MGMT 421: Chapter 1, Chapter-14, MGMT 421 Chapter 13, MGMT421 Chapter 10, Chatper-9, Chapter - 8, Chapter-7, Chapter -6, MGMT 421: Chapter 8, MGMT 421: Chapter 2, MGMT421 Chapter 7, MGMT 421 chapter 15, MGMT 421: Chapter 6, MGMT 421: Chapter 5, MGMT...
Which of the following statements characterizes the growth stage of the product life cycle? A. Prices are usually high, sales are low, and development, promotion, and distribution costs are high. B. Marketing strategy in this stage typically encourages strong brand loyalty C. Promotion costs climb, and competitors cut prices to attract business D. Management considers pruning items from the product line to eliminate unprofitable ones
B. Marketing strategy in this stage typically encourages strong brand loyalty
12. Which of the following statements characterizes the growth stage of the product life cycle? A. Prices are usually high, sales are low, and development, promotion, and distribution costs are high. B. Marketing strategy in this stage typically encourages strong brand loyalty. C. Promotion costs climb, and competitors cut prices to attract business. D. Management considers pruning items from the product line to eliminate unprofitable ones.
B. Marketing strategy in this stage typically encourages strong brand loyalty.
21. _____ is the amount added to the cost of a product to determine selling price. A. Push money B. Markup C. Marginal value D. Cumulative
B. Markup
25. Matt plans to open a convenience store. The startup cost is approximately $10,000. Since Matt has only $2,500 with him, he decides to invite two of his friends—Brett and Brian—to join him in this venture. In this scenario, who should be in charge of writing the business plan? A. Only Brett and Brian, since they are contributing 75 percent of the initial investment B. Matt, Brett, and Brian, since it is always a team effort C. Whoever has paid the biggest share of the startup cost D. Matt alone, since it was primarily his business plan
B. Matt, Brett, and Brian, since it is always a team effort
Matt plans to open a convenience store. The startup cost is approximately $10,000. Since Matt has only $2,500 with him, he decides to invite two of his friends—Brett and Brian—to join him in this venture. In this scenario, who should be in charge of writing the business plan? A. only Brett and Brian, since they are contributing 75% of the initial investment B. Matt, Brett, and Brian, since it is always a team effort C. whoever has paid the biggest share of the startup cost D. Matt alone, since it was primarily his business plan
B. Matt, Brett, and Brian, since it is always a team effort
In the context of small businesses, which of the following statements is true of selling products to different ethnic groups? A. The median age of most ethnic groups is higher than that of whites. B. Most ethnic groups constitute a better market for durable goods than traditional markets. C. Ethnic groups cannot be reached through advertising D. Traditional markets and ethnic groups must be targeted in the same way
B. Most ethnic groups constitute a better market for durable goods than traditional markets.
10. _____ give a short-term direction to a business and serve as benchmarks for measuring performance. A. Budgets B. Objectives C. Strategies D. Missions
B. Objectives
7. Which of the following is characteristic of a small business owner? A. Is innovative and focuses primarily on profitability and growth B. Perceives the business as being an extension of his or her personality C. Starts and manages a business for many reasons other than furthering personal goals D. Prefers a less relaxed and more aggressive approach to running the business
B. Perceives the business as being an extension of his or her personality
14. _____ are general statements that serve as a guide to managerial decision making and supervisory activities. A. Methods B. Policies C. Budgets D. Procedures
B. Policies
____is a series of prescribed steps to be taken by a small business owner to ensure that a profit will be made A. budgeting B. Profit Planning C. Forecasting D. Profit sharing
B. Profit planning
29. Which of the following does a business incubator do to help small business owners succeed? A. Find out the competition and make deals for cooperation B. Provide management assistance and shared office services C. Hire employees and train them D. Keep their financial records up to date
B. Provide management assistance and shared office services
26. Which form of conservation involves the reprocessing of used items for future use? A. Dematerialization B. Recycling C. Afforestation D. Reducing
B. Recycling
14. _____ refers to the process of reducing the number of employees to increase efficiency. A. Freezing B. Rightsizing C. Procuring D. Resourcing
B. Rightsizing
29. Which of the following may be a good test for ethical behavior? A. Morris water maze test B. Rotary International's "Four-Way Test" C. Conditioned-place preference test D. Two-bottle choice test
B. Rotary International's "Four-Way Test"
12. _____ is a group of volunteer members who specialize in helping people develop their business ideas. A. Small Business Development Center B. Service Corps of Retired Executives C. Production Credit Association D. Officers' Welfare Association
B. Service Corps of Retired Executives
6. Which of the following is an example of operational planning in a company? A. Formulating the mission statement B. Setting the personnel policy C. Selecting the type of business to enter D. Determining the financial needs
B. Setting the personnel policy
19. _____ is a business's obligation to set policies, make decisions, and follow actions that are desirable in terms of a society's values and objectives. A. Collectivism B. Social responsibility C. Business ethics D. Consumerism
B. Social responsibility
1. Which of the following statements is true of the marketing concept? A. The survival of any business depends solely on making a profit. B. Special consideration must be given to the needs, desires, and wishes of present and prospective customers. C. Being consumer oriented often involves coercing consumers to buy a product, irrespective of its quality. D. The systems approach is not used as part of the marketing concept.
B. Special consideration must be given to the needs, desires, and wishes of present and prospective customers.
Which of the following statements is true of the marketing concept? A. The survival of any business depends solely on making a profit. B. Special consideration must be given to the needs, desires, and wishes of present and prospective customers. C. Being consumer oriented often involves coercing consumers to buy a product, irrespective of its quality. D. The systems approach is not used as part of the marketing concept.
B. Special consideration must be given to the needs, desires, and wishes of present and prospective customers.
5. Which of the following is a good source of information through which prospective business owners get help and advice? A. Business Committee for the Arts B. State Economic Development Agencies C. Federal Trade Commission D. Business Council for International Understanding
B. State Economic Development Agencies
21. Which of the following is true of a limited liability partnership? A. It is the most common type of industry for agriculture, or family farms. B. States that recognize limited liability partnerships sometimes limit them to organizations that provide a professional service for which each partner is licensed. C. In a limited liability partnership, partners do not report their profits and losses on their personal tax returns. D. It does not protect individual partners from personal liability for the negligent acts of other partners.
B. States that recognize limited liability partnerships sometimes limit them to organizations that provide a professional service for which each partner is licensed.
29. Which of the following statements is true of small business investment companies (SBICs)? A. They are limited to the sale of debentures. B. The Small Business Administration matches each dollar an SBIC puts into a loan. C. The Small Business Administration does not make ventured capital through SBICs. D. They do not make qualified Small Business Administration loans.
B. The Small Business Administration matches each dollar an SBIC puts into a loan.
Which of the following statements is true of small business investment companies (SBICs)? A. They are limited to the sale of debentures. B. The Small Business Administration matches each dollar an SBIC puts into a loan. C. The Small Business Administration does not make ventured capital through SBICs. D. They do not make qualified Small Business Administration loans.
B. The Small Business Administration matches each dollar an SBIC puts into a loan.
23. Which of the following is true of a family limited partnership? A. It has the same advantages and disadvantages as a proprietorship. B. The majority of the partners are related to each other as spouses, parents, grandparents, siblings, cousins, nieces, or nephews. C. The family limited partnership has fewer benefits than other limited liability partnerships. D. It enjoys a tax-exempt status.
B. The majority of the partners are related to each other as spouses, parents, grandparents, siblings, cousins, nieces, or nephews.
Which of the following is a major reason for the increased interest in small business? A. There is no major fear of being impacted by recession. B. There is a growing trend toward self-employment. C. The rate of profit achieved by small businesses is higher than that of big corporations. D. There are very few government regulations and paperwork for small businesses.
B. There is a growing trend toward self-employment.
3. Which of the following statements is true of family-owned businesses in the United States? A. They have less potential financial risks. B. They can be a source of unresolved family conflicts. C. They can remove all obstacles to achieving the basic business goals. D. They rarely have family members with differing value systems.
B. They can be a source of unresolved family conflicts.
In the context of small businesses, which of the following statements is true of business incubators? A. They reap tax advantages from selling shares to workers. B. They nurture young firms and help them grow. C. They are run by the federal Small Business Administration. D. They require a substantial return as either equity or profit.
B. They nurture young firms and help them grow
21. In the context of small businesses, which of the following statements is true of business incubators? A. They reap tax advantages from selling shares to workers. B. They nurture young firms and help them grow. C. They are run by the federal Small Business Administration. D. They require a substantial return as either equity or profit.
B. They nurture young firms and help them grow.
29. Which of the following statements is true of taxes on amounts withdrawn from a business? A. Salaries and bonuses received from the business corporation are not considered as expenses to the business. B. When one withdraws cash from a proprietorship or partnership, these sums are also taxable to that person as an individual. C. When owners receive a dividend from a corporation, it is taxed only once. D. The payment of pension plans is not deductible by the business.
B. When one withdraws cash from a proprietorship or partnership, these sums are also taxable to that person as an individual.
17. _____ is the amount of current assets less current liabilities. A. Return on investment B. Working capital C. Quick ratio D. Return on net assets
B. Working capital
32. Lawyers can charge for their services by _____. A. asking a client to mortgage his/her immovable property B. asking for a flat fee for a specific assignment C. asking for the entire amount a client receives through a trial D. asking a client to pay as much they think is fit
B. asking for a flat fee for a specific assignment
This land, cash, account receivable, inventory, equipment, building and other things of value that a company owns are considered its____. A. profit B. assets C. revenues D. expenses
B. assets
Which of the following is part of a company's financial resources? A. tools and equipment B. available equity C. reputation D. supervisors
B. available equity
_____ is a form of debt security with a standard denomination, method of interest payment, and method of principal repayment. A. lease B. bond C. chattel D. mortgage
B. bond
A _____ brings a buyer and seller of a particular good together but does not take actual possession of the goods. A. retailer B. broker C.. wholesaler D. merchandiser
B. broker
27. A _____ provides for a corporation to repurchase a shareholder's stock when he/she leaves the company. A. nondisclosure agreement B. buy-sell agreement C. family limited partnership D. recovery fund
B. buy-sell agreement
_____ is the amount of money available at a given time to pay expenses. A. equity B. cash flow C. line of credit D. fixed capital
B. cash flow
6. In the context of small businesses, _____ comes from lenders who will be repaid at a specified interest rate within a specified time span. A. equity financing B. debt financing C. profit capital D. working capital
B. debt financing
In the context of small businesses, _____ comes from lenders who will be repaid at a specified interest rate within a specified time span. A. equity financing B. debt financing C. profit capital D. working capital
B. debt financing
Which of the following refers to a profit planning step of a small business? A. listing strategies for rapid growth B. determining the volume of sales revenue needed to reach profit goals C. listing strategies and possible alternatives to reduce production costs D. analyzing the diversification strategies of competitors
B. determining the volume of sales revenues needed to reach profit goals
9. A disadvantage of a partnership is that: A. financial resources are obtained from one person only. B. each partner is responsible for the acts of every other partner. C. specialized skill is difficult to find in the individual partners. D. there are inadequate management and employee skills.
B. each partner is responsible for the acts of every other partner.
27. The _____ is a part of a business plan that outlines the entire plan, its major objectives, and the expected results. A. cover sheet B. executive summary C. table of contents D. appendix
B. executive summary
The _____ is a part of a business plan that outlines the entire plan, its major objectives, and the expected results. A. cover sheet B. executive summary C. table of content D. appendix
B. executive summary
11. A _____ is a formalized examination and/or review of a company's financial records. A. budget B. financial audit C. financial forecast D. deed
B. financial audit
Expenses that do not alter in value as sales volume rise or fall are called____. A. overhead expenses B. fixed expenses C. operating expenses D. miscellaneous expense
B. fixed expense
20. Expenses that do not alter in value as sales volume rise or fall are called _____. A. overhead expenses B. fixed expenses C. operating expenses D. miscellaneous expenses
B. fixed expenses
13. The sales of a product are rising rapidly and profits are peaking. This product is in the _____ stage of the product life cycle. A. introduction B. growth C. maturity D. decline
B. growth
The sales of a product are rising rapidly and profits are peaking. This product is in the _____ stage of the product life cycle. A. introduction B. growth C. maturity D. decline
B. growth
20. The occupation with the fastest growth overall is _____. A. professional service B. health care C. office and administrative support D. sales and related services
B. health care
_____ are long, usually half-hour TV ads that can be effective in helping small firms keep growing and enter markets once dominated by giant competitors. A. circulars B. informercial C. display ads D. product placement
B. informercial
15. An advantage of imposing government regulations on an industry or business is that _____. A. it makes the proceedings of a business clear and easy to understand B. it generates opportunities for other small businesses C. it requires very little paperwork D. it encourage small firms to hire more workers
B. it generates opportunities for other small businesses
Which of the following statement is true of sales forecast? A. it is the value received by a firm in return for a good or service B. it is an estimate of the amount a firm expects to sell during a given period in the future C. it represents the difference between revenue earned and expenses incurred D. it is estimate of the owners' share of a business, after liabilities are subtracted from assets
B. it is an estimate of the amount a firm expects to sell during a given period in the future
which of the following statement is true of the breakeven point? A. it sets in advantage cost target in all aspects of product design and production B. it is the volume of sales where there is neither profit nor loss C. it is the amount of revenue expected from sales for a given period in the future D. it is specific amount one expects to achieve
B. it is the volume of sales where there is neither profit nor loss
In the context of small businesses, which of the following statements is true of common stock? A.People holding common stocks have an enforceable claim to dividends. B. It represents an owner's interest and consists of many identical shares C. People holding common stocks are paid before preferred stockholders D. It denies its holder all the voting rights of the company.
B. it represents an owner's interest and consists of many identical shares
12. A limitation of a small family-owned business is that a family manager may: A. refuse to hire family members who want to enter the business. B. lack general management skills in spite of specializing in a specific activity. C. ignore top family members when a matter needs to be cleared. D. give more importance to a family member's ability rather than his or her age.
