Entrepreneurship Exam 3 (Chapters 10-14)

Factoring is a method of borrowing against receivables.

True.

The easiest way to find selling prices for products these days is on the Internet.

True.

The quantity of items sold times the price expected to be paid for each product is the calculation used for the:

cost of goods sold budget.

_____ is a category of marketing research that is best defined as the new information collected to solve a problem at hand or answer current questions.

Primary research.

what is a disadvantage of leasing?

Renovation options are limited in a leased property. Leasing is an option with a considerably lower initial cash outlay, and it is often the only feasible choice for new businesses. One of the main downsides of leasing is that you are usually limited in the renovations you can do.

_____ is a form of communication, such as coupon or contests, which encourages the customer to take immediate action.

Sales promotion.

Advertising costs are usually based on cost per?

Thousand.

Which of the following is a reason for a business to do accounting?

To produce information that is useful for managing a business

A cash budget is the essential starting point for all financial and accounting considerations in a small business.

True

Cash-to-cash cycle is also referred to as operating cycle.

True

Currency is the most common form of cash.

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

Most service providers get business usually through referrals or word-of-mouth.

True

Participating in trade shows and trade missions increase international contacts.

True

Payroll records ensure that employment taxes are kept current.

True

Setting up a short-term lease initially is one of the ways to handle an early termination of business.

True

The term "value proposition" refers to small business owners' unique selling points that will be used to differentiate their products and/or services from those of the competition.

True

The usefulness of the income statement for managing a small business is related to the amount of detail available in the statement.

True

There are three typical locations for services: at a client's location, at a mutually accessible location, and at the firm's location.

True

Variance analysis is the process of determining the effect of price and quantity changes on revenues and expenses.

True

A vending machine is a form of direct sales method.

True.

Accounting equation: The statement that assets equal liabilities plus owners' equity (assets = liabilities + owners' equity)

True.

A clothing company that divides its market using characteristics of clothing such as practical, stylish, or for a particular sport, etc., is segmenting the market _____.

by benefits sought

Money that is immediately available to be spent is called _____

cash

Debt investments that mature in less than three months are an example of _____.

cash equivalents

A reduction in the bank account of a merchant by a credit card company is termed _____.

charge back

An entity that processes checks and electronic fund transfers for banks and other financial organizations is called a _____.

clearinghouse

What is Direct Competition?

companies that make a similar product or provide a similar service.

A _____ budget is also referred to as a master budget.

comprehensive

Entrepreneurs can use the AIDA formula to write press releases well. In this AIDA formula, "D" stands for _____.

desire. Entrepreneurs can use the AIDA (attention, interest, desire, and action) formula to write press releases well.

Wholesalers and retailers who connect manufacturers to consumers are referred to as _____.

distribution channels.

In creating a marketing plan, a firm typically identifies its competition and understands its strengths and weaknesses in a stage where the firm:

examines its current situation.

A _____ is best described as a small group (8 to 20 people) that is asked to meet to discuss a series of questions about a particular product or service

focus group

Identify the layout that is very efficient and organized but lacks some visual impact.

Grid layout

Chapter 13

...

Chapter 14

...

In the context of accounting functions, which of the following is true of accounts receivable?

It records provision of credit to customers.

Chapter 11

...

Chapter 12

...

what are open-ended questions best for?

Best used for gathering preliminary information.

What term refers to a concept in public importance which alludes to the degree to which the issue is immediate in its impact?

Currency.

Which of the following direct sales methods is effective for products that need demonstrations or detailed explanations?

Door-to-door sales.

what statement is true of low customer contact businesses?

Empowerment zones offer businesses low-cost space and tax advantages. Generally low customer contact businesses are manufacturing businesses, the headquarters of client location-based services, or remote location services. Customer access is relatively unimportant. Empowerment zones offer businesses low-cost space and tax advantages for locating there. In addition to relatively low cost space, business incubators offer a multitude of small business support services.

Short-term debts are not transferable to other investors.

False.

The difference between revenue and expense is called sales.

False.

An undifferentiated marketing strategy is used when a firm targets one particular segment on which to focus all its efforts.

