Business _ Final Exam
62. A business that has a gaming console intended to compete directly with Sony's PlayStation gaming console would likely use a: a. follow-the-leader pricing strategy. b. penetration pricing strategy. c. prestige pricing strategy. d. variable pricing strategy.
a) follow-the-leader pricing strategy.
18. Which of the following questions does a statement of cash flows answer? a. How profitable is the business? b. How much debt has the business accumulated? c. What is the degree of liquidity for the business? d. Where did the cash come from?
d. Where did the cash come from?
36. Sandy is using a government program to help finance her new business. Her company is not eligible for a loan through a normal lending channel and is receiving $120,000 with the SBA guaranteeing 85 percent of the loan. She also had to submit a loan application to the lender. Sandy is participating in the: a) 7(a) Loan Guaranty Program. b) Certified Development Company 504 Loan Program. c) Small Business Innovative Research Program. d) 7(m) Microloan Program.
a) 7(a) Loan Guaranty Program.
15. The 80/20 principle maintains that: a) 80 percent of sales come from 20 percent of customers. b) 80 percent of customers are repeat customers and 20 percent are new customers in any given period. c) any employee within 20 to 80 feet of a problem should help address it. d) 80 percent of complaints come from 20 percent of customers.
a) 80 percent of sales come from 20 percent of customers.
79. Jason has neither a website nor a storefront. Instead, he lists his products for sale on a site that provides individuals with the ability to list products for sale to potential bidders. Jason is using a _____ site. a) C2C b) C2B c) B2C d) B2B
a) C2C
139. Which of the following "Cs" defines the customer's ability to conserve assets and follow a financial plan? a) Capacity b) Character c) Collateral d) Conditions
a) Capacity
4. When considering a loan application, which of the five Cs is vital even if not sufficient alone to secure a loan? a) Capacity b) Capital c) Character d) Collateral
a) Capacity
114. Comparing this year's results to last year's, Hector discovered that his firm's current ratio improved from 1.5 to 2.0. Which of the following may have happened? a) Current liabilities have decreased. b) Fixed assets have increased. c) Owners' equity has increased. d) Long-term debt has decreased.
a) Current liabilities have decreased.
96. If Ray's cash burn averages $5,000 per month, what does this mean? a) Ray has expenses of $5,000 per month. b) Ray has cash disbursements of $5,000 per month. c) Ray's cash disbursements exceed his cash receipts by $5,000 per month. d) Ray's income statement shows a $5,000 net loss each month.
a) Ray has expenses of $5,000 per month.
14. Eugenie has written a poem that she plans to print inside the greeting cards she will publish. Her work is automatically protected, but which of the following should Eugenie include on the back of her greeting cards? a) The symbol © b) The date the work was published c) The name of the copyright owner's company d) A listing of all other copyrights held by the owner
a) The symbol ©
1. A private equity recapitalization will: a) allow senior entrepreneurs to sell most of their stock immediately. b) prevent the next generation of entrepreneurs from assuming control of the family business. c) cause the firm to have a higher debt ratio. d) do all of these choices.
a) allow senior entrepreneurs to sell most of their stock immediately.
120. Judy is opening a small business that will produce high-quality paper products and has decided to place a green pine tree on all product boxes and on the sign outside the facilities to symbolize the business. At this point, the symbol is an example of a: a) brandmark. b) brand name. c) service mark. d) trademark.
a) brandmark.
135. Stacy was pleased when positive comments about her products appeared on a blog but became discouraged when other reviewers panned the same products. Stacy must remember that: a) business owners cannot absolutely control how their businesses are viewed by consumers. b) customers will misuse the products, resulting in negative comments. c) people are more likely to share complaints than compliments. d) if she wants more positive comments, she will have to write them herself.
a) business owners cannot absolutely control how their businesses are viewed by consumers.
19. In the B2B model, the customers are: a) businesses. b) other consumers. c) franchisees. d) auction participants.
a) businesses
140. In earlier years, leveraged buyouts became synonymous with the _____ LBO. a) bust-up b) build-up c) owner-financed d) publicly funded
a) bust-up
100. Demand for a product typically _____ as price _____. a) decreases; increases b) decreases; stays the same c) stays the same; increases d) decreases; decreases
a) decreases; increases
20. Kermit calculated his total asset turnover to be 1.13. This tells Kermit that every: a) dollar of assets generates $1.13 in sales. b) dollar of sales costs Kermit $1.13 to generate. c) year he turns his inventory 1.13 times. d) dollar of assets generates $1.13 in profits.
a) dollar of assets generates $1.13 in sales.