B. lack general management skills in spite of specializing in a specific activity.
_____ is the systematic gathering, recording, and analyzing of data about the merchandising of goods and services. A. competitor analysis B. market research C. Competitive intelligence D. SWOT analysis
B. market research
Which of the following is an example of a strictly business-oriented service? A. health and beauty B. market research firm C. real estate D. insurance and policy
B. market research firm
_____ is the amount added to the cost of a product to determine selling price. A. push money B. markup C. marginal value D. cumulative
B. markup
____ give a short-term direction to a business and serve as benchmarks for measuring performance. A. budgets B. Objectives C. Strategies D. Missions
B. objective
_____ are intermediaries who buy designer labels of clothing and sell them at less than typical retail prices. A. brokers B. off-price retailer C. mass-merchandising agents D. wholesalers
B. off-price retailer
5. A(n) _____ budget forecasts sales and allocates expenses for achieving them. A. capital B. operating C. revenue D. organizing
B. operating
With the _____ method, advertising costs have a consistent relationship to a firm's sales volume and/or profit level. A. units of sales B. percentage of sales or profits C. objective D. executive decision
B. percentage of sales or profits
2. The process of setting objectives and devising courses of action to achieve those objectives is termed _____. A. controlling B. planning C. organizing D. leading
B. planning
The process of setting objectives and devising courses of action to achieve those objectives id termed_____. A. controlling B. planning C. organizing D. leading
B. planning
_____ are general statements that serve as a guide to managerial decision making ands supervisory activities. A. methods B. policies C. budgets D. procedures
B. policies
Which of the following is an example of operational planning in a company? A. formulating the mission statement B. Setting the personnel policy C. selecting the type of business to enter D. Determining the financial needs
B. setting the personnel policy
5. Equity financing in a corporation is evidenced by shares of either common or preferred _____. A. credit B. stock C. partnership D. budget
B. stock
Equity financing in a corporation is evidenced by shares of either common or preferred _____. A. credit B. stock C. partnership D. budget
B. stock
A primary marketing research technique used by most companies is _____. A. leafiet distribution B. telephone survey C. trade association reports D. target marketing reports
B. telephone survey
6. A primary marketing research technique used by most companies is _____. A. leaflet distribution B. telephone surveys C. trade association reports D. target marketing reports
B. telephone surveys
15. A home-based business is an attractive option for working mothers because: A. most corporations encourage telecommuting. B. there has been a decrease in job sharing in many businesses. C. many companies are adopting flextime. D. daycare services are relatively inexpensive.
B. there has been a decrease in job sharing in many businesses.
25. A small retailer provides an allowance to a customer upon the purchase of a washing machine. This is called a _____. A. subsidy B. trade-in C. discount D. rebate
B. trade-in
A small retailer provides an allowance to a customer upon the purchase of a washing machine. This is called a _____. A. subsidy B. trade-in C. discount D. rebate
B. trade-in
_____ play an important role in shipping because of their flexibility in operation and the improved highway systems. A. cables B. trucks C. railroads D. oil pipelines
B. trucks
Questionnaires used for primary research should: A. address at least two issues at a time B. use familiar jargon C. be sequenced randomly D. be prepared by laymen
B. use familiar jargon
7. Questionnaires used for primary research should: A. address at least two issues at a time. B. use familiar jargon. C. be sequenced randomly. D. be prepared by laymen.
B. use familiar jargon.
24. A(n) _____ is a tax on the utilization, consumption, or storage of goods within a taxing jurisdiction. A. sales tax B. use tax C. excise tax D. income tax
B. use tax
20. A(n) _____ is a document that contains instructions about what should be done with a family-owned business if the owner suddenly dies or becomes incapacitated. A. bequest B. will C. estoppel D. claim
B. will
_____ are those capital requirements that are of a relatively permanent nature and are necessary for the functioning of a business. A. Trade credits B. fixed assets C. current assets D. accounts receivable
B.fixed assets
_____ are those institutions in the channel of distribution that either take title to or negotiate the sale of a product. A. publicists B.intermediaries C. manufacturers D. designers
B.intermediaries
1. Obtaining all items, including goods and services, in the proper form and at the proper place, time, and cost is the main objective of: A. promoting. B. marketing. C. purchasing. D. scheduling.
C
1. Which of the following statements is true of an operating system? A. It is a system that helps decide how to get into a business. B. It consists of researching and analyzing the market for a product before starting a business. C. It consists of inputs, processes, and outputs of a business. D. It is a system that helps search for a product before starting a business.
C
10. If a prospective employee is an obvious misfit from outward appearance and conduct, then he or she will be rejected after the _____. A. proficiency test B. diagnostic interview C. preliminary screening D. in-depth interview
C
10. _____ convert materials into products in considerable volume for others to sell to the ultimate consumer. A. Wholesalers B. Retailers C. Producers D. Telecommuters
C
12. Which of the following should an interviewer do to improve the diagnostic interview process? A. Must ask the obvious questions B. Must focus as much attention as possible on a candidate's self-evaluation C. Must have the knowledge to evaluate the answers of a candidate D. Must rely mostly on past credentials
C
16. _____ goods are usually high-priced goods with trade names that are recognized for the exclusive nature of their clientele. A. Convenience B. Shopping C. Specialty D. Seasonal
C
18. Which of the following disabilities is covered under the Americans with Disabilities Act? A. Kleptomania B. Sexual behavior disorders C. Chemical dependency D. Gambling
C
19. Which of the following is an example of products sold in seasonal stores? A. Expensive video B. Precious jewelry C. Skiing equipment D. Cigarette
C
19. Which of the following laws prohibits employment decisions based on race, color, religion, sex, or national origin? A. Civil Rights Act of 1991 B. Vocational Rehabilitation Act of 1973 C. Title VII of Civil Rights Act of 1964, as amended D. Executive Order 11246, as amended
C
20. Which of the following is a characteristic of a downtown location, in the context of small businesses? A. It has the distinction of having low crime rates. B. It suffers due to inadequate public transportation. C. The shopping hours are limited. D. The availability of ample parking space attracts customers.
C
22. Which of the following is true of freestanding stores in the United States? A. These stores have limited parking space. B. The cost per square foot of the location of the stores is very high. C. Considerable advertising may be required to attract customers. D. Limited shopping hours may repel prospective customers.
C
23. Which of the following is a characteristic of shopping centers in the United States? A. They aim to attract business-oriented activities. B. They target customers for specific seasons or events. C. They are designed to draw traffic according to the planned nature of the stores to be included in them. D. They stock only low-priced items that are purchased often and lend themselves to self-service.
C
24. A(n) _____ is the extra compensation paid for all production over a specified standard amount. A. merit increase B. profit share C. incentive wage D. employee stock
C
24. _____ stores are often large department stores, usually located at the ends of the arms of a mall, where they generate heavy traffic for the small stores between them. A. Convenience B. Freestanding C. Anchor D. Specialty
C
26. Which of the following is a legally required fringe benefit that must be provided by employers with 50 or more employees within a radius of 75 miles of their home office? A. Alcohol and drug rehabilitation B. Auto insurance C. Family and medical leave D. Severance pay
C
26. _____ are small work groups meeting periodically to find ways to improve the standard and performance of work. A. Zero-defect teams B. Informal groups C. Quality circles D. Standing committees
C
27. In the context of small businesses, _____ is the use of communication media and scanners to work from an office, home, or any location. A. merchandising B. prospecting C. telecommuting D. freestanding
C
28. _____ is a system used by a producer to ensure that the finished goods or services meet the expectations of customers. A. Standing order B. Quality circle C. Quality control D. Just-in-time management
C
3. Which of the following is a job specification? A. Days and hours of work B. Machines and tools used C. Educational background and knowledge D. Working conditions, including psychological conditions
C
30. The _____ is a nongovernmental bridging organization that establishes global barometers for quality. A. World Trade Organization B. National Institute of Quality C. International Organization for Standardization D. Small Business Administration
C
4. _____ of an operating system consist of the goods and services required by customers. A. Inputs B. Processes C. Outputs D. Layouts
C
5. Which of the following refers to supplier-base downsizing? A. Achievement of high standards by suppliers in a supply chain B. Assigning the responsibility of supplying to one person C. Reducing the number of suppliers to concentrate purchasing D. Integration of supply and demand between suppliers in a supply chain
C
7. Which of the following statements is true about choosing a location for a small business? A. A small business owner must choose a location that is not permanent to include the option of moving to another location. B. It is a factor that does not adversely affect the employees of a small business. C. It is a factor that can make the difference between success and failure for a small business. D. A small business owner must choose a location that is inexpensive irrespective of the accessibility to consumers.
C
What will the net income of a company be if its revenue is $600,000 and its expenses are calculated to be $200,000? A. $800,000 B. $200,000 C. $400,000 D. $1,200,000
C. $400,000
19. Which of the following statements is true of franchising? A. The parties in a franchising arrangement usually compete with each other for success. B. The franchisee is the company that owns the franchise's name and distinctive elements and grants others the right to sell its product. C. A franchise is an agreement whereby an independent businessperson is given exclusive rights to sell a specified good or service. D. A franchiser is usually an independent local businessperson who agrees with the franchise owner to operate the business on a local or regional basis.
C. A franchise is an agreement whereby an independent businessperson is given exclusive rights to sell a specified good or service.
11. Which of the following steps should a family-owned business take to compensate family members? A. Every relative who wishes to work for the business should be hired. B. Family members should be financially rewarded on the basis of their position in the family. C. A managerial title should be offered to motivate a productive family member. D. Relatives should be offered positions according to their status in the family.
C. A managerial title should be offered to motivate a productive family member.
2. Which of the following is a strategy used by companies with a reputation for superior marketing? A. Uniform pricing for all products B. Low customer engagement C. Attention to packaging D. Waging price wars with competitors
C. Attention to packaging
Which of the following is a strategy used by companies with a reputation for superior marketing? A. Uniform pricing for all products B. Low customer engagement C. Attention to packaging D. Waging price wars with competitors
C. Attention to packaging
22. In a store, an item is priced extremely low by a dealer, but the salesperson points out the disadvantages of the item and switches customers to items of higher quality and price. What is this pricing policy called? A. Leader pricing B. Prestige pricing C. Bait pricing D. Odd pricing
C. Bait pricing
8. Prospective entrepreneurs can access data from _____ to obtain information on subjects such as population, business, and housing. A. MIT Enterprise Forum B. International Franchise Association C. Census Bureau D. Federal Trade Commission
C. Census Bureau
25. _____ is also known as the "green" movement. A. Consumerism B. Deforestation C. Conservation D. Acculturation
C. Conservation
20. _____ is the organized efforts of independent, government, and business groups to protect end users from undesirable effects of poorly designed and produced products. A. Polarization B. Conservation C. Consumerism D. Protectionism
C. Consumerism
6. _____ refer to family-owned businesses run by husband-and-wife teams. A. Appreneurs B. Intrapreneurs C. Copreneurs D. Ecopreneurs
C. Copreneurs
24. _____ is a voluntary decision to terminate a business. A. Foreclosure B. Formal failure C. Discontinuance D. Bankruptcy
C. Discontinuance
13. Which of the following is an advantage of hiring professional managers to run family-owned businesses? A. More employment opportunities for family members B. Retained "personal touch" C. Fair treatment of employees D. Concentration of power in small cliques
C. Fair treatment of employees
22. Which of the following is an advantage of selling a family-owned business to family members? A. Fewer family members are hired in the business. B. There is relief from further responsibility attached to the business. C. Family bonds are strengthened, and additional friction is reduced. D. The family tension that was previously linked to owning the business is released.
C. Family bonds are strengthened, and additional friction is reduced.
_____ of a company is its current assets, less current liabilities, that a firm uses to produce goods and services and to finance the extension of credit to customers. A. Debt capital B. Equity C. Flexcomo D. Working capital
C. Flexcomo
10. Which of the following statements is true of Chapter 11 of the Bankruptcy Reform Act of 1978? A. A firm that files for bankruptcy protection cannot operate while its debts are being repaid. B. Society should compensate those who have suffered an injury as a result of wrongful action(s) by others. C. If a business is so far gone that it cannot keep operating, it must be liquidated. D. A bankrupt business can be reorganized only when the bankruptcy petition is filed voluntarily.
C. If a business is so far gone that it cannot keep operating, it must be liquidated.
12. Which of the following is a reason for the drastic changes in small business management trends? A. Accounting departments becoming independent of computer support B. Diverse shift away from people-related activities C. Improvements in communications and computer technology D. Excess supply of managerial talent
C. Improvements in communications and computer technology
6. What is the function of a cash flow budget? A. It plans expenditures for obtaining, expanding, and replacing physical facilities. B. It forecasts sales and allocates expenses for achieving them. C. It forecasts the amount of money needed to pay expenses and make other purchases. D. It plans and controls revenue and expenses to obtain desired profits.
C. It forecasts the amount of money needed to pay expenses and make other purchases.
28. Which of the following statements is true of the Small Business Administration? A. It offers environmentally friendly products for commercial sale. B. It generally requires a substantial return as either equity or profit. C. It helps small firms find financing at reasonable rates. D. It allows small businesses to reap tax advantages by selling stock shares to workers.
C. It helps small firms find financing at reasonable rates.
Which of the following statements is true of the Small Business Administration? A. It offers environmentally friendly products for commercial sale. B. It generally requires a substantial return as either equity or profit. C. It helps small firms find financing at reasonable rates. D. It allows small businesses to reap tax advantages by selling stock shares to workers.
C. It helps small firms find financing at reasonable rates.
26. Which of the following is true of a franchise fee? A. It is a fee paid to the franchiser at regular intervals of time. B. It is a fee based on the percentage of a franchisee's gross revenue. C. It is a one-time fee paid to the franchiser. D. It is a continuous fee paid by the franchiser to the franchisee.
C. It is a one-time fee paid to the franchiser.
11. Which of the following statements is true of small company offering registration (SCOR)? A. It is a form of debt security with a standard denomination. B. It is a contract that permits use of someone else's property. C. It is the sale of common stock to the public through a regulated board. D. It is a long-term debt that is secured by real property.
C. It is the sale of common stock to the public through a regulated board
Which of the following statements is true of small company offering registration (SCOR)? A. It is a form of debt security with a standard denomination. B. It is a contract that permits use of someone else's property. C. It is the sale of common stock to the public through a regulated board. D. It is a long-term debt that is secured by real property.
C. It is the sale of common stock to the public through a regulated board.
3. Which of the following statements is a characteristic of an effective control system? A. It should not be the responsibility of one individual. B. It should indicate the ability a company has to pay its current liabilities. C. It should indicate cause-and-effect relationships. D. It should not be quantifiable.
C. It should indicate cause-and-effect relationships.
20. Which form of business combines the advantages of a corporation with the benefits of a partnership? A. Nonprofit corporation B. Proprietorship C. Limited-liability company D. Quasi-corporation
C. Limited-liability company
15. In which stage of the product life cycle does competition become more aggressive with declining prices and profits? A. Introduction B. Growth C. Maturity D. Decline
C. Maturity
In which stage of the product life cycle does competition become more aggressive with declining prices and profits? A. introduction B. Growth C. Maturity D. Decline
C. Maturity
1. Which of the following factors should be considered while choosing the proper legal form for a business? A. Packaging of the product B. Location of the factory C. Nature of the business D. Name of the product
C. Nature of the business
Which of the following statements is true of exporting by small American firms? A. Small firms cannot export successfully. B. Payment for goods sold to foreign buyers is uncertain. C. Overseas markets represent unlimited sales opportunities D. Export start-up costs are high
C. Overseas markets represent unlimited sales opportunities
22. Which of the following is true about the final stage of the typical growth pattern that small businesses tend to follow? A. Owners manage the business and do all the work. B. Owners manage their companies but hire employees to help with routine and/or management activities. C. Owners hire managers to run the firms. D. Owners outsource much of the supervisory work.