False. A concentrated strategy is used when a firm chooses one particular segment on which to focus all its efforts. Entrepreneurs often are able to locate a particular niche that the larger companies ignore, and by focusing their efforts on them, are able to do extremely well.

Doing business in a different location other than the hometown is comparatively less expensive.

False. Doing business in your hometown may be perfectly appropriate; however, the cost of moving a company—whether across town or across the country—can be very expensive. It pays to plan ahead.

Exporting is usually expensive, difficult to start, and more risky than licensing, franchising, or joint ventures.

False. Entrepreneurs have available to them the same options as large companies including wholly owned subsidiaries, joint ventures, licensing, franchising, and exporting. Exporting is usually inexpensive, quick to start, easy to change, and less risky than other ventures.

Formal summaries of the content of an accounting system's records of transactions are called financial instruments.

False. Formal summaries of the content of an accounting system's records of transactions are called financial statements.

Direct competition refers to a strategy where companies provide alternatives that are dissimilar to a firm's product/service that consumers might choose to meet a similar need.

False. Indirect competition refers to a strategy where companies provide alternatives that are dissimilar to a firm's product/service that consumers might choose to meet a similar need.

Financial accounting is forward-looking and attempts to predict the results of management decisions.

False. Managerial accounting is forward-looking and attempts to predict the results of management decisions.

One technique to increase cash inflow is to offer discounts for delayed payments.

False. One of the five proven techniques to increase cash inflows includes offering discounts for prompt payment.

Press relations are a form of communication that encourage the customer to take immediate action.

False. Press relations are those activities that business owners do to influence or increase media coverage of their business. Media include newspapers, magazines, websites, blogs, radio, and television.

Brochures and flyers are types of promotional novelties.

False. Promotional novelties range from key chains, pens, and coffee mugs to more expensive embossed briefcases and the like.

The process of dividing the market into smaller portions of people that have certain common characteristics is called stereotyping.

False. Segmentation is the process of dividing the market into smaller portions of people who have certain common characteristics.

Among surveys, in-personsurvey tends to be the least expensive method, with telephone coming in second, and mail the most expensive.

False. Survey questions may be written, asked in person or asked on the telephone. In person tends to be the most expensive method, with telephone coming in second, and mail the least expensive

In person survey has the lowest return rate and does not allow for much flexibility when compared to mail or telephone surveys.

False. Survey questions may be written, asked in person or asked on the telephone. In person tends to be the most expensive method, with telephone coming in second, and mail the least expensive. On the other hand, mail has the lowest return rate and does not allow for much flexibility.

The bank available balance and the bank ledger balance will always show the same value.

False. The bank available balance is the sum of money that has actually been received and paid out of a depositor's account. The bank available balance can vary significantly from the ledger balance.

Hiring marketing research firms is a much more inexpensive option than online surveys for small businesses.

False. There are marketing research firms that could conduct primary research for businesses, but the cost—usually several tens of thousands of dollars—tends to put it out of reach for small businesses. A much more reasonable option is an online survey.

A marketing plan is not required if a person plans to use his or her own personal savings and direct marketing.

False. To convince a bank or private investor to loan money or a store or distributor to carry your product, as an entrepreneur, you need more than just "gut instinct." Even if people plan to use their own personal savings and direct marketing, they're going to need some way to determine whether they are accomplishing their goals, something to make sure they're on the right path.

All money is considered currency, but all currency is not considered money.

False. While all currency is money, all money is not currency.

The close of a sale is the end of the sale.

False. the close is not the end of the sale. The important objective of follow-up is to make customers feel at ease.

Which of the following accounting functions focuses the most on automatically calculating and accumulating depreciation?

Fixed asset accounting

What is a Multi-channel marketer?

If you include in your classified ad your phone number, your Web site, and your e-mail address, then you are a multi-channel marketer. One customer may pick up the phone. Others will e-mail or browse your Web site. This simply allows your customers to contact you in the way they feel most comfortable.

Keeping in mind the budget constraints of a small business and the need to cover customers all over the world, which of the following is the most appropriate way to conduct a survey?

Internet. Internet surveys are gaining in popularity and have the advantage of being able to collect data from a large geographic area inexpensively.

_____ activities include the acquisition and disposal of property, plant, equipment, and investment securities of other firms.

Investing

what is an advantage of personal selling?