54. Before social networking sites became dominant, _____ provided a low-cost way to pinpoint customers and achieve high response rates. a) e-mail promotion b) search engine optimization (SEO) c) reciprocal advertising d) quick response (QR) codes
a) e-mail promotion
11. Hollywood Amusement, a small independent movie theater, decreased the price of admission from $10 to $9. Prior to the price decrease, the business sold 1,000 tickets each month. After the price decrease, it experienced ticket sales of 1,500 a month. If the change in sales is attributable only to the change in price, Hollywood Amusement faces _____ for its movie tickets. a) elastic demand b) constant demand c) inelastic demand d) variable demand
a) elastic demand
27. The benefits of issuing an IPO include a) enhanced reputation for the firm. b) the allowance of a quick exit. c) the insignificant costs of doing so. d) all of these choices.
a) enhanced reputation for the firm
77. A comprehensive break-even analysis entails: a) examining cost-revenue relationships and incorporating sales forecasts into the analysis. b) analyzing marketing strategy's effect on revenue and costs. c) the use of comparison pricing and contribution margins. d) approximating debits, credits, costs, and sales.
a) examining cost-revenue relationships and incorporating sales forecasts into the analysis.
45. The difference between fixed and variable expenses is that: a) fixed expenses stay the same regardless of sales volume. b) variable expenses will decrease per unit as sales increase. c) one represents cost of goods sold while the other represents operating expenses. d) all of these choices.
a) fixed expenses stay the same regardless of sales volume.
46. Williams Alternative Power, Inc., a company developing solar panels, has done considerable research and limited production during its two-year life. It is about ready for its IPO. At this stage of its life cycle, its ability to attract venture capital is: a) greater. b) lessened. c) optimal. d) limited.
a) greater.
113. Media publications, public records, and directories are sources of: a) impersonal referrals. b) marketer-initiated contacts. c) personal referrals. d) customer-initiated contacts.
a) impersonal referrals.
103. If a firm's current ratio _____, its liquidity _____. a) increases; increases b) increases; decreases c) decreases; increases d) increases; remains the same
a) increases; increases
7. Mark follows the cash budget like it was carved in stone. He has fallen prey to the one real danger in overreliance on a cash budget which is: a) inflexibility. b) pliability. c) exaggeration. d) errors.
a) inflexibility.
34. Personal selling degenerates into mere order-taking when a salesperson: a) lacks product knowledge. b) is persistent about selling the product. c) is not friendly and enthusiastic when a customer enters the store. d) cannot handle objections.
a) lacks product knowledge.
67. A firm should finance its growth in such a way as to maintain adequate: a) liquidity. b) inventory. c) sales. d) volume.
a) liquidity.
51. The liquidity of a firm is: a) measured by a ratio of current assets to current liabilities. b) not important to the company's financial health. c) the ability of the firm to sell its products quickly. d) a measurement of spontaneous financing.
a) measured by a ratio of current assets to current liabilities.
125. Bernard has just learned that on the balance sheet, a company's total assets must equal the _____ plus the _____. a) money borrowed from others; money invested by the owners b) accounts receivable; accounts payable c) accumulated depreciation; asset value d) net profit; retained earnings
a) money borrowed from others; money invested by the owners
127. The business analysis stage of the new product development process is critical because: a) one to three years may pass before profits are realized on the sale of a new product. b) it is hard to attract the 10 percent of the total market that is needed for a new product success. c) products often fail in laboratory and marketing testing. d) All of these support the importance of the business analysis stage.
a) one to three years may pass before profits are realized on the sale of a new product.
61. The major difference between the information-based model and the content-based model is the: a) presence of ads in the content-based model. b) ability to contact the site developer in the information-based model. c) presence of an order-processing feature in the information-based model. d) the ability for the visitor to post comments on the content-based model.
a) presence of ads in the content-based model.
37. Raymond is considering whether to advertise on the placemats used in many local restaurants. One of the arguments in favor of this action is: a) publicity is important to a small business and should be used at every opportunity. b) you never know who might see the ad on the placemat. c) the cost of printing is shared with many other local businesses. d) every ad will generate approximately 1,000% of its cost in revenues.
a) publicity is important to a small business and should be used at every opportunity.
91. Paul is approaching retirement and has decided to siphon off funds from his company rather than sell it. From his perspective, the advantage of systematically withdrawing cash from the firm is a) retaining control. b) preserving cash for later reinvestment. c) greater latitude in seeking out a buyer for the firm. d) increasing long-term returns from the business.
a) retaining control.
111. Before he executes his exit strategy, Arthur should: a) understand why he wants out. b) make sure his heirs approve his exit strategy. c) find a hobby to occupy his time. d) plan his budget based on the sudden inflow of cash.
a) understand why he wants out.