C. Owners hire managers to run the firms
____is referred to as the proprietors' share of (or net worth in) a business, after the liabilities are subtracted from the assets. A. breakeven expense B. operating expense C. owners' equity D. private equity
C. Owners' equity
25. What is estate planning? A. Planning for a new buyer of a family-owned business that is up for sale B. Compensating the owner of a family-owned business when the family wants to sell it C. Preparing for the orderly transfer of an owner's equity when death occurs D. Assessing the real-estate value of a family-owned business before it is sold
C. Preparing for the orderly transfer of an owner's equity when death occurs
5. _____ law is administered between two or more citizens. A. Public B. Criminal C. Private D. Civil
C. Private
13. Jane, who wants to start her own business, considers buying an Internet café which is up for sale in her neighborhood. However, Jane discovers that Internet connectivity tends to be erratic in the store since she lives in a remote town and decides against it. Which of the following is most likely the reason for Jane's refusal to buy the business? A. Lack of an established product line B. Lack of an established channel of distribution C. Problems due to old and obsolete facilities D. Problems associated with workforce availability
C. Problems due to old and obsolete facilities
17. The Small Business _____ Act requires each federal agency to set up compliance centers to help small businesses deal with pending legislation. A. Emergency Supplemental Appropriations B. Community Learning Centers C. Regulatory Enforcement Fairness D. Worker Adjustment and Retraining
C. Regulatory Enforcement Fairness
15. _____ is the percentage of net profit the owners' equity earns, before taxes. A. Return on net assets B. Surplus value C. Return on equity D. Profit margin
C. Return on equity
14. Which organization provides counseling, training, and technical assistance in all aspects of small business management? A. Small Business Correction Center B. Small Business Facilitation Center C. Small Business Development Center D. Small Business Training Center
C. Small Business Development Center
4. The website of the Federal Small Business Administration has a self-help program called the _____, which helps prospective entrepreneurs focus on some of the factors they need to consider before starting their own business. A. Market Research Questionnaire B. Directory of Entrepreneurship C. Small Business Startup Kit D. Test Marketing Tool
C. Small Business Startup Kit
17. In the context of small businesses, which of the following statements is true of debt securities? A. Commercial banks prefer to make long-term loans. B. Publicly issued debt is commonly used by small firms. C. Small companies rely on loans from commercial banks. D. Insurance companies prefer to make short-term loans.
C. Small companies rely on loans from commercial banks.
In the context of small businesses, which of the following statements is true of debt securities? A. Commercial banks prefer to make long-term loans. B. Publicly issued debt is commonly used by small firms C. Small companies rely on loans from commercial banks. D. nsurance companies prefer to make short-term loans
C. Small companies rely on loans from commercial banks.
14. Which of the following is a benefit of buying a franchise? A. The franchisee can identify his or her market niche. B. The franchisee can select his or her own sales activities. C. The franchiser brings proven methods of operation to aid the franchisee. D. The franchiser gives complete independence to run the franchise.
C. The franchiser brings proven methods of operation to aid the franchisee.
24. Which of the following is true of business format franchising? A. The franchiser exercises very little control over the franchisee's business operations. B. Gasoline service stations and truck dealerships use this form of franchising. C. The franchiser provides assistance to the franchisee to train franchise personnel. D. Franchisees concentrate on handling the franchiser's product line and identify their business with that firm.
C. The franchiser provides assistance to the franchisee to train franchise personnel.
12. What are articles of copartnership? A. They are instruments by which a partnership is formed under the business laws of a given state. B. They state what a business can do and provide other organizational and financial information. C. They are drawn up before the formation of a partnership to show the rights, duties, and responsibilities of each partner. D. They explain how stockholders can buy out each other's interest in a business.
C. They are drawn up before the formation of a partnership to show the rights, duties, and responsibilities of each partner.
19. Which of the following statements is true of venture capital firms? A. They rely more heavily on business plans than on executive summaries in making investment decisions. B. They are a source of debt financing for all large companies. C. They prefer to back small firms with opportunities for fast growth. D. They are engaged in assisting disadvantaged businesses that may or may not be successful in the future.
C. They prefer to back small firms with opportunities for fast growth.
Which of the following statements is true of venture capital firms? A. They rely more heavily on business plans than on executive summaries in making investment decisions. B. They are a source of debt financing for all large companies. C. They prefer to back small firms with opportunities for fast growth. D. They are engaged in assisting disadvantaged businesses that may or may not be successful in the future.
C. They prefer to back small firms with opportunities for fast growth.
19. Why are a number of entrepreneurs turning to formal succession plans for their family-owned businesses? A. To ensure that they get proper returns on their investment B. To allow themselves to go on a short leave C. To prevent endless disputes over ownership between their heirs D. To devote time to face-to-face teaching and training
C. To prevent endless disputes over ownership between their heirs
10. While working in a fast food outlet, Harold observed that most of the customers were working in offices in the neighborhood. Sensing a profitable opportunity, he decided to open a catering business. He offered to deliver lunch directly to the offices so that the businesspeople would not have to interrupt their meetings to go out for lunch. In the context of the above scenario, which of the following was the reason for Harold to start his own business? A. To obtain fresh inventory B. To take advantage of the latest technology to fill a void C. To select a competitive environment D. To have a free hand in selecting personnel
C. To select a competitive environment
____ are obligations to pay for goods and services purchased and are usually due within 30 or 60 days, depending on the credit terms. A. Purchase return B. Sales returns C. Accounts payable D. Owner's Equities
C. accounts payable
16. The _____ is the ratio of current assets, less inventory, to current liabilities. A. current ratio B. debt ratio C. acid test ratio D. cash ratio
C. acid test ratio
The absolute cost of an advertising media is the: A. relationship between the actual cost and the number of consumers a message reaches. B. ratio between the cost of commercial time and the program rating. C. actual expenditure of running an advertisement. D. cost of ad space compared to its circulation
C. actual expenditure of running an advertisement.
_____ are marketing intermediaries who market a product to others for a fee. A. wholesalers B. brokers C. agents D. retailers
C. agents
24. A(n) _____ is given to customers for accepting less of something or as an adjustment for variation in quality. A. discount B. rebate C. allowance D. subsidy
C. allowance
A(n) _____ is given to customers for accepting less of something or as an adjustment for variation in quality A. discount B. rebate C. allowance D. subsidy
C. allowance
In a store, an item is priced extremely low by a dealer, but the salesperson points out the disadvantages of the item and switches customers to items of higher quality and price. What is this pricing policy called? A. leader pricing B. prestige pricing C. bait pricing D. odd pricing
C. bait pricing
19. According to the Small Business Administration's (SBA) Office of Advocacy (www.sba.gov), only _____ tend to be dominated by larger businesses. A. specialized delivery and catering services B. social assistance and educational services C. construction and personnel/supply services D. management, business, and financial services
C. construction and personnel/supply services
Marketing activities that include the use of coupons, trading stamps, and samples that stimulate buyer purchasing and dealer effectiveness is incorporated in _____. A. trade promotion B. publicity C. consumer promotion D. merchandising
C. consumer promotion
1. _____ is the process of ensuring that organizational goals are achieved. A. Audit B. Credit management C. Control D. Debt restructuring
C. control
27. A business that is owned by and operated for the benefit of patrons using its services is called a _____. A. joint venture B. fractional ownership C. cooperative D. proprietorship
C. cooperative
30. Credit management involves: A. forecasting sales and allocating expenses to achieve them. B. developing new products to achieve a deeper market penetration. C. deciding how customers will pay for purchases. D. examining a company's financial records.
C. deciding how customers will pay for purchases.
A business plan can be successfully prepared by: A.adding overestimated values of expected revenues to attract investors. B. establishing a long-term operational plan only for the current production process. C. developing short-term detailed plans for those involved with the business. D. removing the parts related to operational planning and retaining the parts related to strategic planning.
C. developing short-term detailed plans for those involved with the business
26. A business plan can be successfully prepared by: A. adding overestimated values of expected revenues to attract investors. B. establishing a long-term operational plan only for the current production process. C. developing short-term detailed plans for those involved with the business. D. removing the parts related to operational planning and retaining the parts related to strategic planning.
C. developing short-term detailed plans for those involved with the business.
25. Mark opened a café in his neighborhood. Soon his café became very popular, and his revenues started increasing. Steve, the owner of a popular restaurant, saw Mark's success and asked him to join his restaurant. The financial incentive that Steve offered Mark was more than what he earned at his café. Moreover, Mark would not have to face the daily hassles of managing everything on his own. Mark decided to shut down his café and join the restaurant. This is an example of: A. foreclosure. B. formal failure. C. discontinuance. D. bankruptcy.
C. discontinuance.
A well-managed small business is mostly likely to: A. place low importance on the balance sheet B. emphasize rapid growth instead of stability C. emphasize long-range planning D. be less liquid than a badly managed company
C. emphasize long-range planning
Many consultants and advisers push small companies to give more emphasis to their: A. internal environment B. strengths C. external environment D. competitive edge
C. external environment
11. Many consultants and advisers push small companies to give more emphasis to their: A. internal environment. B. strengths. C. external environment. D. competitive edge.
C. external environment.
21. Burger's Inc. owns a number of fast food stores across the country. Ryan, who wants to start his own business, decides to open a store under the Burger's Inc. trademark. He has to sell and market the fast food products according to the terms of the licensing agreement. In this scenario, Ryan is a: A. venture capitalist. B. franchiser. C. franchisee. D. manufacturing agent.
C. franchisee.
Which of the following is an example of a current asset? A. motor vehicles B. furniture C. inventory D. office equipment
C. inventory
In order to maintain control, the owner of a business should: A. convince securities dealers to finance the startup costs B. use venture capital funds C. invest more personal funds than all other sources combined D. borrow funds for the startup capital from external lenders
C. invest more personal funds than all other sources combined
22. In order to maintain control, the owner of a business should: A. convince securities dealers to finance the startup costs. B. use venture capital funds. C. invest more personal funds than all other sources combined. D. borrow funds for the startup capital from external lenders.
C. invest more personal funds than all other sources combined.
8. Smaller firms tend to: A. minimize innovation and flexibility. B. not provide a comprehensive learning experience to their employees. C. keep larger firms competitive. D. provide reduced employee job satisfaction.
C. keep larger firms competitive.
8. A _____ is a contract that permits the use of someone else's property for a specified time period. A. trade credit B. bond C. lease D. living trust
C. lease
A _____ is a contract that permits the use of someone else's property for a specified time period. A. trade credit B. bond C. lease D. living trust
C. lease
26. A _____ is an item priced at or below the actual cost price to attract customers into the store and buy more profitable items. A. prestige buy B. trade-in C. loss leader D. premium product
C. loss leader
A _____ is an item priced at or below the actual cost price to attract customers into the store and buy more profitable items. A. prestige buy B. trade-in C. loss leader D. premium product
C. loss leader
The largest expenses for companies selling products usually is related to: A. human capital and resources B. insurance C. materials, suppliers, and/or goods D. advertising
C. materials, suppliers, and/or goods
17. The largest expense for companies selling products usually is related to: A. human capital and resources. B. insurance. C. materials, supplies, and/or goods. D. advertising.
C. materials, supplies, and/or goods.
_____ is the promotional effort made for a product or service in retailing firms, especially at the point of purchase. A. trading B. sponsoring C. merchandising D. brokering
C. merchandising
5. Strategic planning helps a business set its _____. A. methods and procedures B. policies and visions C. missions D. budgets
C. missions
Strategic planning helps a business set its____. A. method and procedures B. policies and visions C. missions D. budgets
C. missions
The external environment of a SWOT analysis consists of : A. strengths and weaknesses B. threats and weaknesses C. opportunities and threats D. opportunities and strengths
C. opportunities and threats
8. The external environment of a SWOT analysis consists of: A. strengths and weaknesses. B. threats and weaknesses. C. opportunities and threats. D. opportunities and strengths.
C. opportunities and threats.
7. A partnership is a form of business that is: A. formed for only civic, educational, charitable, and religious purposes. B. organized to provide a professional service for which each shareholder is licensed. C. owned by two people who share ownership of a single business. D. created to obtain financial sources from only one person.
C. owned by two people who share ownership of a single business.
17. John wants to start his own fruit juice and beverage company. He is aware of the large number of competitors in this industry and of the fact that his product should not be very costly. To differentiate his product from that of his competitors, he decides to sell his beverages in specially designed containers that keep the juice fresh for 7 days even without refrigeration. John is focusing on the _____ component of the marketing mix. A. place B. pricing C. packaging D. product
C. packaging
John wants to start his own fruit juice and beverage company. He is aware of the large number of competitors in this industry and of the fact that his product should not be very costly. To differentiate his product from that of his competitors, he decides to sell his beverages in specially designed containers that keep the juice fresh for 7 days even without refrigeration. John is focusing on the _____ component of the marketing mix. A. place B. Pricing C. packaging D. product
C. packaging
26. A family limited partnership allows business owners to: A. choose people who could be considered owners of the business in their absence. B. remain part of the ownership group when the business is sold to an outsider. C. pass assets to heirs with a minimum of income and estate tax costs while retaining control of assets during their lifetime. D. name a family member as the successor when their business is up for sale.
C. pass assets to heirs with a minimum of income and estate tax costs while retaining control of assets during their lifetime.
Which of the following is the first step in the creative selling process? A. making initial contact B. presenting a product C. preparation D. prospecting
C. preparation
24. A corporation formed by a doctor for the sole purpose of providing his services for which he is licensed is called a(n) _____. A. nonprofit corporation B. S corporation C. professional service corporation D. C corporation
C. professional service corporation
_____ is the specific amount of profit one expects to achieve in a business. A. the breakeven point B. the sales income C. a profit goal D. a benchmark
C. profit goal
Which of following statements is true of profit planning? A. profit planning completely eliminate the risk of failure in a small business B. typically, determining the volume of sales revenue is not required for profit planning C. profit planning must precede other planning activities because it establishes targets D. Ones profit goal need not be a specific target value
C. profit planning must precede other panning activities because it establishes targets
11. The function of the Small Business Administration is to: A. protect consumers from undesirable effects of poorly produced products of small businesses. B. enforce pollution control standards for small businesses. C. provide direct and guaranteed loans to small businesses. D. provide demographic information to small businesses.
C. provide direct and guaranteed loans to small businesses.
6. Small business owners prefer a proprietorship over other forms of business because it: A. provides access to unlimited capital. B. ensures that the business has an unlimited life. C. provides relative freedom of action and control. D. makes it easy for the owner to obtain credit.
C. provides relative freedom of action and control.
Which mode of transportation has the disadvantage of operating on fixed routes and on a fixed schedule? A. waterways B. trucks C. railroads D. cables
C. railroads
25. A(n) _____ is a tax added to the gross amount of the sale for goods sold within the taxing jurisdiction. A. use tax B. excise tax C. sales tax D. income tax
C. sales tax
16. Expansion of small family-owned businesses may be limited by: A. the size of the family. B. the low motivational level of employees. C. the amount of family assets available. D. the retirement age of the owner.