It allows business owners to find out the buyers' main concerns and address them.

Which of the following is true of theories based on the bounded rationality models?

It assumes that people are inefficient processors of information.

_____ is the most used item on the income statement.

Operating income

what is customer retention?

The name for the general approach to keeping customers is called customer retention (CM). There are two major elements to CM. One is handling problems that crop up after a sale, and the other called customer relationship management (CRM).

An "as is" property is one which has problems and the landlord tries to push you to accept the property "as is." A compliant property is one which is in compliance with all applicable laws, rules, and regulations.

True.

Creating and distributing a catalog online saves the cost of printing and mailing.

True.

Expendables are often variable costs. Expendables (also called indirect materials) are products used in the sales, manufacturing, or delivery that are not part of the finished product.

True.

Follow-up refers to the contacts you periodically make with customers in order to remind them of your business, and your interest in their business.

True.

If a businessis able to create a prestige image in its customer's mind, it can charge much higher prices than the going rate.

True.

It is customary for a small business to concentrate its efforts on one target market at the beginning and consider secondary ones later.

True.

It is good to opt for distributors when a whole line of products need to be bought or warehoused but you cannot afford to do so yourself.

True.

It is much easier to compare groups and to statistically analyze data with close-ended questions than it is with open-ended questions.

True.

Managerial accounting is both a source of information that is used in decision making and a methodology to reduce the complexity of the information used to make a decision. By definition, managerial accounting deals with only financial information. By limiting the information being considered to financial concerns, the complexity of the alternatives is reduced.

True.

Market segmentation is the process of dividing the market into groups that have somewhat homogeneous needs for a product or service.

True.

One of the difficulties in understanding and interpreting the income statements is the dispute over when one should recognize revenues.

True.

Sales leads who actually make some sort of effort to learn more about the product, service, or business in anticipation of a possible purchase are known as prospects.

True.

The easiest payment procedure for a company is to require up-front cash payment prior to shipment or credit card. This eliminates the company's risk, but puts the customer at risk. Providing credit to your customers reverses the risk, and puts it all on the company.

True.

The first step in budgeting is to make a forecast of your future sales.

True. From the sales forecast, and from your knowledge of cost behaviors, collections, payments, and expenses, a complete business plan will be developed.

_____ offer the flexibility of having a product available around the clock and at convenient locations.

Vending machines. Vending machines aren't appropriate for every product, but they do offer the flexibility of having your product available around the clock and at convenient locations for your customers.

Which of the following is usually the first technique an entrepreneur uses to get customers?

Word-of-mouth

The "going concern" concept states that:

a successful business will stay in business.

Diversification is a strategy whose goal is growth, based on:

adding new products or services to the firm's existing collection of offerings

By using multiple screens of questions in online surveys, respondents can select the screen they will see based on their responses to an earlier question. In Internet survey terms, this is known as _____.

branching

A financial plan for the future based on a single level of operations is called a(n):

budget.

Naomi had always been complimented for her excellent cooking skills. Hence, she decided to commercialize this ability by starting a restaurant. Before starting the restaurant, she invited a few friends and neighbors over for dinner to taste her dishes and provide feedback that she could incorporate in her business venture. This is a typical example of conducting an informal _____.

focus group research.

In personal selling, _____ means finding out about the clients before approaching them.

preparation. The process of personal selling includes prospect and evaluate, prepare, present, close, and follow-up. Preparation means finding out about the clients before approaching them.

What does a Dichotomous Question mean?

questions that have only two possible choices.

A _____ is a concession which covers the time while you prepare your location prior to opening.

rent-free use period.

A(n) _____ is a middleman business which sells to consumers or end-users of a product, typically in single or small quantities.

retailer

People who receive a promotional impression and who give some thought to buying the product are referred to as _____.

sales leads.

The question "On a range of 1 to 10, how would you rate the service in this restaurant?" is an example of a(n) _____.

scalar question

When a marketer mentions the key points about his or her product or service in as few and as memorable words as possible, the resulting message is known as the _____ message.

succinct.

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:

the cash inflows and cash outflows recorded in the firm's accounting records.

An implication of the bounded rationality models of management is that

the more information available to be included into the decision process, the less efficient that process will be