16. Retro Hits, a local band covering songs from the 1980s and 1990s, decided they wanted to expand to more college students. Research showed students thought the current $25 ticket price was too high for a local band. To strengthen ticket demand, Retro Hits began offering $15 tickets to all fans who checked in on Facebook. The band was using a: a) variable pricing strategy. b) price lining strategy. c) price skimming strategy. d) freemium pricing strategy.
a) variable pricing strategy.
25. Lorrie Veasey, owner of All That Swag, used discount coupons for special event items to drive customers to her retail stores. Using such promotions and stating that "the regular price is never chiseled in stone" would indicate Lorrie is using a: a) variable pricing strategy. b) price lining strategy. c) price skimming strategy. d) product line pricing strategy.
a) variable pricing strategy.
75. Cameron has applied for a loan to expand his young business. When bankers look for evidence of whether he will be able to repay a loan, they usually base their assessment on: a) what Cameron's firm has done in the past. b) what Cameron says the firm will do in the future. c) the opinion of investment analysts. d) the business plan of the enterprise.
a) what Cameron's firm has done in the past.
29. According to the Pew Research Center, in 2021, _____ percent of adults in the United States owned a smartphone. a) 95 b) 85 c) 52 d) 63
b) 85
73. Which of the following statements about company growth is true? a) Successful growth occurs on its own. b) A high-growth firm's need for additional financing may exceed its available resources, even though the venture is profitable. c) Inventory needs will increase while account receivables will decrease with growth. d) While rapid growth may stress personnel, the increase in pay will be sufficient.
b) A high-growth firm's need for additional financing may exceed its available resources, even though the venture is profitable.
31. Harvey has invested all of his money in his thriving business. He would like to recoup some of his investment but not completely sell off his business. This might be a good time for him to consider selling stock to the public in a(n) a) ESOP. b) IPO. c) MBO. d) LBO.
b) IPO.
24. Which of the following is an advantage for choosing a hometown as a location for a new business venture? a) The entrepreneur knows the landmarks around his or her home community. b) It may be easier to establish credit. c) The entrepreneur is more likely than an outsider to be offered a better price on a building or land to locate his or her business. d) The risk is significantly reduced.
b) It may be easier to establish credit.
44. Which of the following forms of promotion would be the most effective for industrial insulation products? a) Advertising b) Personal selling c) Sales promotions d) Social media
b) Personal selling
87. Although consumer needs are innumerable, they can be identified as falling into which of the following four categories? a) Motivational, spiritual, physiological, and social b) Physiological, social, psychological, and spiritual c) Physiological, social, psychological, and motivational d) Physiological, motivational, psychological, and spiritual
b) Physiological, social, psychological, and spiritual
70. _____ is the process of increasing the volume and quality of traffic to a particular website. a) Blogging b) Search engine optimization (SEO) c) Prospecting d) Social networking
b) Search engine optimization (SEO)
5. As Jacob considers harvesting, he is concerned with which of the following? a) Merely selling and leaving a business b) The creation of future options c) The establishment of a benchmark for firm risk d) Capturing future profitability
b) The creation of future options
38. Which of the following is a challenge for a B2C e-commerce business? a) The amount of time involved in modifying the appearance of the website b) The inability to change prices quickly c) The inability to change merchandise mixes quickly d) Customers who refuse to purchase a product without first seeing it
b) The inability to change prices quickly
63. Hermione decided to create a website to complement her brick-and-mortar store. Which of the following would most likely be her primary motive for doing so? a) To allow her customers to preview her products before coming to her store b) To attract customers from outside her local area c) To keep up with the competition d) To reduce her overall expenses
b) To attract customers from outside her local area
93. Meili reports revenues when they are earned and records expenses when they are incurred. She is using _____-basis accounting. a) activity b) accrual c) cash d) liquidity
b) accrual
21. Marcia uses other people's money whenever possible to finance her business. She prefers to minimize and control rather than to maximize and own resources. This practice is known as: a) high-stepping. b) bootstrapping. c) unethical business practice. d) taking advantage of others.
b) bootstrapping.
101. Zoning ordinances often apply to factors related to: a) nonrelated employees working in a home. b) commercial signage. c) the storage of hazardous materials. d) all of these choices.
b) commercial signage.
115. A business will not be successful unless it charges a price for its products that covers its total _____ and _____. a) cost; a margin of profit b) cost of goods; selling cost c) fixed cost; operating expense d) variable cost; cost of goods
b) cost of goods; selling cost
13. Buying on credit _____ the amount of working capital needed by the business doing the buying. a) augments b) decreases c) increases d) offsets
b) decreases
99. Customer accessibility is the most critical factor in evaluating a specific site for a: a) clothing manufacturer. b) drugstore. c) car-parts maker. d) software development company.
b) drugstore.