C. the amount of family assets available.
21. If a family-owned business is a corporation, replacement of ownership is decided by: A. the spouse of the former owner. B. a court-appointed attorney. C. the board of directors. D. the nonfamily employees.
C. the board of directors.
The assets, liabilities, and equity account of a business, which are interrelated and interact with each other, represent: A. the benchmark of the business B. the surplus value of the business C. the financial structure of the business D. the profit realization rate of the business
C. the financial structure of business
Cost of goods sold is : A. the target cost for all phase of design, development, and production of a product for each accounting period B. the sum of net income and accounts receivable C. the total cost in terms of raw materials, labor, and overhead of the business that can be allocated to production D. the difference between revenue earned and expenses incurred
C. the total cost in terms of raw materials, labor, and overhead of the business that can be allocated to production
22. Environmental protection involves: A. dealing ethically with employees, customers, and competitors. B. participating in community and charitable activities to help the underprivileged. C. trying to maintain a healthy balance between people and their surroundings. D. dealing with sexual harassment in the office.
C. trying to maintain a healthy balance between people and their surroundings.
1. _____ is a statement of the mental, physical, and other qualifications required of a person to do a particular job. A. Job forecast B. Job evaluation C. Job method D. Job specification
D
10. What is the advantage of using multiple sources of supply? A. During shortages, better services can be received. B. Discounts can be obtained with low-volume buying. C. The cost of ordering is low. D. Greater variety of goods can be obtained.
D
11. Which of the following statements is true about small service companies? A. They vary in size and are designed to draw traffic in a shopping center. B. They should be located away from the city, where rental space is too costly. C. They cannot take their activities on the road to obtain more income. D. They have some characteristics of both retailers and producers.
D
14. _____ are usually higher-priced items, which are bought infrequently, and for which customers compare prices. A. Convenience goods B. Seasonal goods C. Fringe goods D. Shopping goods
D
16. Which of the following training methods do small companies use to make their employees more versatile during shortage of skilled job applicants? A. Apprenticeship training B. Internship training C. Co-op program D. Cross-training
D
17. Which of the following is an advantage of cross-training? A. It helps employees specialize in their area of work. B. It is the most effective way to increase employee attrition. C. It is most effective for young people who cannot finish a high school program. D. It is an effective way to keep workers more interested in their jobs.
D
17. _____ is carried to disconnect one segment of the operating process of a business from another so that each part can operate at its optimum level. A. Stockout B. Scheduling C. Controlling D. Inventory
D
19. When can an optimum inventory level be maintained? A. When the sum of the costs of carrying inventory and the costs of stockout is high B. When the costs of carrying inventory are higher than the costs of stocking out C. When the costs of carrying inventory are lower than the costs of stocking out D. When inventory carrying costs and stockout costs are zero
D
2. For small businesses, the inputs of an operating system: A. are the steps to integrate the support systems into an overall producing system. B. include the activities from obtaining raw materials through delivering the product to the customers. C. include the process of converting productive factors into the goods and services required by the consumers. D. include materials, people, money, information, machines, and other productive factors.
D
21. When inventory level determines the time to order in a business, the order quantity is a fixed amount called the _____. A. incremental order quantity B. stockout quantity C. standing order D. economic order quantity
D
22. Which of the following can the owners of small businesses do to cope with variations in demand? A. Hire permanent workers during peak periods B. Avoid subcontracting production C. Avoid carrying complementary products, such as winter and summer items D. Use inventory buildups to smooth out operations
D
22. Which of the following statements is a characteristic of an affirmative action program? A. It allows punitive and compensatory damages in cases of intentional discrimination. B. It makes it illegal to discriminate against employees or applicants because of genetic information. C. It provides employee selection guidelines. D. It provides guidelines to help firms eliminate discrimination against women and minorities.
D
26. In the context of small businesses, _____ include the buildings, machines, and other equipment needed to produce and distribute a product. A. intangible assets B. layouts C. market locations D. facilities
D
27. Which of the following statements is true of the members of quality circles? A. They are usually senior-level managers. B. They are generally the supervisors of their respective departments. C. They usually do not get support from top management. D. They receive training in problem identification, communications, and problem solving.
D
28. The _____ retirement plan permits workers to place a certain amount of their wages in a tax-deferred retirement savings plan. A. flexcomp B. defined-contribution C. defined-benefit D. 401(k)
D
29. Which of the following is one of W. Edwards Deming's 14 points of management philosophy and techniques? A. Adopt the old philosophy. B. Depend on mass inspection. C. Award business on the basis of a price tag. D. Break down barriers between departments.
D
4. Which of the following is one of the two current trends in purchasing that are causing considerable problems for small firms? A. Lack of stockouts B. Manufacturer-base downsizing C. Decrease in the demand for American products D. Fully integrated production networks
D
5. Which of the following is an output of a restaurant business? A. Menu display B. Bill C. Order D. Happy customer
D
5. _____ is moving an employee from one location or department to another, without necessarily changing job title or pay. A. Upgrading B. Reengineering C. Downsizing D. Transferring
D
6. _____ includes all the activities from obtaining raw materials through providing the good or service to the buyer. A. Marketing B. Reinvention C. Processing D. Production
D
8. The _____ is an integrated-coordinated system of activities to transform raw materials into finished products delivered to the end consumer. A. inventory code B. economic order C. quality circle D. supply chain
D
9. In the context of the process of selection of employees, validity is making sure that: A. the results of an employee selection test are kept confidential. B. an employee selection test is administered by a trained professional. C. an employee selection test is approved by all businesses alike. D. the contents of an employee selection test correspond to job performance.
D
7. _____ is defined as a wrongful act by one party that results in injury to a second party's person, property or reputation for which the first party is liable. A. Malice B. A deed C. Hostility D. A tort
D. A tort
20. _____ are wealthy individuals who invest part of their assets in high-risk, high-return ventures. A. Business incubators B. Debt creditors C. Trade creditors D. Angel capitalists
D. Angel capitalists
_____ are wealthy individuals who invest part of their assets in high-risk, high-return ventures. A. Business incubators B. Debt creditors C. Trade creditors D. Angel capitalists
D. Angel capitalists
16. _____ set the requirements needed to follow strategies and accomplish objectives. A. Methods B. Policies C. Procedures D. Budgets
D. Budgets
17. How can children be prepared to enter a family-owned business? A. By allowing them to work in senior management positions and make important decisions B. By giving them a permanent leadership position in the business C. By promoting them rapidly in the business out of turn D. By letting them work for another company to gain suitable work experience
D. By letting them work for another company to gain suitable work experience
21. _____ is the movement to protect the valid interests of consumers and is a major force in small business today. A. Protectionism B. Social responsibility C. Business ethics D. Consumerism
D. Consumerism
3. _____ is the process of setting standards, measuring performance against standards, and taking corrective action to see that planned performance is achieved. A. Planning B. Organizing C. Staffing D. Controlling
D. Controlling
27. Which pricing strategy is a building contractor most likely to use? A. Break-even pricing strategy B. Unit pricing strategy C. Loss leader pricing strategy D. Cost-plus pricing strategy
D. Cost-plus pricing strategy
Which pricing strategy is a building contractor most likely to use? A. break-even pricing strategy B. unit pricing strategy C. loss leader pricing strategy D. Cost-plus pricing strategy
D. Cost-plus pricing strategy
30. While implementing a marketing strategy, _____ involves adding products that are unrelated to the present product line. A. Penetration B. Acquisition C. Specialization D. Diversification
D. Diversification
15. Which of the following is a drawback of buying a franchise? A. Franchisers do not provide any guidance to the franchisee. B. Franchises are not available in a wide range of endeavors. C. Franchisers have to identify their market niche and conduct their own sales activities. D. Franchisees face issues in understanding their role in the responsibilities of operating the franchise.
D. Franchisees face issues in understanding their role in the responsibilities of operating the franchise.
18. _____ is a marketing system based on a legal arrangement that permits one party to conduct business as an individual owner while abiding by the terms and conditions set by the second party. A. Joint venture B. Wholesaling C. Wholly owned subsidiary D. Franchising
D. Franchising
10. Which of the following statements is true about small businesses? A. They get easy financing that leads to too many choices for funding. B. Small businesses provide low employee job satisfaction owing to a lower volume of transactions. C. They are not subject to burdensome government regulations and paperwork. D. Inadequate management in small businesses creates problems for small business owners and entrepreneurs.
D. Inadequate management in small businesses creates problems for small business owners and entrepreneurs.
24. Which of the following statements is true of a company's business plan? A. It emphasizes operational planning more than strategic planning. B. It is a money-raising tool to attract venture capitalists when the owner wants to assume more control over the company. C. It usually provides big entrepreneurs a greater chance of success than the small business owners. D. It provides a detailed design of activities to be carried to finance the business and market products.
D. It provides a detailed design of activities to be carried to finance the business and market products.
30. John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation? A. Lender(s) involved in helping him with his business should have a voice in managing it. B. John's ability to attract money does not depend on a lender's perception of his character. C. John's credit history will not be checked when he requests funding because his business is small. D. Lender(s) will typically look at the track record of his business because the money being borrowed is for an existing business.
D. Lender(s) will typically look at the track record of his business because the money being borrowed is for an existing business.
John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation? A. Lender(s) involved in helping him with his business should have a voice in managing it. B. John's ability to attract money does not depend on a lender's perception of his character. C. John's credit history will not be checked when he requests funding because his business is small. D. Lender(s) will typically look at the track record of his business because the money being borrowed is for an existing business.
D. Lender(s) will typically look at the track record of his business because the money being borrowed is for an existing business.
Which of the following statements is true of the introduction stage of the product life cycle A. Management considers pruning items from the product line to eliminate unprofitable ones B. Marketing strategy typically encourages strong brand loyalty C. Promotion costs climb, and competitors cut prices to attract business D. Many products never get beyond this stage
D. Many products never get beyond this stage
11. Which of the following statements is true of the introduction stage of the product life cycle? A. Management considers pruning items from the product line to eliminate unprofitable ones. B. Marketing strategy typically encourages strong brand loyalty. C. Promotion costs climb, and competitors cut prices to attract business. D. Many products never get beyond this stage.
D. Many products never get beyond this stage.
8. Which of the following is an advantage of partnerships? A. Each partner has limited liability for the debts of a business. B. Each partner is responsible only for his or her acts. C. A business continues to exist even after the death of any one partner. D. More capital can be raised since good credit may be available.
D. More capital can be raised since good credit may be available.
1. _____ is the process of finding a small—but profitable—demand for something and producing a custom-made product for that market. A. Lead marketing B. Challenge marketing C. Content marketing D. Niche marketing
D. Niche marketing
In the context of small businesses, which of the following statements is true of global marketing? A. Only large firms can export successfully B. Payment for goods sold to foreign buyers is always uncertain C. Foreign consumers will not buy American products D. Overseas markets represent wide sales opportunities
D. Overseas markets represent wide sales opportunities
26. John opened All-for-Shop, a small retail outlet, in his neighborhood. He could not sustain it for more than a year because of huge losses and chose to shut it down. Fortunately, he did not have any creditors. Which of the following does the situation describe? A. Formal failure B. Foreclosure C. Bankruptcy D. Personal failure
D. Personal failure
Which of the following statements is true of selling merchandise in today's world? A. Advertising entices customers to desire a product, and it alone is usually sufficient to complete a sale. B. Self-service increases retail costs by having less effective use of store space C. Now many retailers are using salary or salary plus commission, rather than straight commission, to pay their salespeople D. Personal selling is one activity where small firms, particularly retailers, can compete with larger competitors—and win
D. Personal selling is one activity where small firms, particularly retailers, can compete with larger competitors—and win
23. _____ is defined as trying to prevent the contamination or destruction of the natural environment. A. Conservation B. Consumerism C. Community relations D. Pollution control
D. Pollution control
30. Which of the following is the main goal of an incubation program? A. Provide financial assistance B. Exempt small businesses from interest on loans C. Procure equipment D. Produce businesses that are financially viable and freestanding
D. Produce businesses that are financially viable and freestanding
23. Which of the following statements is true about the typical growth pattern of a small business? A. Owners do not need to give managers a financial interest in the business to hold them. B. The length of service of professional managers (as opposed to owner-managers) in small businesses tends to be relatively long. C. Owners typically hire professional managers as soon as they start their business. D. Professional managers who work in small companies move from one company to another as they progress upward in rank and earnings.
D. Professional managers who work in small companies move from one company to another as they progress upward in rank and earnings.
1. _____ is a body of laws passed by federal, state, and local governments. A. Common law B. Police law C. Judicial law D. Statutory law
D. Statutory law
29. _____ is the concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independent efforts. A. Duality B. Due diligence C. Equity investment D. Synergy
D. Synergy
30. Which of the following is a requirement of a successful fractional ownership? A. The co-owners must share individual reports of their profits and losses on personal tax returns. B. The co-owners must have established it for religious purposes. C. The co-owners must be related to each other. D. The co-owners must be honest in their dealings.
D. The co-owners must be honest in their dealings.
12. Catherine, who loves dogs, wants to offer dog-walking services in her neighborhood. Her research leads her to a small professional pet care store operating in the area, which she decides to buy. Which of the following is a good reason for Catherine to buy the pet care store? A. The latest technology can be used to fill a service gap. B. A fresh inventory can be obtained. C. A competitive environment may be selected. D. The facilities are already available.
D. The facilities are already available.
8. Which of the following budgets is planned first when preparing the operating budget? A. The production budget B. The personnel budget C. The revenue budget D. The sales budget
D. The sales budget
30. In the context of a family-owned business, which of the following is a disadvantage of a living trust? A. The business goes to the designated heirs without going through probate court. B. Property can be put into the trust while the owner is alive. C. The ownership still remains with the owner after transferring the title to the trust. D. The title on real estate and securities must be changed to the name of the trust.
D. The title on real estate and securities must be changed to the name of the trust.
16. Which of the following best describes the purpose of articles of incorporation? A. They govern the operations of partnerships in the absence of other expressed agreements. B. They provide for protection of limited liability for shareholders. C. They combine the advantages of a corporation with the benefits of a partnership. D. They are the instruments by which a corporation is formed.
D. They are the instruments by which a corporation is formed.
27. What is the purpose of specialized small business investment companies? A. They extend credit by vendors on purchases of inventory, equipment, and supplies. B. They allow small businesses to reap tax advantages by selling stock shares to workers. C. They sell common stock to the public through a regulated board such as Nasdaq without the hassle of an initial public offering. D. They assist socially and economically disadvantaged businesses with venture capital.
D. They assist socially and economically disadvantaged businesses with venture capital.
What is the purpose of specialized small business investment companies? A. They extend credit by vendors on purchases of inventory, equipment, and supplies. B. They allow small businesses to reap tax advantages by selling stock shares to workers. C. They sell common stock to the public through a regulated board such as Nasdaq without the hassle of an initial public offering. D. They assist socially and economically disadvantaged businesses with venture capital.
