ENTR Final
Managing risks to tools, equipment, inventory, and other physical assets is largely a function of developing and enforcing appropriate business policies and procedures,
True
Many small businesses experience problems in cash flow management because of the mismatch between the timing of the receipt of cash and the timing of the need to expend cash.
True
Money borrowed for the purpose of investment in a business is called debt capital.
True
Networking is a relatively low-cost, although time-intensive, method of recruiting.
True
Skimming, odd-even pricing, and price lining are three possible pricing strategies available to small businesses.
True
According to the IRS, to be an independent contractor the person must:
perform a service that is not central to the operation of the business.
A legal obligation to pay money in the future is called equity capital.
False
Formal summaries of the content of an accounting system's records of transactions are called financial instruments.
False
In a negotiation process, proposing solutions that provide value and balance for all parties involved is considered the easiest step
False
In a professional corporation, the shareholders are responsible for debts of the corporation.
False
A(n) _____ is a type of contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform.
Subcontract
The primary purpose of managerial accounting is to ______.
Support good decision making
Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer.
True
A lease is simply a rental agreement that specifies a minimum period of time for which one must make rental payments.
True
A product can include goods, services, and ideas.
True
A sole proprietorship is not considered as a separate legal entity from its owner.
True
Advertising is often used to support the corporate identity and value propositions that are established through public relations efforts.
True
Contractual provisions of insurance policies that specify what risks the insurance company is assuming are called coverages.
True
During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.
True
Identifying risks is the first task to be completed before a comprehensive insurance program can be developed for a business.
True
One reason why accounting is important to a small business is that it shows how much your business is worth.
True
The majority of small business start-ups are funded by bootstrapping.
True
The primary reason to acquire and use a computerized accounting system in your business is to ensure the accuracy of your accounting information.
True
The time value of money is the concept that a dollar received today is worth much more than is a dollar to be received at some time in the future.
True
Which of the following statements is not true of a product in the decline stage of the product life cycle?
Characteristics of the decline stage differ for each product.
Distributors and wholesalers prefer taking on start-up products as there are no setup charges involved.
False
E-tailers have high overhead and limited shelf space.
False
Exporting is usually expensive, difficult to start, and more risky than licensing, franchising, or joint ventures.
False
Face-to-face meetings with the client are infrequent if the services are provided at the client's location.
False
In the context of a business plan, a firm's responsiveness to customers is a key concern of bankers.
False
Personal selling decreases business owners' flexibility in their presentation.
False
Press relations are a form of communication that encourage the customer to take immediate action.
False
Selling your product or service in a limited area, for a limited time is known as parallel marketing.
False
The method of advertising is least likely to be used by businesses to convey their message to potential customers
False
The process of dividing the market into smaller portions of people that have certain common characteristics is called stereotyping.
False
The purchasing process is the term applied to the schedule and the process for setting the schedule for making purchases by an individual or an organization.
False
The total product is the most general description of a business, and the one which captures the smallest amount of what is special about a business.
False
When the fear appeal used by a marketing message is a too strong, it always causes the audience to react positively.
False
When considering the service life cycle, which of the following statements is not true?
It can be more difficult to extend the life cycle of a service over that of a product
Which of the following is a type of information plan that solicits information on customer interests?
Proof-of-concept website
Marcie works at a public library and she is responsible for purchasing all audiobooks for the library. Marcie reads reviews of the titles from the available monthly circulars, choosing the titles she would like to add to the collection. Marcie then sends the order to the technical services department where Linda places the order. In this case Linda is playing the customer role of _________.
Purchaser
Access for employees and reasonable cost are critical for businesses with low customer contact.
True
Every business faces risks in the real world, so every business plan needs to spend some time addressing them.
True
Executive summaries are written in a formal style, suitable for investors, bankers, and lawyers to read.
True
Giveaways, samples, and tastings are all examples of introductory techniques used in sales promotion.
True
In the context of a business plan, product quality, its benefits, service quality, and the competitive advantage are the primary concerns of potential customers.
True
It is customary for a small business to concentrate its efforts on one target market at the beginning and consider secondary ones later.
True
It is good to opt for distributors when a whole line of products need to be bought or warehoused.