30. Sylvia, the owner of a clothing boutique, has agreed to sell her business to one of her clothing suppliers. This transaction would likely be described as a sale to a(n) _____ buyer. a) competing b) employee c) financial d) strategic
b) employee
123. The features or characteristics of a product or service that the customer decides to use for comparison purposes in the decision-making process are called the: a) evoked set. b) evaluative criteria. c) functional factors. d) reference group.
b) evaluative criteria
74. D&R Products forecasts that it will require $10,000 for equipment, which will be depreciated over five years. The $10,000 will be reflected in the balance sheet as: a) inventory. b) gross fixed assets. c) net fixed assets. d) accounts payable.
b) gross fixed assets.
72. Quality Cars, an independent used car dealership, utilizes long-term consumer credit in its business. Typically, consumers are allowed to place a 15 percent down payment on an automobile. Then, over a period of 48 months, the consumer is allowed to make payments on the balance of the account, which includes compound interest of 2 percent monthly on the unpaid portion. Quality Cars is employing _____ in its business. a) open charge accounts b) installment accounts c) revolving charge accounts d) selective accounts
b) installment accounts
137. The entrepreneur who issues an IPO as part of the exit strategy will: a) be able to cash out immediately. b) likely not be able to exit until the firm reaches another plateau. c) be required by law to wait at least one year before selling his or her shares. d) none of these choices.
b) likely not be able to exit until the firm reaches another plateau.
132. Ben left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making. He does not expect either growth or high profits. Ben's prospects for attracting outside financing are: a) plentiful. b) limited. c) moderate. d) nonexistent.
b) limited
104. Jeff has concluded that his company, which sells professional football merchandise, needs to increase its line of shirts. He is in the _____ stage of the consumer decision-making process. a) information search and evaluation b) need recognition c) post-purchase evaluation d) purchase decision
b) need recognition
40. A drawback to "going public" is: a) large profit potential resulting in increased taxation. b) numerous SEC requirements. c) national recognition causing increased exposure. d) additional working capital.
b) numerous SEC requirements.
131. Two years ago, Harold inherited $30,000 and decided to open a coffee shop in his hometown instead of buying stock in Ford Motor Company. The rate of return he could have earned on his investment in Ford stock represents his: a) lost profit. b) opportunity cost of funds. c) investment opportunity. d) potential profit.
b) opportunity cost of funds.
2. If the owner of Clarisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand-designed jewelry, a _____ pricing strategy would be expected. a) skimming b) prestige c) follow-the-leader d) Dynamic
b) prestige
47. Miracle Fund is a venture capitalist. In exchange for providing venture capital, Miracle Fund: a) expects the entrepreneur to pay interest to the fund. b) receives the right to own a percentage of the entrepreneur's business. c) takes a percentage of the annual earnings. d) becomes a general partner of the entrepreneur.
b) receives the right to own a percentage of the entrepreneur's business.
52. Carla is a loan analyst at the bank. When Cameron applied for a loan, Carla looked at his balance sheet for _____ to evaluate a possible loan for his company's financing. a) direct and indirect assets b) tangible and intangible assets c) assets founded upon past performance and those depending on future performance d) industry-specific and firm-specific assets
b) tangible and intangible assets
32. The federal government primarily provides funds to small businesses through: a) venture capital companies. b) the Small Business Administration. c) business angels. d) the Securities and Exchange Commission.
b) the Small Business Administration.
33. Calvert is contemplating building an aluminum smelting plant. The ratio of bauxite, the raw material from which aluminum is extracted, to aluminum is two to one. It takes two tons of bauxite to product one ton of usable aluminum. Calvert should locate his smelting plant close to: a) his customers. b) the bauxite mine. c) transportation. d) an area with a suitable labor supply.
b) the bauxite mine.
117. Trinity Chocolates had net income of $70,000, depreciation expense of $10,000, and an increase in accounts receivable of $20,000. Based on this information, what was Trinity's net cash flows from operations on its statement of cash flows? a) $40,000 b) $60,000 c) $80,000 d) $100,000
c) $80,000
146. Trinity Chocolates had sales of $850,000, cost of goods sold of $550,000, operating expenses of $200,000, interest expense of $20,000, and taxes of $10,000. Based on this information, what was Trinity's operating profits? a) $300,000 b) $100,000 c) $80,000 d) $70,000
c) $80,000
145. Smith Bakery has current assets of $60,000, total assets of $150,000, current liabilities of $25,000, total debt of $75,000, sales of $100,000, operating profits of $20,000, and net profits of $10,000. Based on this information, what is Smith's asset turnover? a) 0.07 b) 0.13 c) 0.67 d) 1.50
c) 0.67
49. The initial costs of going public by issuing an IPO can be as much as _____ percent of the stock issued. a) 5 b) 10 c) 20 d) 25
c) 20
148. Which emerging model of e-commerce is used to generate considerable income from advertising? a) B2C b) Disintermediation c) Blogging d) Auction site
c) Blogging
124. Martina wants to expand her business. She will need to buy a larger facility and equip it with additional machinery. She should look into the SBA loan program that provides long-term financing for small businesses to acquire real estate or machinery and equipment called the: a) 7(m) Microloan Program. b) 7(a) Loan Guaranty Program. c) Certified Development Company 504 Loan Program. d) Small Business Investment Program.
c) Certified Development Company 504 Loan Program.