D. They assist socially and economically disadvantaged businesses with venture capital.
16. Which of the following is a reason for starting a small business? A. To get a chance to act like automatons B. To get freedom from decision-making responsibility C. To focus on selling the same products that are available in the market D. To satisfy personal objectives
D. To satisfy personal objectives
27. Which of the following constitutes taxable income? A. Total revenues plus deductible expenses B. Total revenues minus dividends paid C. Total revenues plus dividends paid D. Total revenues minus deductible expenses
D. Total revenues minus deductible expenses
24. _____ refers to purchases of inventory, equipment, and/or supplies on an open account in accordance with customary terms for retail. A. Venture capital B. Asset-based financing C. Mortgage loan D. Trade credit
D. Trade credit
_____ refers to purchases of inventory, equipment, and/or supplies on an open account in accordance with customary terms for retail. A. Venture capital B. Asset-based financing C. Mortgage loan D. Trade credit
D. Trade credit
9. Identify a true statement about bankruptcy? A. When one or more creditors file the bankruptcy petition against the debtor, it's called ordinary bankruptcy. B. Chapter 11 of the Bankruptcy Reform Act of 1978 contains a provision for reorganizing the bankrupt business only when the petition filed is voluntary. C. Involuntary bankruptcy occurs when a debtor files an application with a court claiming that debts exceed assets and asks to be declared bankrupt. D. Under bankruptcy law, people or businesses can petition the courts to be relieved of the obligation to pay debts they cannot repay.
D. Under bankruptcy law, people or businesses can petition the courts to be relieved of the obligation to pay debts they cannot repay.
11. Which of the following is a problem faced by small businesses today? A. Lack of advertising B. Lack of risk takers C. No training at colleges and universities D. Unexpected growth and financing issues
D. Unexpected growth and financing issues
7. In the context of small businesses, what is financial leverage? A.Making a financial claim to the profit left after all other claims against a business have been met B. Employing a form of debt security with a standard denomination C. Financing the extension of credit available to customers D. Using fixed-charge financing, usually debt, to fund a business's operation
D. Using fixed-charge financing, usually debt, to fund a business's operation
7. In the context of small businesses, what is financial leverage? A. Making a financial claim to the profit left after all other claims against a business have been met B. Employing a form of debt security with a standard denomination C. Financing the extension of credit available to customers D. Using fixed-charge financing, usually debt, to fund a business's operation
D. Using fixed-charge financing, usually debt, to fund a business's operation
2. _____ of a company is its current assets, less current liabilities, that a firm uses to produce goods and services and to finance the extension of credit to customers. A. Debt capital B. Equity C. Flexcomp D. Working capital
D. Working capital
8. Bankruptcy is defined as _____. A. a wrongful act by one party that results in injury to a second party's person, property, or reputation B. a legal process by which the lender takes away the borrower's right to a property C. a body of laws passed by federal, state, and local governments D. a formal legal condition of inability to repay debts
D. a formal legal condition of inability to repay debts
19. A penetration price refers to: A. the high prices set by fur retailers. B. a published price that remains the same for a long time. C. the different price levels set for different lines of merchandise. D. a price set relatively low to secure market acceptance.
D. a price set relatively low to secure market acceptance.
A penetration price refers to: A. the high prices set by fur retailers. B. a published price that remains the same for a long time. C. the different price levels set for different lines of merchandise. D. a price set relatively low to secure market acceptance.
D. a price set relatively low to secure market acceptance.
____ shows a firm's financial position and reflect any changes in that position A. benchmarks B.standing orders C. profit goals D. accounting records
D. accounting records
10. A way to deal with incompetent family members in a family-owned business is to: A. allow them to take special privileges. B. allow them to avoid unpleasant tasks. C. place them in responsible positions to encourage them to work. D. assign jobs to them that allow minimal contact with other employees.
D. assign jobs to them that allow minimal contact with other employees.
___ set the requirements needed to follow strategies and accomplish objectives. A. methods B. policies C. procedures D. budgets
D. budgets
15. A debt backed by some physical asset other than land, such as machinery, equipment, or inventory, is termed _____. A. intermediate-term security B. trade credit C. preferred equity D. chattel mortgage loan
D. chattel mortgage loan
A debt backed by some physical asset other than land, such as machinery, equipment, or inventory, is termed _____. A. intermediate-term security B. trade credit C. preferred equity D. chattel mortgage loan
D. chattel mortgage loan
_____ is the process of setting standards, measuring performance against standards, and taking corrective action to see that planned performance is achieved. A. planning B. organizing C. staffing D.controlling
D. controlling
16. Promotion efforts may be cut and plans may be made to phase out a product during the _____ stage of the product life cycle. A. introduction B. growth C. maturity D. decline
D. decline
Promotion efforts may be cut and plans may be made to phase out a product during the _____ stage of the product life cycle. A. introduction B. growth C. maturity D. decline
D. decline
4. In order to cope with the daily challenges of a family-owned business, the family should: A. hire all relatives regardless of their ability. B. keep children out of the decision-making process. C. reduce time spent on home activities. D. develop an appropriate family mission statement.
D. develop an appropriate family mission statement.
While implementing a marketing strategy, _____ involves adding products that are unrelated to the present product line. A. penetration B. acquisition C. specialization D. diversification
D. diversification
The most popular method of setting an advertising budget that depends on a manager's experience and intuition is the _____ method. A. units of sales B. percentage of sales or profit C. objective D. executive decision
D. executive decision
22. The most common type of industry for a _____ is agriculture. A. nonprofit corporation B. professional service corporation C. fractional ownership D. family limited partnership
D. family limited partnership
24. The transition of a family-owned business to a successor can be made easier for the former owner by: A. devoting less time to hobbies and other outside activities. B. keeping the owner engaged in a top management position. C. narrowing his or her skills to focus on a single task. D. handing over the business to the successor in phases.
D. handing over the business to the successor in phases.
A SWOT analysis is used to : A. select human resources B. restrict over-usage of physical capital C. formulate the mission of a company D. identify new markets
D. identify new market
7. A SWOT analysis is used to: A. select human resources. B. restrict over-usage of physical capital. C. formulate the mission of a company. D. identify new markets.
D. identify new markets.
_____ advertising tries to get potential customers to buy a product within a short period of time so that the reaction can be easily measured. A. subliminal B. covert C. direct-marketing D. immediate-response
D. immediate-response
_____ is the use of a combination of truck, rail, or ship to transport goods. A. trans shipping B. trailer swapping C. distribution modality D. intermodal shipping
D. intermodal shipping
Which of the following statements is true of a company's business plan? A. it emphasizes operational planning more than strategic planning B. it is a money-raising tool to attract venture capitalists when the owner wants assume more control over the company C. it usually provides big entrepreneurs a greater chance of success than the small business owners D. it provides a detailed design of activities to be carried to finance the business and market products
D. it provides a detailed design of activities to be carried to finance the business and market products
The concept of ____sets cost target for all phases of design, development, and production of a product for each accounting period in a small business. A. activity-based costing B. contract costing C. batch costing D. kaizen costing
D. kaizen costing
____are the financial obligations of a business created by borrowing. A. current assets B. Fixed assets C. Equities D. Liabilities
D. liabilities
_____ sell goods and services directly to ultimate consumers. A. wholesalers B. retailers C. brokers D. manufacturers
D. manufacturers
9. A business's _____ defines the present business scope and broadly describes an organization's present capabilities, focus, and activities. A. budget B. policy C. operational plan D. mission statement
D. mission statement
A business's____ defines the present business scope and broadly describes an organization's present capabilities, focus, and activities A. budget B. policy C. Operational plan D. mission statement
D. mission statement
Which of the following is an example of a long-term liability? A. accounts payable B. accounts receivable C. accrued payable D.mortgage payable
D. mortgage payable
25. A _____ is formed for civic, educational, charitable, and religious purposes. A. professional service corporation B. joint venture C. family limited partnership D. nonprofit corporation
D. nonprofit corporation
28. A person's own belief system that tells him or her what to do if or when the laws and/or any pertinent codes of values are silent is termed _____. A. reputation B. association C. business ethic D. personal ethic
D. personal ethic
18. Small business investment companies are: A. a group of wealthy local businesspeople and other investors who may be external sources of equity funding. B. the dominant suppliers of external financing to small firms. C. firms funded by the Small Business Administration that make investments based on projected future income and generally require a substantial return as either equity or profit. D. private firms licensed and regulated by the Small Business Administration to make "venture" investments in small firms.
D. private firms licensed and regulated by the Small Business Administration to make "venture" investments in small firms.
Small business investment companies are: A. a group of wealthy local businesspeople and other investors who may be external sources of equity funding. B. the dominant suppliers of external financing to small firms. C. firms funded by the Small Business Administration that make investments based on projected future income and generally require a substantial return as either equity or profit. D. private firms licensed and regulated by the Small Business Administration to make "venture" investments in small firms.
D. private firms licensed and regulated by the Small Business Administration to make "venture" investments in small firms.
Market segmentation refers to the: A. change in a brand's status due to its failure in the marketplace B. mix of the uncontrollable elements of a marketing plan C. simulation of the conditions under which a product is to be marketed D. process of identifying and evaluating various layers of a market
D. process of identifying and evaluating various layers of a market
9. Market segmentation refers to the: A. change in a brand's status due to its failure in the marketplace. B. mix of the uncontrollable elements of a marketing plan. C. simulation of the conditions under which a product is to be marketed. D. process of identifying and evaluating various layers of a market.
D. process of identifying and evaluating various layers of a market.
4. The _____ form of business generates significant revenues in services, trade, and construction in the United States. A. partnership B. cooperative C. corporation D. proprietorship
D. proprietorship
Which of the following is the last step in the creative selling process? A. closing a sale B. handling objective C. suggestion selling D. sales follow-up
D. sales follow-up
An electronics store provides discount coupons to its customers when they buy a product. Which marketing activity, other than advertising, does this situation illustrate? A. distribution B.Publicity C. merchandising D. slaes promotion
D. slaes promotion
5. A _____ is any business that is independently owned and operated and is not dominant in its field of operation. A. monopolistic organization B. public enterprise C. close corporation D. small business
D. small business
18. Working capital indicates the ability a company has: A. to fund innovations. B. to multiply its profits within a short time. C. to lower its variable costs of production. D. to pay its current liabilities.
D. to pay its current liabilities.
30. The oral presentation of any business plan should be: A. given by an outside advisor. B. delivered from the owner's perspective. C. detailed in order to motivate employees. D. validated by the market research findings.
D. validated by the market research findings
The oral presentation of any business plan should be: A. given by an outside advisor. B. delivered from the owner's perspective. C. detailed in order to motivate employees. D. validated by the market research findings
D. validated by the market research findings
2. John wants to start his own business. After doing some research, he has decided to specialize in cleaning kitchens since most homemakers are not satisfied with the quality of the service offered by the residential cleaning companies. This process of finding a small—but profitable—demand for something and producing a custom-made product or service is known as _____. A. out-of-home advertising B. niche marketing C. sales promotion D. visual merchandising
b. Niche marketing
7. Leased manpower refers to _____. A. rehired former employees who are a potential source of trained workers B. employees upgraded by training them to do increasingly complex work C. employees obtained from an outside firm that specializes in performing a particular service D. employees moved from one location or department to another
c
A(n)____periodically chows revenues, expenses, and profit from a firm's operations. A. balance sheet B. statement of retained earnings C. income statement D. inventory statement
c. income statement
2. _____ are acceptable levels that are set in advance that is used to measure how well employees meet expectations. A. Indirect standards B. Debit standards C. Performance standards D. Excise standards
c. performance standards
4. _____ provides comprehensive long-term direction to help a business accomplish its mission. A. Strategic planning B. Operational planning C. Elemental cost planning D. Enterprise resource planning
. Strategic planning
15. A disadvantage of a corporation is that: A. it is difficult to raise capital. B. it is personal in its approach. C. it is subject to double taxation. D. it is considered as a separate entity from its owners.
. it is subject to double taxation.
11. A(n) _____ tells a supplier to ship a given amount of an item at a given quality and price. A. purchase order B. standing order C. bill of lading D. economic order quantity
A
11. Which of the following statements is true about a diagnostic interview? A. Its purpose is to assess various aspects of an applicant's personality. B. It is a preliminary screening of applicants in the selection procedure. C. It is conducted to verify the educational background of an applicant. D. Its purpose is to validate the evidence of an applicant's past performance.
A
12. _____ goods are products that customers buy often, routinely, quickly and in any store that carries them. A. Convenience B. Premium C. Specialty D. Shopping
A
13. Which of the following statements is a characteristic of on-the-job training? A. It involves low out-of-pocket costs. B. It requires the process of production to be stopped during training. C. It prevents excessive waste caused by mistakes. D. It involves employees learning many job skills so they are more versatile.
A
13. Which of the following statements is true of convenience goods? A. They are products that are bought by habit and lend themselves to self-service. B. They are usually high-priced items that are purchased infrequently. C. They are goods with trade names that are recognized for the exclusive nature of their clientele. D. They are products that target customers for specific seasons or events.
A
14. Which of the following statements is a characteristic of apprenticeship training? A. It blends on-the-job training with learning of theory in the classroom. B. It combines education at a school or college with on-the-job training at a cooperating business. C. It involves workers learning many job skills so they are more versatile. D. It is used specifically for prospective managerial employees for marketing positions.
A
14. _____ are derived from a language called symbologies and are used for specific identification of objects. A. Bar codes B. Radio-frequency identifications C. Six Sigma certifications D. Quality circles
A
16. _____ is the trademark for a type of machine-readable optical label containing information about the item to which it is attached. A. QR code B. Radio-frequency identification code C. Quality circle D. Six Sigma certification
A
2. What is the significance of the Federal Acquisition Streamlining Act? A. It urges government agencies to buy off-the-shelf goods rather than items made to its own specifications. B. It encourages the government to communicate with vendors with detailed paperwork rather than on-line. C. It makes it easier for small companies to bid on non-federal contracts. D. It mandates the process of delivering materials to a user at the time of production mandatory.
A
2. _____ is a list of a job's duties, responsibilities, and working conditions, as well as relationships between it and other jobs in an organization. A. Job description B. Job forecast C. Job inventory D. Job slotting
A
20. The _____ is the quantity to purchase that balances the cost of placing the order with the cost of carrying the inventory. A. economic order quantity B. standing order inventory C. stockout quantity D. purchase inventory
A
20. Which of the following employers are covered under the Executive Order 11246, as amended? A. Employers with federal contracts and subcontracts B. Employers with 15 or more employees C. Employers with 20 or more employees D. All employers who fall under the small business owners category
A
23. _____ is setting the times and sequences needed to perform specialized activities. A. Scheduling B. Controlling C. Assigning D. Procuring
A
24. _____ refers to product characteristics and the probability of meeting established standards. A. Quality B. Schedule C. Process layout D. Product layout
A
25. In the context of small businesses, _____ usually involves making or processing materials into finished goods. A. manufacturing B. resourcing C. prospecting D. merchandising
A
25. What is the difference between a bonus and a commission? A. A bonus is a reward not specified in advance, whereas a commission is a reward of a given amount per sale. B. A bonus is a form of merit increases, whereas a commission is a form of incentive. C. A bonus is useful in rewarding door-to-door selling, whereas a commission is useful for rewarding on special occasions. D. A bonus is based on seniority, whereas a commission is based on contributions to a company's profits.
