is a useful rule used to avoid pitfalls in selecting a trademark?

Never choose a trademark without first conducting a trademark search.

Which of the following is an indicator that an entrepreneur's business is failing?

Obligations are greater than assets.

Under U.S. law, which of the following is the first step in the initial public offering (IPO) process?

Present the proposal to the board

Which of the following management principles emanated from Steve Jobs?

Put a dent in the universe

An S corporation takes its name from

Subchapter S.

Which of the following falls under Chapter 7 bankruptcy?

The debtor is relieved of obligations.

What is meant by product life cycle pricing?

The pricing needs to be adjusted at each stage in a product's life cycle.

Which of the following is a decision rule for handling questionable costs?

The product should not be profitable if expected sales do not exceed the lower break-even point.

A SWOT analysis refers to analyzing strengths, weaknesses, opportunities, and threats.

True

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

True

Because corporate law makes it difficult for businesses to consider employee, community, and environmental interests in their decision making, the B corporation has been introduced.

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

Buyers and sellers assign different values to a business.

True

Every business plan should provide information about future harvest strategies.

True

Marketing planning is the process of determining a clear, comprehensive approach to the creation of customers.

True

Misunderstanding industry attractiveness can be a fatal flaw in strategic planning.

True

One of the most common reasons for acquiring a business is developing more growth-phase products.

True

The basic rule for privately held businesses is this: The owner should develop a succession plan.

True

The object of a patent is to provide the holder with a temporary monopoly on his or her innovation.

True

The prospectus for an initial public offering (IPO) must disclose fully all pertinent information about a company and must present a fair representation of the firm's true prospects.

True

Which of the following is not a step in developing a succession strategy?

Undertaking forcing events

Closely held ventures usually suffer from which of the following shortcomings?

a lack of management depth

The recommended length of a business plan is

about 25 pages

Which of the following is not one of the most common methods used in capital budgeting?

anticipated change in net income method

Investments in which returns are expected to extend beyond one year are referred to as

capital investments

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

cash-flow statement

The managerial successor typically is not interested in

creativity

Which of the following balance sheet ratios measures solvency?

current

Which of the following are the two major variables needed to identify specific market segments?

demographic and benefit

Small business owners are often guarded about their businesses, which leads to

distrust of others when formulating a strategic plan

A fixed cost

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

New ventures are important to the economy in terms of innovation and

employment

A key aspect to be considered in an effective succession is the

entrepreneur's vision

The most common viewpoint in business plans is viewpoint of the

entrepreneur.

Secondary data consist of

existing information

Chapter 13 bankruptcy involves a reorganization of the enterprise.

false

The first source for succession often is

family and in-house personnel

Which of the following is not perceived as a difficulty in long-range planning?

favorable market conditions

Happenings that cause the replacement of the owner/manager of a family business are called

forcing events.

The reason many small business managers lack expertise is that they are

generalists

The cash flow does not come from

goods purchased on account

All of the following factors affect pricing strategies except

government mandates

A market is a

group of consumers who have purchasing power and unsatisfied needs.

Which of the following stages of venture development requires major changes in entrepreneurial strategy?

growth

Which of the following pricing models is not indicative of pricing in the social media age?

growth stage model

Sometimes consumers associate a higher price with

higher product quality

Items that can qualify for patent protection include all of the following except

ideas

Emotional bias is likely to have which of the following effects on a seller's valuation of a business?

increase the valuation

In the entrepreneurial strategy matrix, the creation of something new and different is categorized as a(n)

innovation

Return on investment

is net profit divided by investment

Most privately held firms

lack a succession plan

Specific forms of partnership include _____ and _____.

limited partnerships; limited liability partnerships

Which of the following survey methods typically has the lowest respondent cooperation?

mail surveys

A business plan

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

A patent gives the holder a temporary

monopoly.

A trademark is a distinctive _____ that is identified with a company's product.

name

Which of the following works on the premise that a dollar today is worth more than a dollar in the future?

net present value

To establish a sole proprietorship, a person needs to

obtain whatever local and state licenses are necessary.

A budget that is a statement of estimated income and expenses over a specified period of time is referred to as a(n) _____ budget.

operating

When considering management, the entrepreneur should be concerned about

ownership positions

The first step in constructing an operating budget is

preparation of the sales forecast

When comparing and contrasting major competitors along core competitive dimensions, you should include

product, technology, and distribution.

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

ratio analysis.

Loan proceeds are not directly tied to

sales revenue.

The text of a patent application is known as the

specification

Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid

start-up costs

Analysis of a firm's external and internal environments provides the firm with the information to develop

strategic intent and strategic mission

Goodwill, patents, deferred financing costs, and other intangible assets are considered when computing

the adjusted tangible book value

The second section of a business plan is

the business description

In the simple linear regression analysis equation, Y = a + bx, Y represents

the dependent variable

Which of the following is needed to prepare a pro forma balance sheet?

the last balance sheet prepared before the budget period began

Market segmentation is

the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest

A financial source that reads a business plan derives which of the following beneficial information?

the venture's ability to service debt or provide an adequate return on equity

Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need

to formalize planning because there is a great deal of complexity.

The completed business plan provides the entrepreneur with a

tool for communicating with financial sources

Which of the following does a post-money valuation include that a pre-money valuation does not?

venture capital investment

Which of the following are the three types of leadership of consequence to new ventures described by the text?

visionary, strategic, and managerial

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

False

Effective marketing is based on three key elements: marketing philosophy, market segmentation, and consumer philosophy.

False

Emotional bias is not an underlying issue in valuing a business.

False

Only 10 percent of all privately held enterprises make it to a third generation.

False

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

False

Small firm owners/managers are usually very open and trusting about their businesses and the decisions that affect them.

False

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

False

Vesting on founders' stock refers to holders of preferred stock having the right to purchase additional shares when issued by the company.

False

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?

Which of the following is not a suggestion a tax accountant or lawyer might make concerning tax reduction?

Increase management's salaries and fringe benefits

Which of the following statements about a business plan is true?

It is the minimum document required by any financial source.

Which of the following statements about seeking legal advice with respect to succession planning is true?

Legal advice is not critical, but beneficial.

In the context of buying a business, a known commodity may command a higher price for which of the following reasons?

Avoiding start-up costs has value

Which of the following should be done to avoid the pitfall of "no market niche" (segment)?

Clearly target a niche

Which of the following statements regarding communication after the sale is true?

Communication is a key step between the seller and the buyer and between the buyer and the current management personnel

Which of the following is the first step in the traditional pricing formula?

Determine the adjusted tangible net worth

_____ refers to conducting a thorough analysis of every facet of an existing business.

Due dilligence