119. Which of the following compensation plans is best suited for new salespersons in a small business? a) Straight salary plan b) Strictly commissions-on-sales plan c) Combination of salary and commissions, with salary representing the larger portion d) Combination of salary and commissions, with commissions representing the larger portion
c) Combination of salary and commissions, with salary representing the larger portion
78. How does e-commerce benefit small firms? a) Small firms are often more "tech savvy," allowing quicker adoption of innovations. b) Large firms may not push the consumer toward the Internet, resulting in small firms being able to gain customers. c) E-commerce allows small firms to expand their reach beyond local markets. d) The government has committed significant resources to encourage small firms to adopt an e-commerce business model.
c) E-commerce allows small firms to expand their reach beyond local markets.
17. Dallas is considering starting his business in his hometown. Which of the following is a reason why he should? a) He can get a more favorable tax treatment. b) The city government may waive any start-up fees he must pay. c) His friends and relatives in the community may be quick to buy his product and also spread positive reports about it to others. d) All of these choices are correct.
c) His friends and relatives in the community may be quick to buy his product and also spread positive reports about it to others.
64. James is preparing his forecasts for the coming year. Which of the following kinds of scenarios should he prepare when forecasting and budgeting? a) Best- and worst-case scenarios b) Aggressive sales increases, conservative assumptions, and worst-case scenarios c) Moderate sales increases, break-even, and worst-case scenarios d) Most-likely, probably, and least-likely scenarios
c) Moderate sales increases, break-even, and worst-case scenarios
149. Which of the following advertising media is considered to have a low pass-along rate? a) Newspapers b) Outdoor media c) Radio d) Television
c) Newspapers
8. Which of the following advertising media is considered to have a no visual treatment? a) Magazines b) Outdoor media c) Radio d) Television
c) Radio
57. In its simplest form, the balance sheet follows what formula? a) Total assets = Owners' equity − Debt b) Total assets + Debt = Owners' equity c) Total assets = Debt + Owners' equity d) Owners' equity = Assets − Debt
c) Total assets = Debt + Owners' equity
94. Joann is buying an existing convenience store. Her best choice for a bank would be: a) a national bank that processes credit card payments. b) the credit union where she is already a member. c) a bank close to her store. d) the largest bank in her town, which is located on the other side of town from her store.
c) a bank close to her store.
122. XYC Corporation pays its income taxes quarterly but withholds payroll taxes from its employees' paychecks each week. Until the taxes are actually paid to the IRS, they appear on the balance sheet as: a) an asset. b) an account receivable. c) a liability. d) long-term debt.
c) a liability.
92. Working capital consists of: a) inventory and equipment. b) cash, accounts receivable, and inventory. c) accounts receivable and inventory less accounts payable. d) none of these choices.
c) accounts recievable and inventory less accounts payable.
69. The distinctive operating image of a product, including features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques, can be protected: a) by copyright. b) by patent. c) as trade dress. d) as a registered concept.
c) as trade dress.
85. Daisy is planning a clothing manufacturing company. When selecting the location for her production facility, Daisy will want to consider: a) ease of access to her customers. b) ease of access to transportation. c) availability of suitable labor. d) the overall cost of living of an area.
c) availability of suitable labor.
50. For investment purposes, Wilma needs a snapshot of the firm's financial position at a specific point in time. She should look at the: a) marketing plan. b) statement of cash flows. c) balance sheet. d) income statement.
c) balance sheet.
106. A good reason for relocating a typical manufacturing business is to: a) stabilize income taxes. b) increase customer traffic. c) be closer to a pool of highly skilled labor. d) provide free-flow space.
c) be closer to a pool of highly skilled labor.
109. Natalya reports revenues when cash is received and records expenses when they are paid. She is using _____-basis accounting. a) activity b) accrual c) cash d) liquidity
c) cash
82. Bart is ready to look for a site for his new retail business. To help him in his search he should: a) contact a local real estate agent. b) check property for sale ads in the local newspaper. c) check into site-selection software. d) check with the local small business development office.
c) check into site-selection software.