A
29. Which of the following is an advantage of a process layout? A. It provides flexibility to take care of change and variety. B. It requires minimal movement of material or people. C. It requires a smaller inventory than a product layout. D. It needs less space for aisles and storage than a product layout.
A
3. Which of the following statements is true of the processes included in the operating system of a small business? A. They involve converting inputs into goods the customers want, using the employees, machines, materials, and other factors. B. They consist of the activities needed to satisfy the needs of employees and the public. C. They consist of the goods and services required by the customers. D. They include all the activities from obtaining raw materials through delivering the product to the customers.
A
30. Which of the following statements is true of a workplace emergency? A. It is seen as an unforeseen situation that threatens employees, customers, or the public. B. It is a process that organizations use to redesign their businesses. C. It is considered a challenging situation staged to test the ability of employees. D. It is seen as a situation that requires employees to rapidly increase productivity.
A
4. Which of the following defines upgrading? A. Retraining workers so they can do increasingly complex work B. Moving an employee from one job to another, without necessarily changing title or pay C. Moving a person to a higher position, usually with increased responsibilities and pay D. Rehiring from a pool of former employees
A
6. Which of the following is true of assigning responsibility for purchasing? A. Generally, one person should be given the overall purchasing responsibility. B. Generally, the authority to order should be with a team of experts. C. The person assigned the responsibility for purchasing should not ask for help. D. Responsibility for purchasing should not be assigned to the business owner.
A
6. _____ is the process of moving a person to a higher position in an organization, frequently with increased responsibilities, greater status or prestige, a new title, and a higher salary. A. Promoting B. Reengineering C. Reinventing D. Transferring
A
7. _____ are sales lost because an item is not available in a store when customers want it. A. Stockouts B. Inflations C. Inventory losses D. Standing orders
A
8. Which of the following statements is true of retailers? A. They are concerned with people who come to, or are drawn into, a store to make a purchase. B. They emphasize selling products through intermediaries to the ultimate consumer. C. They convert materials into products, usually in considerable volumes. D. They bring the buyers and sellers together to negotiate purchases or sales but do not take title to, or possession of, the goods.
A
9. _____ is the process of coordinating the movement, storage, and all processes, from beginning to end. A. Supply chain management B. Supplier-base downsizing C. Network integration management D. Manufacturer-base upsizing
A
Gemini Inc. earned a net income of $250,000 in the year 2000. what is the revenue that Gemini Inc. earned in the year 2000 if its expenses for that year amounted to $50,000? A. $300,000 B. $250,000 C. $350,000 D. $200,000
A. $300,000
29. An effective business plan should be about _____. A. 25 to 30 pages long or less B. 40 to 50 pages long C. 50 to 65 pages long D. 70 to 75 pages long or more
A. 25 to 30 pages long or less
An effective business plan should be about_____. A. 25 to 30 pages long or less B. 40 to 50 pages long C. 50 to 65 pages long D. 70 to 75 pages long or more
A. 25 to 30 pages long or less
15. Which of the following is the result of the trend in business to become more active globally? A. A growing number of large and small U.S. businesses are or are becoming foreign owned. B. The American consumer is increasingly noticing the change in managerial styles. C. The foreign-owned companies are increasingly adopting traditional managerial styles. D. A growing number of small business owners and managers are refraining from adapting to nontraditional managerial styles.
A. A growing number of large and small U.S. businesses are or are becoming foreign owned.
18. Which of the following refers to an introspective personal analysis that can help a small business owner determine whether the combination of qualities he or she has will help him or her succeed as a small business owner? A. Analysis of one's attitude B. Analysis of one's financial status C. Analysis of the value of the products to be sold D. Analysis of the capacity of the facility to be used
A. Analysis of one's attitude
10. _____ control is the careful planning and control of all financial activities of a firm. A. Budgetary B. Auditing C. Production D. Functionary
A. Budgetary
9. How is cash balance calculated at the end of a month? A. By deducting the total cash payments from the sum of the balance at the beginning of the month and the total cash receipts B. By deducting the balance at the beginning of the month from the sum of the total cash payments and total cash receipts C. By deducting total cash receipts from the sum of the total cash payments and the balance at the beginning of the month D. By adding the balance at the beginning of the month, the total cash receipts, and the total cash payments
A. By deducting the total cash payments from the sum of the balance at the beginning of the month and the total cash receipts
8. How can copreneurs efficiently manage their family-owned business? A. By talking to a marriage counselor about how the business will affect their relationship B. By letting one spouse work for the other as an employee C. By making major decisions independently, without consulting the other D. By spending most of their time tending to the business and less time in personal matters
A. By talking to a marriage counselor about how the business will affect their relationship
3. _____ involves prodding businesses to improve the quality of their products and to expand consumer knowledge. A. Consumerism B. Promotion C. Diversification D. Segmentation
A. Consumerism
21. _____ are those paid without an intermediary to a taxing authority by the person or business against which they are levied. A. Direct taxes B. Value added taxes C. Indirect taxes D. Sales taxes
A. Direct taxes
23. _____ are reductions from a product's normal list price and are given to customers as an inducement to buy more of the same product. A. Discounts B. Allowances C. Subsidies D. Trade-ins
A. Discounts
22. _____ is a source of financing that reaps tax advantages from selling shares to workers. A. Employee stock ownership plan B. Professional service corporation C. Specialized small business investment D. Small company offering registration
A. Employee stock ownership plan
_____ is a source of financing that reaps tax advantages from selling shares to workers. A. Employee stock ownership plan B. Professional service corporation C. Specialized small business investment D. Small company offering registration
A. Employee stock ownership plan
2. Which of the following statements is true about the impact of small businesses and entrepreneurship on educational institutions? A. Entrepreneurship and small business management are accepted as academically respected disciplines by many high schools, colleges, and universities. B. Community colleges are reluctant to offer courses for small business owners. C. Today more students think working for big corporations is a safer haven than self-employment. D. Educational institutions have discovered that by teaching entrepreneurship they will be able to put a restriction on free enterprise.
A. Entrepreneurship and small business management are accepted as academically respected disciplines by many high schools, colleges, and universities.
4. _____ is an owner's share of the assets of a company. A. Equity B. Profit C. Capital D. Credit
A. Equity
Which of the following is an opportunity available for small firms interested in global operations? A. Expansion of markets and product diversification B. Rapid change in political systems C. Fluctuating foreign exchange rates D. Cultural and language barriers
A. Expansion of markets and product diversification
2. _____ businesses are considered the backbone of the American business industry. A. Family-owned B. Nonfamily C. Public sector D. Professionally run
A. Family-owned
28. In which part of a business plan should the expected revenues be included? A. Financial data B. Company background C. Definition of the market D. Management structure
A. Financial data
9. Which of the following statements is true of market research in the context of small businesses? A. Formal research programs are a valuable but an expensive way to obtain guidance. B. The district offices of the U.S. Department of Education have good libraries that can be helpful to small businesses. C. The Business Committee for the Arts has publications on organizing small businesses. D. Market research consists of granting a franchisee the right to sell a product.
A. Formal research programs are a valuable but an expensive way to obtain guidance.
29. _____ is defined as a percentage share of an expensive asset and is most often used for aircraft, sports cars, and real property. A. Fractional ownership B. Limited liability partnership C. Joint venture D. Limited partnership
A. Fractional ownership
11. Which of the following is true of a limited partnership? A. General partners conduct the business. B. Limited partners are held liable for debts of general partners. C. Limited partners do not contribute any capital to the business. D. General partners have limited personal liability for the partnership's debts.
A. General partners conduct the business.
In the context of small business, which of the following is an alternative for improving profits? A. increasing the productivity of people and machines B. selling products on the basis of price alone C. buying all components of a product from the outside D. removing a summer product from a winter line of products
A. Increasing the productivity of the people and machines
25. In the context of small businesses, which of the following statements is true of consignment selling? A. It allows payments to be made to suppliers only when products are sold. B. It consists of two or more companies exchanging items of roughly equal value. C. It allows small businesses to reap tax advantages by selling stock shares to workers. D. It is regulated by the federal Small Business Administration.
A. It allows payments to be made to suppliers only when products are sold.
In the context of small businesses, which of the following statements is true of consignment selling? A. It allows payments to be made to suppliers only when products are sold. B. It consists of two or more companies exchanging items of roughly equal value. C. It allows small businesses to reap tax advantages by selling stock shares to workers. D. It is regulated by the federal Small Business Administration.
A. It allows payments to be made to suppliers only when products are sold.
14. Which of the following is an advantage of a corporation? A. It cannot make use of a business owner's personal property to pay the debts of the business. B. It gives unlimited powers to the owners. C. The procedures required by the government for its formation are not complex. D. The tax advantages received in this form of business are unique.
A. It cannot make use of a business owner's personal property to pay the debts of the business.
4. Which of the following statements is true of criminal law? A. It deals with penalizing those who commit illegal acts. B. It deals with the rights and powers of the government. C. It implies that everyone is entitled to a day in court. D. It is an unwritten law derived from judicial decisions.
A. It deals with penalizing those who commit illegal acts.
13. Which of the following statements is a characteristic of an internal audit? A. It functions primarily as a service to management for the improvement of its financial controls. B. It furnishes the regulatory agencies with information on a company's financial status and operations. C. It studies the basic operations of a company in order to identify problem areas. D. It employs an outside certified public accountant to verify the records and financial statements of a company.
A. It functions primarily as a service to management for the improvement of its financial controls.
20. Which of the following statements best describes leader pricing? A. It is a strategy wherein certain products are chosen for their promotional value and priced low to entice customers into retail stores. B. It is a strategy of setting high price levels for given lines of merchandise. C. It is a strategy aimed at obtaining the "cream" of the target market at a high price before dealing with other market segments. D. It is a strategy of offering the same products and quantities to different customers at different prices.
A. It is a strategy wherein certain products are chosen for their promotional value and priced low to entice customers into retail stores.
Which of the following statements best describes leader pricing? A. It is a strategy wherein certain products are chosen for their promotional value and priced low to entice customers into retail stores. B. It is a strategy of setting high price levels for given lines of merchandise. C. It is a strategy aimed at obtaining the "cream" of the target market at a high price before dealing with other market segments. D. It is a strategy of offering the same products and quantities to different customers at different prices.
A. It is a strategy wherein certain products are chosen for their promotional value and priced low to entice customers into retail stores.
Identify a true statement about institutional advertising. A. It is selling an idea about the company to consumers. B. It refers to promoting a product that is banned by law C. It refers to promoting a product that is banned by law D. It must be used only while introducing a new product
A. It is selling an idea about the company to consumers.
30. Which of the following statements is true of the Federal Sentencing Guidelines for Organizations? A. It outlines programs for effective ethics. B. It tells one what to do if the codes of ethics are silent. C. It specializes in helping people develop their business ideas. D. It provides the "Four Way Test" of the things we think, say, or do.
A. It outlines programs for effective ethics.
26. In the context of small businesses, which of the following statements is true of a line of credit? A. It permits a business to borrow up to a set amount without red tape. B. It represents ownership in a corporation. C. It permits the use of someone else's property for a specified time period. D. It is an owner's share of the assets of a company.
A. It permits a business to borrow up to a set amount without red tape.
In the context of small businesses, which of the following statements is true of a line of credit? A. It permits a business to borrow up to a set amount without red tape. B. It represents ownership in a corporation. C. It permits the use of someone else's property for a specified time period. D. It is an owner's share of the assets of a company.
A. It permits a business to borrow up to a set amount without red tape.
4. What is meant by the term competitive edge? A. It refers to a particular characteristic that makes one firm more attractive to customers than other firms. B. It refers to a concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independent efforts. C. It refers to an organized effort to gather information about markets or customers. D. It refers to an assessment of the strengths and weaknesses of current and potential competitors.
A. It refers to a particular characteristic that makes one firm more attractive to customers than other firms.
What is meant by the term competitive edge? A. It refers to a particular characteristic that makes one firm more attractive to customers than other firms. B. It refers to a concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independent efforts. C. It refers to an organized effort to gather information about markets or customers D. It refers to an assessment of the strengths and weaknesses of current and potential competitors.
A. It refers to a particular characteristic that makes one firm more attractive to customers than other firms.
10. In the context of small businesses, which of the following statements is true of preferred stock? A. It usually conveys no voting rights to its holder. B. Its dividends must be paid after common stock dividends. C. It represents an owner's interest. D. It usually consists of many identical shares.
A. It usually conveys no voting rights to its holder.
In the context of small businesses, which of the following statements is true of preferred stock? A. It usually conveys no voting rights to its holder. B. Its dividends must be paid after common stock dividends. C. It represents an owner's interest. D. It usually consists of many identical shares.
A. It usually conveys no voting rights to its holder.
Which of the following is a risk for small firms interested in global operations? A. Low skill levels of workers in underdeveloped countries B. Strong demand for U.S. goods in many countries C. High labor costs in most developing countries
A. Low skill levels of workers in underdeveloped countries
4. Which of the following features must a business have to be classified as small? A. Management is independent, and the area of operation is primarily local. B. It is dominant in its field of operation, and it employs 100-200 people. C. Ownership is held by a large group of people, and the market is primarily local. D. Capital is provided by a federal institution, and the objectives are non-profitability and service to the government.
A. Management is independent, and the area of operation is primarily local.
7. _____ is the system of gathering, recording, classifying, analyzing, and interpreting data related to merchandising of goods and services. A. Market research B. Operational research C. Drip marketing D. Global marketing
A. Market research
18. To locate a lawyer in helping with government regulations, a small business owner will refer to the _____. A. Martindale-Hubbell Law Directory B. General Accounting Office C. National Small Business Association D. Case Law Information Services
A. Martindale-Hubbell Law Directory
15. _____ provide employees with standing instructions for performing their jobs, comprise detailed explanations of how to do the work properly, and inform in what order it should be done. A. Methods and procedures B. Policies C. Budgets D. Mission statements
A. Methods and procedures
18. Which of the following statements is true of the findings of a classic survey of owners of family-owned businesses with two or more children working for the company? A. One child is groomed from an early age to take over the business. B. Children are discouraged from choosing their own successor. C. Only one child is included in all future ownership and management decisions. D. There is a defined hierarchy for decision-making.
A. One child is groomed from an early age to take over the business.
21. Which of the following is true about the first stage of the typical growth pattern that small businesses tend to follow? A. Owners manage the business and do all the work. B. Owners manage their companies but hire employees to help with routine and/or management activities. C. Owners hire managers to run the firms. D. Owners outsource much of the supervisory work.