True
Radio advertisements provide both geographic and demographic segmentation of a product or service.
True
Sales leads who actually make some sort of effort to learn more about the product, service, or business in anticipation of a possible purchase are known as prospects.
True
The concept of total product includes how customers describe one's good or service.
True
The final goal for developing and testing your value proposition is how it stacks up against and will compete against the other offering available to your customers.
True
The financial statements in a business plan include income statements, cash flow, balance sheet, and their respective assumptions.
True
The new product development process is likely to be easier for services than for innovative goods.
True
The primary areas for conflict resolution in exporting include nonpayment and contract default issues.
True
A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by:
Assembling the product in the absolute minimum time possible
Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes?
Book value
Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for. Trent, the accounts manager, accepts fake bills and assists Jacob in deceiving the company. They split the profits made this way. This is an example of theft by:
Employee collusion
Making ______ work requires giving employees permission to act, the knowledge to act, and the skill to act.
Empowerment
Which of the following statements is true of low customer contact businesses?
Empowerment zones offer businesses low-cost space and tax advantages.
Money contributed to businesses in return for part ownership of the business is called a(n) ________>
Equity capital
Which of the following statements is true of documenting the operations of your business?
Every business process does not have to be extensively documented.
A(n) _____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions.
Exculpatory cause
A process is what a business does when it takes some raw material and converts it into a valuable output. This does not apply to service businesses.
False
All businesses within an industry have to pay the same amount, as decided by the state, as unemployment insurance.
False
All money is considered currency, but all currency is not considered money.
False
Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes.
False
Business risk is the probability that the future state of the business will be better than planned.
False
By agreeing to an exculpatory clause in a contract, one party is agreeing not to hold the other responsible for his or her actions.
False
Contingency fees are a fixed amount paid for a certain task.
False
Copyrights, trademarks, and patents provide automatic full protection to small business owners.
False
Customers can never be a source of risk for businesses.
False
Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market.
False
Everyone responds differently to risk. When it comes to business risk, small business owners are mostly risk seeking rather than risk averse.
False
Expenses are the value given up to obtain something that the owner wants.
False
Factoring is a method of borrowing against payables.
False
Financial accounting is forward-looking and attempts to predict the results of management decisions.
False
Financial flexibility of a business is a matter of judgment, whereas financial strength is an objective assessment.
False
For a small business, the amount and type of inventory held for resale is not important because the supply of inventory and demand of customers can be matched at all times.
False
For me-too products, the stages of new product development are always extensively long.
False
Guerilla marketing is a form of communication that encourages the customer to act immediately, such as coupons, sales, or contests.
False
In employee leasing, the leased employees actually work for the hiring company rather than the leasing company.
False
Knowing one's personal worth is not important when starting a business.
False
Lines of communication means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard.
False
Of the strategies employed by small businesses for handling money shortages, the three most common, in order of use, are (1) sell investments, (2) sell receivables, and (3) lay off employees.
False
Off-the-job techniques include apprenticeships, internships, and job rotation.
False
On-the-job techniques include orientations, job instruction training, lectures, and case studies.
False
One technique to increase cash inflow is to offer discounts for delayed payments.
False
Services have separability of production and consumption.
False
Something that is essential to how you live and does not have many substitutes or alternatives is called an elastic product.
False
The employee referral method is an example of an overused, high-cost recruitment method.
False
The primary advantage of bartering is that it is essentially tax-free as long as no cash is involved.
False
When a business enters a phase of rapid growth, one of the challenges it faces is that very few sources of money are available to support its growth.
False
When coming up with a new idea in the product development process, the focus is on the pains and gains of customers.
False
When financing with debt, small businesses should first apply for a Small Business Administration guaranteed loan before approaching their own bank as the SBA loans have lower interest rates.
False
When interviewing a promising prospective employee, it is best to only have one interviewer. This helps you be sure that you understand the individual as well as possible.
False
Which of the following policies is a minimum standard for managing customer credit?
Filing suits and liens against the assets of customers who default on payment
Uncertainty of returns in a business is referred to as ________.
Financial risk
If your business is wholesale or retail merchandising, the issues of property, plant, and equipment (PPE) constitute your greatest investments and your greatest costs.