48. Ethical questions are being raised about the merging of the _____ and _____ models on one website. a) information-based; content-based b) information-based; transaction-based c) content-based; transaction-based d) content-based; blogging
c) content-based; transaction-based
89. The difference between the unit selling price and the unit variable costs and expenses is known as the: a) average price. b) elasticity. c) contribution margin. d) break-even point.
c) contribution margin
60. Huang is starting a business where he restores homes built before 1900. He is purchasing used equipment, specifically lathes, planing mills, and drill presses. This equipment is an example of _____ equipment. a) special-purpose b) product-layout c) general-purpose d) automated
c) general-purpose
10. If the firm's rate of return on its assets is _____ than the cost of borrowing, then the owners' rate of return on equity will _____ as the firm uses _____ debt. a) less; decrease; less b) greater; decrease; more c) greater; increase; more d) less; increase; more
c) greater; increase; more
41. A salesperson at Plumbers Warehouse searches public records of new building permits to identify potential customers for new bathrooms. This salesperson is relying on _____ to identify sales prospects. a) personal referrals b) marketer-initiated contacts c) impersonal referrals d) customer-initiated contacts
c) impersonal referrals
42. Business angels provide: a) asset-based loans. b) assets under management. c) informal venture capital. d) trade credit.
c) informal venture capital.
105. Reliable Construction created a website to post photos of some of its completed projects and display its address and phone number, along with a list of the types of projects the company can complete. Reliable has used the _____ model. a) transaction-based b) content-based c) information-based d) customer-relationship-based
c) information-based
129. Bob never purchases bottled water when he is thirsty even if it is available. This behavior indicates that bottled water: a) does not meet Bob's evaluative criteria. b) increases Bob's cognitive dissonance. c) is not included in Bob's evoked set. d) decreases Bob's perceptual categorization.
c) is not included in Bob's evoked set.
97. A line of credit is the _____ amount of credit a bank will provide a borrower at any one time. a) average b) annual c) maximum d) minimum
c) maximum
133. Mary, an independent sales representative, is hindered in her ability to be in contact with clients because of dropped calls on her cell phone. Her decision to purchase a cellular booster for her phone shows that Mary has just proceeded through the _____ stage of consumer decision making. a) post-purchase evaluation b) information search and evaluation c) need recognition d) purchase decision
c) need recognition
134. To calculate his company's _____, Edgar will deduct operating expenses from gross profits. a) cost of goods sold b) profits before taxes c) operating profits d) retained earnings
c) operating profits
107. For entrepreneurs planning an exit strategy, the best advice comes from: a) their management team. b) someone experienced in buying multiple businesses. c) other entrepreneurs who have personally been through a harvest. d) the same experts who helped them build and grow their business.
c) other entrepeneurs who have personally been through a harvest.
121. Juan's belief that all low-calorie sodas taste awful is an example of: a) cognitive dissonance. b) the elimination of an item in an evoked set. c) perceptual categorization. d) unilateral indifference.
c) perceptual categorization.
65. According to the consumer decision-making process, _____ is the final stage through which consumers progress. a) cognitive dissonance b) evaluative categorization c) post-purchase evaluation d) purchase decision
c) post-purchase evaluation
28. Nancy has decided to raise working capital for her upscale boutique business which currently has four locations and is considering franchising the concept in the next few years. Because of the company's current organization and anticipated future plans, the most likely form of financing would be: a) large corporations. b) private placement. c) public sale. d) underwriting.
c) public sale.
53. Using a customer database, a firm's best customers can be identified by running a(n) _____ analysis. a) 80/20 b) frequency c) recency-frequency-monetary d) transactional relationship
c) recency-frequency monetary
86. Credit cards are usually based on a(n) _____ account system. a) installment b) open charge c) revolving charge d) selective
c) revolving charge
3. A basic idea forming the foundation of customer loyalty for small firms includes the notion that: a) superior customer service always leads to customer purchases. b) customer loyalty will mean constant customer satisfaction. c) small businesses have the potential to provide superior customer service. d) customer satisfaction is being ignored by large firms.
c) small businesses have the potential to provide superior customer service.
26. A line of credit is most often used for: a) purchasing equipment. b) purchasing land and buildings. c) temporary needs such as seasonal inventory increases. d) owner withdrawals/dividends.
c) temporary needs such as seasonal inventory increases.
76. Tyler cannot afford to hire a salesperson for his small business but feels personal selling is the best way to encourage prospects to become customers. You remind him that: a) he may have to be his own salesperson for a while. b) good salespeople are expensive. c) the most cost-efficient mode of selling may be to use self-employed sales or marketing representatives. d) he can always send his production people out to make sales calls.
c) the most cost-efficient mode of selling may be to use self-employed sales or marketing representatives.