A. Owners manage the business and do all the work.
20. What does a franchiser do? A. Owns the company's name and licenses others to sell its products B. Provides a licensing fee to the owner of the business C. Runs the day-to-day operations of the local business D. Agrees to sell the product according to the franchisee's requirements
A. Owns the company's name and licenses others to sell its products
31. Visa and MasterCard are examples of one of the many choices available to use the services referred to as _____. A. Peer-to-Peer (P2P) payment services B. Client-to-Client (C2C) payment services C. Friend-to-Friend (F2F) payment services D. Business-to-Business (B2B) payment services
A. Peer-to-Peer (P2P) payment services
1. _____ should be the first management function performed by an effective business ownermanager. A. Planning B. Organizing C. Staffing D. Controlling
A. Planning
____ should be the first management function performed by an effective business owner-manager. A. Planning B. Organizing C. Staffing D. Controlling
A. Planning
What happens during the maturity stage of the product life cycle? A. Promotion costs climb, and competitors cut prices to attract business B. Marketing strategy typically encourages strong brand loyalty C. Prices are usually high, sales are low, and development, promotion, and distribution costs are high. D. Management considers pruning items from the product line to eliminate unprofitable ones
A. Promotion costs climb, and competitors cut prices to attract business
14. What happens during the maturity stage of the product life cycle? A. Promotion costs climb, and competitors cut prices to attract business. B. Marketing strategy typically encourages strong brand loyalty. C. Prices are usually high, sales are low, and development, promotion, and distribution costs are high. D. Management considers pruning items from the product line to eliminate unprofitable ones.
A. Promotion costs climb, and competitors cut prices to attract business.
13. _____ is the fundamental redesign of a business, often resulting in reduction in size and markets. A. Reinvention B. Incremental change C. Reengineering D. Acculturation
A. Reinvention
20. Which of the following helps increase the assets or decrease the liabilities of a company? A. Retained earnings B. Long-term mortgages C. Accrued payables D. Inventories
A. Retained earnings
3. Which of the following refers to a group of retired—but active—managers from all walks of life who help people develop their business ideas? A. Service Corps of Retired Executives B. Federal Small Business Administration C. State Economic Development Agency D. Small Business Development Center
A. Service Corps of Retired Executives
16. In franchising, which of the following is a benefit to the franchisee? A. Share in local or national promotion B. Low operating costs C. Fast expansion and penetration of business D. Increase in royalty fees
A. Share in local or national promotion
13. Which government organization grants awards for the "Small Business Persons of the Year"? A. Small Business Administration B. Production Credit Association C. U.S. Department of Commerce D. U.S. Department of Education.
A. Small Business Administration
32. _____ is a payment system through which one can accept charge sales from startup with an attachment to one's android, to customer POS. A. Square Point of Sale B. Online Banking ePayment C. PayPal Point of Sale D. Electronic Payment Service
A. Square Point of Sale
1. Which agency is responsible for estimating the percentage of family-owned businesses in the North American business enterprise? A. The Conway Center for Family Business B. The American Family Business Institute C. Wendel International Center for Family Enterprise D. Vantage Business Center
A. The Conway Center for Family Business
3. Which of the following statements is true about small businesses? A. The manager usually owns the business. B. The area of operations is not necessarily local, although the market is primarily local. C. Capital is supplied and ownership is held by a large number of individuals. D. Management of small businesses is highly dependent, because the businesses are owned by a group of people.
A. The manager usually owns the business.
11. Which of the following is a reason for starting a new business? A. The owner has the freedom to select his or her own competitive environment. B. It is easy to find the right business. C. The chances of succeeding is not as high in a franchise as in a small business start-up. D. The owner does not have to experience problems in establishing basic management systems and controls when starting his or her own business.
A. The owner has the freedom to select his or her own competitive environment.
25. What is due diligence? A. The research and analysis of the company that is done before a business transaction B. The efforts of managers from all walks of life to help people develop their business ideas C. The process of producing a custom-made product for that market D. The arrangement under which employees may schedule their own hours around a core time
A. The research and analysis of the company that is done before a business transaction
19. Which of the following is true of S corporations? A. They are exempted from multiple taxations. B. They can issue several classes of stocks. C. They require excessive paperwork. D. They are governed by simple tax rules.
A. They are exempted from multiple taxations.
9. Which of the following best describes one of the contributions of small businesses? A. They are sources of new ideas or services that larger businesses may be unable to provide. B. They provide large capital gains to the owners. C. Their products and services are sold at prices that are lower than large businesses' prices. D. They provide economies of scale that large businesses cannot match.
A. They are sources of new ideas or services that larger businesses may be unable to provide.
26. Which of the following is true of S corporation shareholders? A. They are taxed at individual rates. B. They are taxed at corporate rates. C. They do not enjoy legal protection that comes with corporate status. D. They do not have any restrictions on benefit plans.
A. They are taxed at individual rates.
18. Which of the following best describes the work carried out by the board members in a corporation? A. They represent the stockholders in managing the company. B. They direct the day-to-day operations of the business. C. They elect to form the executive committee. D. They have a limited or no interest in the welfare of the corporation.
A. They represent the stockholders in managing the company.
16. Which of the following is a disadvantage of government regulations being imposed on small business firms? A. They require a small business firm to handle an excessive amount of paperwork. B. They mandate that small businesses must report to the U.S. Department of Commerce. C. They make it compulsory for a small business firms to hire a lawyer. D. They limit opportunities for other small businesses.
A. They require a small business firm to handle an excessive amount of paperwork.
___are current assets resulting from selling a product on credit. A. account receivable B. Account payable C. liabilities D. owners' equity
A. account receivable
Which of the following is an example of a current liability? A. account payable B. prepaid expense C. Inventory D. Mortgage payable
A. accounts payable
A____ is a statement of a firm's assets, liabilities, and owners' equity at a given time. A. balance sheet B. purchase order C. profit goal D. sales forecast
A. balance sheet
27. AMF Systems uses certain standards to judge the rightness or wrongness of its business's and its personnel's relations to others. These standards are called _____. A. business ethics B. personal ethics C. normative ethics D. consumer ethics
A. business ethics
31. To cope with government regulations, owners of small business firms _____. A. can become involved in the legal-political system to elect officials of their choice B. should debar themselves from forming alliances with other companies or organizations C. should keep themselves away from procuring knowledge regarding the various governmental laws D. can establish their own set of laws without having to follow the actual laws and regulations
A. can become involved in the legal-political system to elect officials of their choice
4. A(n) _____ budget plans expenditures for obtaining, expanding, and replacing physical facilities. A. capital B. operating C. sales D. organizing
A. capital
Working capital needs of a company are projected by estimating what out-of-pocket expenses will be incurred and when the revenues from sales are to be collected, which is done by _____. A. cash budgets B. dividend statement C. capital account statements D. expense accounts
A. cash budget
3. Working capital needs of a company are projected by estimating what out-of-pocket expenses will be incurred and when the revenues from sales are to be collected, which is done by _____. A. cash budgets B. dividend statements C. capital account statements D. expense accounts
A. cash budgets
14. A disadvantage of organizing a family business into a corporation and hiring professional managers is the: A. concentration of power in small cliques. B. unfair treatment of employees. C. loss of family time for other purposes. D. increasing sense of unwanted "personal touch."
A. concentration of power in small cliques.
_____ involves prodding businesses to improve the quality of their products and to expand consumer knowledge. A. consumerism B. promotion C. diversification D. segmentation
A. consumerism
_____ are expected to turn over- that is, to change from one form to another- within a year. A. current assets B.owner's equities C. accounts payable D. fixed assets
A. current assets
14. The _____ shows how easily a company can pay its short-term obligations. A. current ratio B. equity ratio C. debt ratio D. sales ratio
A. current ratio
_____ are reductions from a product's normal list price and are given to customers as an inducement to buy more of the same product. A. discount B. allowance C. subsidies D. trade-ins
A. discount
_____ is the effective physical movement of a product from the production line to the final consumer. A. distribution B. merchandising C. warehousing D. depletion
A. distribution
A(n) _____ consists of the various marketing organizations involved in moving the flow of goods and services from a producer to a user. A. distribution channel B. intermodal shipping network C. trade promotion D. order processing
A. distribution channel
9. Conflicts are likely to arise in a small family-owned business when: A. each family member has a different perspective, leading to dissension. B. one family member is clearly in command, at least in a given area of management. C. the role of each family member is distinct, based on sound business practices. D. family members agree to disagree and set ground rules.
A. each family member has a different perspective, leading to dissension.
24. There is now a greater effort in small firms to hire qualified persons without regard to race, sex, religion, color, creed, age, or disabilities. This illustrates enlightened _____. A. employee relations B. consumerism C. personal ethics D. individualism
A. employee relations
_____ is an owner's share of the assets of a company. A. equity B. Profit C. capital D. credit
A. equity
in the context of small businesses,____is the first step in the process of profit planning. A. establishing a profit goal B. estimating the volume of sales revenue C. determining the amount of expenses D. preparing a balance sheet
A. establishing a profit goal
Financial planning involves: A. estimating income and expenses B. choosing a product to sell C. selecting the type of business to enter D. deciding the kind of franchise to buy
A. estimating income and expenses
18. Financial planning involves: A. estimating income and expenses. B. choosing a product to sell. C. selecting the type of business to enter. D. deciding the kind of franchise to buy.
A. estimating income and expenses.
23. A(n) _____ is an additional tax on certain items imposed by the federal government. A. excise tax B. income tax C. corporate franchise tax D. value added tax
A. excise tax
12. In _____ auditing, an outside certified public accountant (CPA) verifies the records and financial statements of a company—usually once a year. A. financial B. internal C. external D. personnel
A. financial
In which part of a business plan should the expected revenues be included? A. financial data B. company background C. Definition of the market D. management structure
A. financial data
6. The Uniform Commercial Code is a set of uniform model statutes to: A. govern business and commercial transactions. B. address a wrongful injury. C. negotiate new business contracts. D. reorganize a bankrupt business.
A. govern business and commercial transactions.
22. Product and trademark franchising: A. grants the franchisee the right to sell a widely recognized brand. B. is the systematic gathering, recording, and analyzing of data related to the marketing of goods and services. C. is a partnership in which each partner actively participates as an equal in managing the business. D. grants a franchisee the right to market the brand and trademark and to use a complete operating system.
A. grants the franchisee the right to sell a widely recognized brand.
28. A unit pricing policy is most likely to be used by a _____. A. grocery store B. producer C. building contractor D. service firm
A. grocery store
A unit pricing policy is most likely to be used by a _____. A. grocery store B. Producer C. building contractor D. service firm
A. grocery store
12. A software engineer is part of a company's _____ resources. A. human B. physical C. financial D. intangible
A. human
A software engineer is part of a company's____resources. A. human B. physical C. financial D. intangible
A. human
17. A new small business owner's primary motive is usually _____. A. independence, that is, freedom from interference or control by superiors B. the need to obtain a second income for balancing the losses of other ventures C. the need to provide a niche product D. to seek security, place, power, prestige, high income, and benefits
A. independence, that is, freedom from interference or control by superiors
6. An entrepreneurial venture is characterized by: A. innovative strategic practices and/or products. B. independent ownership and operation and no desire for dominance in its field. C. no scope of growing large, and the owners may not want it to. D. normal sales, profits, and growth as opposed to rapid growth and a quick sellout.
A. innovative strategic practices and/or products.
Through equity financing, a company can be partly owned by : A. the investors B. commercial banks C. micro loan companies D. lenders
A. investors
Which of the following statement is true of benchmarking ? A. it involves setting up standards and then measuring performance against them B. it is a series of prescribed steps to be taken to ensure that a profit will be made C. it sets cost target for all phases of design, development, and production of a product for each accounting
A. it involves setting up standards and then measuring performance against them
28. In an endeavor where neither party can achieve its purpose alone, a _____ becomes a viable option. A. joint venture B. proprietorship C. corporate charter D. buy-sell agreement
A. joint venture
29. A(n) _____ resembles a will, but, in addition to providing for distributing personal assets on the maker's death, it also contains instructions for managing those assets should a person become disabled. A. living trust B. promissory note C. estoppel D. attestation
A. living trust
_____ provide employees with standing instructions for performing their jobs, comprise detailed explanations of how to do the work properly, and inform in what order it should be done. A. method and procedures B. policies C, budgets D. mission statements
A. methods and procedures
14. A(n) _____ is a long-term debt that is secured by real property. A. mortgage loan B. bond C. lease D. asset-based loan
A. mortgage loan
A(n) _____ is a long-term debt that is secured by real property. A. mortgage loan B. bond C. lease D. asset-based loan
A. mortgage loan
5. A developing trend in family businesses is that young people: A. offer an executive position to their parents in their company in return for funding. B. are not interested in continuing the work of their parents. C. show a great amount of enthusiasm in financing their own business enterprises. D. are not interested in gaining experience by working part-time.
A. offer an executive position to their parents in their company in return for funding.
3. In the United States, finance, insurance, and real estate use the _____ form of business more frequently than do the other industries. A. partnership B. proprietorship C. corporation D. cooperative
A. partnership
____is the difference between revenue earned and expenses incurred. A. profit B.. liability C. Gap ratio D. Depreciation
A. profit
10. Marketing mix refers to the _____. A. proper blending of the basic elements of product, price, promotion, and place into an integrated marketing program B. process of identifying and evaluating the various layers of a market C. part of the total market toward which promotional efforts are concentrated D. process of acquiring customers that involves obtaining individual-level consumer information
A. proper blending of the basic elements of product, price, promotion, and place into an integrated marketing program
Marketing mix refers to the _____. A. proper blending of the basic elements of product, price, promotion, and place into an integrated marketing program B. process of identifying and evaluating the various layers of a market C. part of the total market toward which promotional efforts are concentrated D. process of acquiring customers that involves obtaining individual-level consumer information
A. proper blending of the basic elements of product, price, promotion, and place into an integrated marketing program
27. The continuous fee paid by the franchisee to the franchiser based on a percentage of the franchisee's gross revenue is termed: A. royalty fee. B. start-up fee. C. licensing fee. D. franchise fee.
A. royalty fee.
18. A _____ price is one which is set relatively high initially in order to obtain the "cream" of the target market before competitors enter. A. skimming B. penetration C. predatory D. bait
A. skimming
A _____ price is one which is set relatively high initially in order to obtain the "cream" of the target market before competitors enter. A. skimming B. penetration C. predatory D. bait
A. skimming
_____ provides comprehensive long-term direction to help a business a accomplish its mission. A. strategic planning B. Operational planning C. Elemental cost planning D. Enterprise resource planning
A. strategic planning
23. An advantage of selling a family-owned business to outsiders is that: A. the former owner receives an assured income. B. it provides a constant source of income to all the family and nonfamily members. C. the stature of the family is maintained. D. a stronger family identification is developed.
A. the former owner receives an assured income.
23. Through equity financing, a company can be partly owned by: A. the investors. B. commercial banks. C. microloan companies. D. the lenders.
