ENT 396 Exam 2 Review
Which of the following questions should an entrepreneur ask when a business plan is turned down?
"If you were in my position, how would you proceed?"
The registration of a trademark has a lifetime of
10 years plus 10-year renewable periods.
Works created after January 1, 1978, have a copyright for the life of the author plus
70 years
When considering bankruptcy, entrepreneurs as sole proprietors normally prefer
Chapter 13
Which of the following is a type of equity financing?
Common stock
Which of the following statements is not part of the "five-minute reading" by venture capitalists?
Determine the strengths and weaknesses of the entrepreneur.
A business plan must illustrate the current status of the venture but not the projected results.
False
After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.
False
It often is possible to obtain more capital and a better range of skills in a sole proprietorship than in a partnership.
False
Laws governing intellectual property rights include copyrights, trademarks, and leases.
False
The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.
False
The first step in the preparation of the cash flow budget is the identification and timing of cash outflows.
False
Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?
Is the person someone with whom the entrepreneur can work?
Which of the following statements would not be an appropriate guideline for successful business plan development?
Orient the plan to the present.
Which of the following is not a type of debt financing?
Private Placement
A disadvantage of debt financing is
Regular interest payments
From where does an S corporation take its name?
Subchapter S of the Internal Revenue Code
Which of the following falls under Chapter 7 bankruptcy?
The debtor is relieved of obligations.
Which of the following describes advantages of the business plan for financial sources?
The plan identifies critical risks.
Which of the following statements is not true of venture capitalists?
They are interested in trying to manage firms themselves.
A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service).
True
A budget is one of the most powerful tools that an entrepreneur can use in planning business operations.
True
Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility.
True
Financial information pulls together all the information presented in the other segments of the business.
True
One of the principal advantages of a corporate form of ownership is that liability (the most money a person can lose) is limited to an individual's investment.
True
The business plan is the entrepreneur's road map for a successful enterprise.
True
The two parts of a patent application are specification and claims.
True
Which is one of the most important questions for entrepreneurs to ask regarding venture capitalists?
What is it like to work with their firm?
An informal risk capitalist is referred to as:
a business angel.
The concept of the net present value method works on the premise that
a dollar today is worth more than a dollar in the future.
The completed business plan provides the entrepreneur with
a tool for communicating with financial sources.
A business plan is
a written document that details the proposed venture.
Which of the following does not represent a category of angel investors?
amateur angels
The entrepreneur should ask the venture capitalist _____ questions.
an unlimited number of
The traditional accounting equation that verifies the accuracy of the entrepreneur's balance sheet is
assets = liabilities + owner's equity.
Which of the following is a form of the pro forma statement?
balance sheet
The cash flow budget describes
cash inflows/cash outflows
A variable cost
changes in the same direction and in direct proportion to changes in operation activity.
That part of a patent application which identifies the features that are protected is known as the
claim
All of the following are ways of invalidating a trademark except
clearing-out proceedings.
The most common source of debt financing is
commercial banks
Which of the following terms is not synonymous with social lending?
commercially viable lending
The owner of a copyright may do all of the following except
deduct the intrinsic value of the rights from one's taxes.
A fixed cost
does not change in response to changes in activity for a given period of time.
Break-even analysis is a technique commonly used to assess the
expected product profitability.
Because of the _____ doctrine, it is sometimes difficult to establish infringement.
fair use
Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.
false
Equity financing is money invested in the venture with legal obligations to repay the principal amount of interest or interest rate on it.
false
Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.
false
Venture capitalists, surprisingly, require little information before they make an investment.
false
A key concept in developing an expense budget is that of
fixed costs
When a trademark becomes the name of a general group of products or services, the trademark protection may be lost because of
generic meaning
Which of the following are not trademarks?
generic words
Capital budgeting is designed to show
how many projects, in total, should be selected.
Financial information is important to entrepreneurs because it pulls together all the information presented in other segments of the business and:
it quantifies all the assumptions concerning business operations.
All of the following are recognized as advantages of partnerships except:
lack of continuity
Major trends in the venture capital field today include all of the following except
less specialized and more homogenous funds
Specific forms of partnership include which of the following?
limited partnerships and limited liability partnerships
One of the advantages of public offerings is
liquidity
The main objective of Regulation D is to
make it easier and less expensive for small ventures to sell stock.
An indicator of the planning pitfall of "failure to anticipate roadblocks" is
making no admission of possible flaws in the plan.
Competitive analysis, advertising plan, and pricing policy are all part of the
marketing segment
To effectively pursue a patent violation, experts recommend that the entrepreneur
prepare a realistic budget for infringement.
Contribution margin is the difference between
selling price and variable cost per unit.
There are two parts to a patent application, claims and
specification
Which of the following statements may be the most important in new venture creation?
the cash flow statement
The financial segment includes
the pro forma balance sheet.
An important guideline in putting the plan together is
to identify the target market.
Informal risk capitalists are often referred to as "business angels."
true
Informal risk capitalists are those who have already made their money and now seek to help new ventures.
true
Private placement is a method of raising capital through the private placement of securities.
true
Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures.
true
Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.
true
When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to
zero
Chapter 7, Chapter 9, and Chapter 11 are the most common forms of bankruptcy.
False
Contribution margin is the difference between the selling price and the fixed cost per unit.
False
Pro forma statements show the firm's present financial position.
False
The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.
False
The pro forma balance sheet is used in the critical risk segment of the business plan.
False
The registration of a trademark lasts for 40 years, with continuous renewal every 10 years.
False
The set of assumptions on which financial projections are based have little meaning.
False
The traditional accounting equation is: assets + liabilities = owner's equity.
False
There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.
False
The principle objective of capital budgeting is to
maximize the value of the firm.
A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an
operating budget
Which of the following is a critical factor to be considered in the management segment?
organizational structure
Comparing financial numbers in order to make decisions is referred to as:
ratio analysis
The comprehensive business plan should be the result of
reflections on the direction of the venture.
Advantages of debt financing include all of the following except:
regular interest payments
Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money.
true
The principal objective of capital budgeting is to maximize the value of the firm.
True
Three primary legal forms of organization are the sole proprietorship, the partnership, and the corporation.
True
Works created and copyrighted after January 1, 1978, are protected for the life of the author plus 70 years.
True
What is the significance of a harvest strategy segment in a business plan?
It is important for the entrepreneur to plan for a liquidity event as an exit strategy.
Which one of the following is not a benefit of a business plan to the entrepreneur?
Provides a comprehensive product-launch timetable.
A copyright provides exclusive rights to creative individuals for the protection of their artistic productions.
True
A trademark is a distinctive name, mark, or symbol that is identified with a company's product.
True
An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.
True
Break-even analysis is used to tell how many units must be sold in order to break even at a particular selling price.
True
The cash-flow budget provides an overview of cash inflows and outflows for the budget period.
True