126. If holding true to the average, a venture capitalist likely has approximately _____ of investments in later-stage businesses. a) one-fourth b) one-half c) three-fourths d) nearly all
c) three-fourths
58. Molly has had repeated positive experiences with her local coffee shop. They suggest new flavors, call her by her first name, and donate to a local charity that Molly supports. Molly's experiences, as a result, contribute to the firm's: a) organizational culture. b) customer cost. c) value equation. d) customer satisfaction.
c) value equation.
66. Genevieve just completed her residency and is ready to open her medical office as a general practitioner. The image her office should convey is: a) trendy, minimalist, and futuristic with bold colors and modern art. b) old-fashioned, dark, and somber with dark colors and heavy furniture. c) solid, trustworthy, and confident with neutral colors and comfortable furniture. d) light-hearted and whimsical with pastel colors and playful art.
c. solid, trustworthy, and confident with neutral colors and comfortable furniture.
142. If a business allows a customer to buy on credit, which of the following increases? a) Debt b) Inventory c) Accounts Payable d) Accounts Receivable
d) Accounts Receivable
147. Which of the following is a good way to increase the volume and quality of traffic to a particular website? a) Place banner ads on other websites. b) Include the URL on print promotions and business cards. c) Make sure that the site is as search-engine friendly as possible. d) All of these are correct.
d) All of these are correct.
23. Which of the following would be considered a touch point with a customer? a) Returned warranty cards b) Response to online survey c) Purchase made from a salesperson d) All of these choices
d) All of these choices
81. The purpose of pro forma financial statements is to answer which of the following questions? a) How profitable can you expect the firm to be? b) How much and what type of financing (debt or equity) will be needed? c) Will the firm have adequate cash flows? d) All of these choices.
d) All of these choices.
110. Felipe is approaching a banker for some additional financing. Which of the following assets would be most important to the banker? a) Goodwill b) Equipment c) Current patents d) Business reputation
d) Business reputation
90. If Joan has a cash balance of $98,000, has average expenses of $14,000 per month, and a cash burn rate of $7,000 per month, she will run out of cash in how many months? a) 14 months b) 12 months c) 7 months d) Cannot determine with information given.
d) Cannot determine with information given.
108. Which of the following types of crowdfunding is subject to securities laws? a) Donations b) Rewards c) Pre-purchases d) Equity investing
d) Equity investing
98. Arthur's company is doing well, but he has grown a bit tired of the daily grind. The idea of selling is appealing to him. Which of the following would you recommend that Arthur do next? a) Ask his advisory board for their opinions. b) Ask a business broker what his business is worth. c) Go public. d) Get advice from someone who has sold a business.
d) Get advice from someone who has sold a business.
144. Which of the following cards is an example of a retailer credit card? a) MasterCard b) Visa c) Discover d) None of these choices
d) None of these choices
83. Tanya would like to gain market share rapidly so she has priced her product at a lower than normal, long-range market price. Which of the following strategies is Tanya using? a) Variable pricing b) Price skimming c) Price lining d) Penetration pricing
d) Penetration pricing
39. Which of the following key factors in determining an optimal business location is stated correctly? a) The entrepreneur's personal preference b) Business plan complexity c) Business environment expectations d) Site suitability and costs
d) Site suitability and costs
138. Anne owns a small business dealing with industrial products. She currently uses personal selling extensively, but she wants to reduce her cost without losing exposure. Which of the following promotional tools should she use? a) Contests b) Coupons c) Specialties d) Trade show exhibits
d) Trade show exhibits
80. A loan covenant is very likely to require: a) a bank officer on the board of advisors. b) salary limitations. c) voting rights. d) a fixed business strategy.
d) a fixed business strategy.
55. To understand how his firm performed during the past year, Josh must know: a) the firm's financial position at the beginning of the year. b) the firm's financial position at the end of the year. c) the firm's profits during the year. d) all of these choices.
d) all of these choices
9. The method of payment is important to the seller entrepreneur because: a) accepting the stock of the acquiring company is risky. b) accepting the stock of the acquiring company relieves the buyer of the selling firm's liabilities. c) accepting cash has unfavorable tax consequences. d) all of these choices.
d) all of these choices.
68. A small, specialized software program is called: a) e-mail. b) spam. c) a blog. d) an app.
d) an app.
56. Companies that depend on semiskilled or unskilled workers usually locate in a(n): a) rural area. b) area where the cost of living is low. c) area with no zoning ordinances. d) area with surplus labor.
d) area with surplus labor.