A. the investors.
An exhibition of products or services by companies in the same industry is known as a _____. A. trade show B. conference C. publicity release D. trade mission
A. trade show
The _____ method of setting an advertising budget is useful for specialty goods and in situations where outside factors limit the amount of product available. A. units of sales B. percentage of sales or profit C. objective D. executive decision
A. units of sales
Raw materials used to produce products are : A. variable expenses B. overhead expense C. fixed expense D. promotional expense
A. variable expenses
19. Raw materials used to produce products are: A. variable expenses. B. overhead expenses. C. fixed expenses. D. promotional expenses.
A. variable expenses.
_____ take actual physical possession of goods and then market them to other channel members, or industrial users. A. wholesalers B. brokers C. agents D. retailers
A. wholesalers
12. _____ set predetermined times to ship given quantities of needed products at a given price. A. Purchase orders B. Standing orders C. Economic order quantities D. Scheduled order inventories
B
13. A(n) _____ is a formal list of all the property of a business, or the property so listed. A. purchase order B. inventory C. stockout D. operating system
B
15. Shopping goods are high-priced goods that: A. are purchased often and are available in many stores. B. require capable salespeople with selling ability because customers spend much time talking to sales personnel about them. C. require no comparison with any product because customers just buy the name on the item. D. are produced for specific seasons or events.
B
15. Which of the following statements characterizes internship training? A. It involves workers learning many job skills so they are more versatile. B. It combines on-the-job training at a cooperating business with learning at a school or college. C. It results in low out-of-pocket costs. D. It is usually used for workers performing skilled, craft-type jobs.
B
15. Which of the following statements is true about radio-frequency identification (RFID)? A. It is derived from a language called symbologies. B. It is a method of specific identification transponders that contain information. C. It can only be read from a couple of meters distance. D. It is used for checking the quality of a company's inventory.
B
17. Which of the following statements is true of specialty goods? A. Customers do not just buy a specialty good because of the name on the item. B. Customers do not comparison shop for specialty goods. C. Customers spend much time looking for specialty goods. D. Customers enquire about each and every detail of a specialty good with the sales personnel.
B
18. Which of the following statements is true of seasonal stores in the United States? A. They stock high-priced goods that are recognized for the exclusive nature of their clientele. B. Christmas stores are the most prevalent among seasonal stores. C. These stores are allowed to be open only during the "season." D. They are usually located only in shopping centers.
B
18. Which of the following statements is true of the 80-20 rule? A. Eighty percent of a company's supplies comes from one supplier, and the remaining 20 percent from other suppliers. B. Eighty percent of a company's income comes from 20 percent of its products. C. The cost of raw materials should be about 80 percent of the cost of the finished product, and the cost of manufacturing should be about 20 percent of the cost of the finished product. D. A company should carry out 80 percent of its production using 20 percent of the items in its inventory.
B
21. The Vocational Rehabilitation Act of 1973 prohibits _____. A. employment decisions based on race, color, religion, sex, or natural origin B. discrimination and requires contractor to develop affirmative action programs to recruit and employ handicapped persons C. discrimination against employees who are military veterans D. employment discrimination against employees aged 40 and over including mandatory retirement before 70
B
21. _____ are usually best for customers who have brand or company loyalty. A. Convenience shops B. Freestanding stores C. Warehouse outlets D. Community shopping centers
B
23. Which of the following statements is a characteristic of merit increases? A. They are based on an employee's seniority. B. They are based on an employee's ability and performance. C. They are given as a reward on special occasions. D. They are a form of profit sharing.
B
25. Which of the following statements is true of the quality assessment of a product? A. It depends on the expectations of the producer. B. It is always absolute. C. It depends on the expectations of the customer. D. It can always be measured objectively.
B
27. Employee losses from accidents and occupational diseases are paid for under state _____ laws. A. medical leave B. workers' compensation C. social security D. accident insurance
B
28. Which of the following is an advantage of a product layout? A. It requires movement of material or people. B. It requires minimal space for aisles and storage. C. It provides flexibility to take care of change and variety. D. It uses the same general-purpose machines and equipment for several steps in an operation.
B
29. A _____ allows the employer to provide all employees with the legally required benefits, plus an extra dollar amount that each employee can choose how to use. A. 401(k) retirement plan B. flexcomp C. defined-benefit plan D. defined-contribution plan
B
3. Which of the following statements is true of just-in-time (JIT) delivery? A. It results in high inventory costs for a business. B. It helps keep warehouses from overflowing. C. It ensures that the government communicates with the vendors on-line. D. It urges government agencies to buy off-the-shelf goods.
B
30. Which of the following statements is true of setting performance standards for small businesses? A. Time delays and personal requirements are avoided while setting performance standards. B. Estimates by experienced people are used to set performance standards. C. It is easier to set performance standards for mental work than for physical work. D. Many precise tools are available to establish standards for measuring performance.
B
8. _____ is the process of establishing and maintaining contacts with key persons in one's own or another organization as informal development or promotion systems. A. Reengineering B. Networking C. Rightsizing D. Leasing
B
9. _____ sell goods directly to the ultimate consumer. A. Wholesalers B. Retailers C. Producers D. Telecommuters
B
Acute Business Corp., a small business firm, has $500,000 in assets and $300,000 in liabilities. What is the value of the owners' equity in the accounting book of Acute Business Corp.? A. $1,500,000 B. $200,000 C. $175,000 D. $ 800,000
B. $200,000
27. Which of the following statements is true about failure and small businesses? A. Personal failures typically end up in court with some kind of loss to the creditors. B. A discontinuance may result from the apparent advantages of working for someone else. C. Formal failures are far more numerous than personal ones. D. Discontinuance usually results when creditors file a lawsuit against a small business.
B. A discontinuance may result from the apparent advantages of working for someone else.
32. The _____ in the United States has a code of ethics that covers a franchiser's obligations to its franchisees. A. International Franchise Association B. Franchising Code of Conduct C. Business Format Franchising D. Product and Trademark Franchising
B. A. International Franchise Association
19. Which of the following best describes a collection period ratio? A. Long-term liability divided by working capital B. Accounts receivable divided by average daily credit sales C. Net income divided by average shareholders' equity D. Net profit divided by net sales
B. Accounts receivable divided by average daily credit sales
22. Which of the following is an example of a tax or a fee paid to operate a business? A. An excise tax B. An incorporation tax C. A use tax D. A corporate franchise tax
B. An incorporation tax
13. Which of the following is part of a company's financial resources? A. Tools and equipment B. Available equity C. Reputation D. Supervisors
B. Available equity
23. _____ consists of two or more companies exchanging items of roughly equal value. A. Venture capital B. Barter C. Equity D. Trade credit
B. Barter
____ consists of two or more companies exchanging items of roughly equal value. A. Venture capital B. Barter C. Equity D. Trade credit
B. Barter
13. _____ is a form of debt security with a standard denomination, method of interest payment, and method of principal repayment. A. Lease B. Bond C. Chattel D. Mortgage
B. Bond
23. Which type of franchising system grants the franchisee the right to market the product and trademark and use a complete operating system? A. Product format franchising B. Business format franchising C. Trademark franchising D. International franchising
B. Business format franchising
28. _____ nurture young firms and help them to survive and grow during the startup period when they are most vulnerable. A. Successful graduates B. Business incubators C. International trade organizations D. Conglomerates
B. Business incubators
13. A(n) _____ provides the protection of limited liability for shareholders, but its earnings are taxed at both the corporate and shareholder levels. A. cooperative B. C corporation C. nonprofit corporation D. S corporation
B. C corporation
21. _____ is the amount of money available at a given time to pay expenses. A. Equity B. Cash flow C. Line of credit D. Fixed capital
B. Cash flow
6. _____ are private associations of local (or regional) business and professional people who are familiar with an area's needs. A. Offices of International Trade B. Chambers of commerce C. Directory of Trade Associations in the United States D. State Economic Development Agencies
B. Chambers of commerce
30. Which of the following is true of combination franchising? A. It is opposed to the concept of synergy. B. Cultural clashes can lead to the breakup of this arrangement. C. Firms involved in this arrangement should be competing against each other. D. This type of merger weakens the participating firms.
B. Cultural clashes can lead to the breakup of this arrangement.
Which of the following statements is true of debt securities? A. Debt securities are usually in the form of preferred stocks B. Debt securities are usually in the form of bonds or loans C. Publicly issued debt (such as bonds or commercial paper) is more commonly used by small companies. D. Publicly issued debt (such as bonds or commercial paper) is rarely used by large companies.
B. Debt securities are usually in the form of bonds or loans
12. Which of the following statements is true of debt securities? A. Debt securities are usually in the form of preferred stocks. B. Debt securities are usually in the form of bonds or loans. C. Publicly issued debt (such as bonds or commercial paper) is more commonly used by small companies. D. Publicly issued debt (such as bonds or commercial paper) is rarely used by large companies.
B. Debt securities are usually in the form of bonds or loans.
28. Which document provides information to possible new franchisees on 20 items required by the Federal Trade Commission? A. Business plan agreement B. Disclosure statement C. Marketing statement D. Buy-sell agreement
B. Disclosure statement
28. In the context of family-owned businesses, which of the following can be used to minimize estate taxes? A. Buy-sell agreements B. Family limited partnerships C. Formal succession planning D. Selling stock to outsiders
B. Family limited partnerships
The ___describes the relative proportions of a firm's assets, liabilities, and owners' equity. A. surplus value B. financial structure C. Economic quantity D. Purchase order
B. Financial structure
1. _____ are those capital requirements that are of a relatively permanent nature and are necessary for the functioning of a business. A. Trade credits B. Fixed assets C. Current assets D. Accounts receivables
B. Fixed assets
7. Which of the following situations should copreneurs avoid? A. Agreeing to disagree on several business issues B. Ignoring business conflicts in an attempt to save the relationship C. Setting aside time for the family and sticking to it D. Defining each person's role and accentuating each other's talents
B. Ignoring business conflicts in an attempt to save the relationship
2. Which clause gives the U.S. Congress the right to "regulate commerce with foreign nations, and among the several states"? A. Free exercise clause B. Interstate commerce clause C. Copyright clause D. Contracts clause
B. Interstate commerce clause
In the context of small businesses, which of the following statements is true of asset-based financing? A. All asset-based loans are financed against inventory B. It accepts the assets of a firm as collateral in exchange for a loan C. Of all assets, inventory is considered the most liquid of a service company's assets D. It is a form of debt security with a standard denomination and method of interest payment
B. It accepts the assets of a firm as collateral in exchange for a loan
16. In the context of small businesses, which of the following statements is true of asset-based financing? A. All asset-based loans are financed against inventory. B. It accepts the assets of a firm as collateral in exchange for a loan. C. Of all assets, inventory is considered the most liquid of a service company's assets. D. It is a form of debt security with a standard denomination and method of interest payment.
B. It accepts the assets of a firm as collateral in exchange for a loan.
17. What does a buy-sell agreement do? A. It states what a business can do and provides other financial information. B. It details the terms by which stockholders can purchase each other's interest. C. It lays down the rights, duties, and responsibilities of each partner involved in a business. D. It oversees the usage of an expensive asset.
B. It details the terms by which stockholders can purchase each other's interest.
26. Which of the following is a characteristic of a nonprofit corporation? A. The trustees have unlimited liability status. B. It enjoys tax-exempt status. C. The sole purpose of such an organization is to provide a professional service. D. It is owned by and operated for the benefit of patrons using its services.
B. It enjoys tax-exempt status.
10. What is the purpose of the Uniform Partnership Act (UPA)? A. It legally terminates a business upon the death of a partner. B. It governs partnerships in the absence of other expressed agreements. C. It provides the protection of limited liability for shareholders. D. It ensures that one partner in a partnership business is not held responsible for all the debts of the firm.
B. It governs partnerships in the absence of other expressed agreements.
8. Which of the following statements is true of database marketing? A. It does not require someone with the technology know-how to keep the system up and running because it is fairly easy to use. B. It is a quick and efficient process for obtaining meaningful consumer information and making marketing decisions to acquire customers. C. It is the act of simulating the conditions under which a product is to be marketed. D. It refers to the act of promoting the sale of a product at the point of purchase.
B. It is a quick and efficient process for obtaining meaningful consumer information and making marketing decisions to acquire customers.
Which of the following statements is true of database marketing? A. It does not require someone with the technology know-how to keep the system up and running because it is fairly easy to use. B. It is a quick and efficient process for obtaining meaningful consumer information and making marketing decisions to acquire customers. C. It is the act of simulating the conditions under which a product is to be marketed D. It refers to the act of promoting the sale of a product at the point of purchase
B. It is a quick and efficient process for obtaining meaningful consumer information and making marketing decisions to acquire customers.
2. Which of the following is true about proprietorship? A. It is frequently used in finance, insurance, and real estate. B. It is the most popular form of business in the United States. C. It accounts for the largest share of total revenues generated in the United States. D. It is owned by two persons who have unlimited liability for its debts and obligations.
B. It is the most popular form of business in the United States.
3. Which of the following statements is true of police power? A. It allows the state to regulate commerce with foreign nations and among the several states. B. It is the right to use the force of the state to promote the general welfare of citizens. C. It is an unwritten law derived from judicial decisions based on acceptable customs. D. It entitles each and every citizen to a day in court.
B. It is the right to use the force of the state to promote the general welfare of citizens.
5. Which of the following is an advantage of a proprietorship? A. It makes it easy for the owner to obtain credit. B. It offers unique tax advantages. C. It continues to legally exist even after the proprietor's death. D. It provides access to unlimited capital.
B. It offers unique tax advantages.
9. In the context of small businesses, which of the following statements is true of common stock? A. People holding common stocks have an enforceable claim to dividends. B. It represents an owner's interest and consists of many identical shares. C. People holding common stocks are paid before preferred stockholders. D. It denies its holder all the voting rights of the company.
B. It represents an owner's interest and consists of many identical shares.
7. Which of the following statements is a characteristic of a cash flow budget? A. It allocates expenses for achieving the sales target. B. It tells whether arrangements need to be made for external sources of cash, such as borrowing or owner investments. C. It contains a forecast of the amounts and sources of sales income and the materials that will be needed to achieve the sales forecast. D. It plans and controls revenue to obtain desired profits.
B. It tells whether arrangements need to be made for external sources of cash, such as borrowing or owner investments.
28. Which of the following is a method of computing inventory that small firms tend to use to save taxes when prices rise? A. First-in, first-out method B. Last-in, first-out method C. Average-cost method D. Direct tax method
B. Last-in, first-out method
31. _____ is the most important professional assistance one needs before investing in a franchise. A. Technological advice B. Legal advice C. Medical advice D. Communication advice
B. Legal advice
17. In a franchise, which of the following is an advantage for a franchiser? A. Brand recognition B. Low operating costs C. Financial assistance D. Share in national promotion
B. Low operating costs
5. _____ is the systematic gathering, recording, and analyzing of data about the merchandising of goods and services. A. Competitor analysis B. Market research C. Competitive intelligence D. SWOT analysis
B. Market research
29. Which of the following is an example of a strictly business-oriented service? A. Health and beauty B. Market research firm C. Real estate D. Insurance and policy
B. Market research firm