118. Joe designed a market-leading app that helps businesses organize their taxes. A rival came out with a similar app and gained market share. Afterward, Joe redesigned his app. The IRS and the Society of Certified Public Accountants have said the app meets tax standards. The app would be considered a(n): a) sustainable competitive advantage. b) strategic alliance. c) competitive adjustment. d) business process reengineering.
d) business process reengineering.
71. The five Cs of credit include: a) character, capacity, capital, collateral, and caution. b) capacity, capital, collateral, credit report, and collectivity. c) character, consistency, capital, collateral, and conditions. d) character, capacity, capital, collateral, and conditions.
d) character, capacity, capital, collateral, and conditions.
112. A build-up leveraged buyout involves: a) developing the business to make it an attractive takeover target. b) acquiring businesses that occupy a higher level in the market channel. c) selling the business to employees. d) constructing a larger enterprise to be sold or taken public via an IPO.
d) constructing a larger enterprise to be sold or taken public via an IPO.
22. Russell sold his small variety store to a large retail chain but has agreed to stay on and manage the store. Russell should expect: a) freedom from responsibility. b) a feeling of elation with his new wealth. c) greater independence. d) culture conflict.
d) culture conflict.
95. An approach that recognizes that, with every interaction, customers learn something about a company that will affect their desire to do business there in the future is known as: a) perceptual categorization. b) cognitive dissonance. c) transactional relationship. d) customer experience management.
d) customer experience management.
84. Regina wants to open her own coffee stand. To do that she will need equipment and supplies. The two methods Regina can use to pay for these items are _____ and _____. a) cash flow; balance sheets b) accounts receivable; accounts payable c) assets; liabilities d) debt; equity
d) debt; equity
116. D&R Products forecast a first-year asset requirement of $143,500; therefore, the total debt requirement is: a) $143,500. b) a set percentage of sales. c) equal to the current ratio. d) dependent on the owner's equity amount.
d) dependent on the owner's equity amount.
141. Before a company's competitive advantage moves into the decline stage, it should: a) invest resources to develop a competitive advantage. b) continue deploying the competitive advantage as long as it can. c) slow the decline as much as possible. d) keep a close eye on "hidden curves" and take corrective measures before they become apparent in the company's financial results.
d) keep a close eye on "hidden curves" and take corrective measures before they become apparent in the company's financial results.
102. Anna's new business looks like it can grow quickly and become profitable in its first year. Anna will likely find _____ possible sources of financing than those with less potential for growth and profits. a) fewer b) about the same number of c) more d) many more
d) many more
88. Bootstrapping often becomes necessary with: a) fast growth and limited financing options. b) slow sales and unlimited financing options. c) a high percentage of cash sales. d) none of these choices.
d) none of these choices
43. The determination of the cost of goods sold should include: a) all operating expenses. b) interest expense. c) income tax expense. d) none of these choices.
d) none of these choices.
35. The method of forecasting asset requirements using a ratio of assets to sales is called the _____ technique. a) percentage-of-inventory b) percentage-of-equity c) percentage-of-debt d) percentage-of-sales
d) percentage-of-sales
128. Even though Evan's company is a corporation, the bank imposed a loan covenant that required Evan to: a) make a balloon payment after three years. b) pay a loan origination fee. c) make quarterly rather than monthly payments. d) personally guarantee the loan.
d) personally guarantee the loan
136. Net profits are equal to: a) sales less cost of goods sold. b) gross profits less operating expenses. c) operating profits less interest expense. d) profits before taxes less income taxes.
d) profits before taxes less income taxes.
143. As Willard's business grows and prospers, his company's total asset requirements will equal: a) total sources of financing less owner's investment and retained earnings. b) spontaneous debt financing plus bank loans plus owner's investment less retained earnings. c) total sources of financing less net assets and owner's investment. d) spontaneous debt financing plus bank loans plus owner's investment plus retained earnings.
d) spontaneous debt financing plus bank loans plus owner's investment plus retained earnings.
12. In a harvest situation, the exiting owners are usually paid in cash or: a) tangible assets. b) imputed goodwill. c) favorable publicity. d) stock.
d) stock.
130. The activities involved in physically moving a product are called: a) channel management. b) channel of distribution. c) logistics. d) supply chain management.
d) supply chain management.
150. Florence wants to obtain a loan for a large color laser printer for her copy shop. Because the printer will last approximately eight years, the ideal loan would be a(n) _____ loan. a) mortgage b) trade credit c) asset-based d) term
d) term
59. When Gavin sells his product to _____, the storage function is transferred to the intermediary. a) agents b) brokers c) common carriers d) wholesalers
d) wholesalers
6. Whatever the negotiating skills of the respective parties, harvesting a company requires a: a) business broker. b) promise of positive cash flows. c) precise valuation formula. d) willing buyer.
d) willing buyer.