Flase
Which of the following layouts is more typically found in upscale department stores?
Free-form layout
Josh, the owner of a software company, is facing cash flow problems. To control the cash outflow, he avoids paying the bills to his vendors. After much delay, he sends a check in payment but intentionally forgets to sign the check. To prevent the cash from going out of his business, Josh is applying the strategy of _____.
Gaming the payment process
_____ refers to the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business.
Goodwill
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Within a few months, the sales increase exponentially which results in a shortage of cash needed to expand their business. This crisis is termed _____.
Growth trap
Serial entrepreneurs Steve Blank and Bob Dorf came up with a more inclusive approach than the standard marketing funnel. Which of the following is not one of the major goals of their new approach?
Identify customers
Which of the following explains the difference between limited partnership and general partnership?
In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.
Which of the following statements is true of sales forecasting?
In many cases, the best sales forecasting you can come up with is an educated guess.
There are two points in the presentation where your listeners will be giving you value. Which of the following are those two points?
In the questions they ask and the feedback they give
We use many electronic forms of money: debit cards, online bill payments, electronic bank drafts, and wire transfers. These forms of money make an important point - the essence of money is that it is a form of ______.
Information
There are two general sources of gift financing:
Institutional and personal
Which of the following is most likely to be the key information that joint venture partners seek in a business plan?
Intellectual property protection
Giveaways, samples, and tasting are examples of ______ techniques used in sales promotion.
Introductory
A business plan that provides information to the potential licensees is referred to as a(n) ________ plan.
Invention
Which of the following in an advantage of personal selling?
It allows business owners to find out the buyers' main concerns and address them.
Which of the following is true of theories based on the bounded rationality models?
It assumes that people are inefficient processors of information.
Which of the following is true of leasing issues?
It costs more to limit the landlord's ability to lease it competing businesses.
Which of the following is true of customer retention?
It handles problems that crop up after a sale.
Which of the following is true of a private placement memo?
It is a complex legal document and should be drafted by a lawyer
Which of the following would implicate employee empowerment?
Letting employees make on-the-spot decisions for the companies' best interest
_____ means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard.
Line of appeal
Which of the following forms of direct response advertising allows very specific targeting and is appropriate for business-to-business selling?
Magazine
________ information and reports are used when planning, organizing, staffing, directing, and controlling.
Managerial accounting
A ______ is an example os a low customer contact business
Manufacturing business
Which of the following statements is true of marketing research?
Marketing research can tell you what customers consider a reasonable price.
Which of the following is a management philosophy of selecting and promoting people based solely on their being the most capable person for the job?
Meritocracy
A(n) _____ refers to a set of goods or services that consists of only one or a few items.
Micro inventory
Which of the following is true about trade name?
Most states allow several firms to use the same trade name, as long as the firms are in different lines of business.
When your product or service already exists but your firm is the first of its kind in your market, it is considered a(n) ___ business.
New entrant
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who manages the budgets and expenses of the business. Within a few months, David notices problems in cash flow. Although not the primary strategy of her business, Tammy takes up craft projects for kindergarten schools in an effort to increase cash inflow. This kindergarten project is an example of a(n) _____.
Noncore project
Which of the following statements is not true concerning marketing and marketing plans?
Not all business plans have a marketing section
Jacob has started a graphic design company called Interon Graphics. As Interon Graphics moves into the growth phase, which of the following would be Jacob's dominant financial management need?
Obtaining increasing amounts of cash inflows
A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease.
Operating
A(n) _____ is the amount of inventory that results in the minimum cost, considering the cost of lost sales resulting from running out of stock, the number of units sold per day, and the number of days required to receive inventory.
Optimum stocking level
Economic order quantity (EOQ) helps a business to think in terms of:
Ordering costs and carrying costs
_____ is money from selling part of a business to people who are not and will not be involved in the management of the business.
Outside equity
Which of the following is a recommended fair personnel policy guideline across family and non-family members?
Owners should let family and nonfamily members pick and choose from a set of privileges or benefits.
In _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings.
Pass through taxation
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who would manage the budgets and expenses of the business. Tammy buys her craft materials on credit from her supplier but clears all her debts at the end of every month. The amount that Tammy owes her supplier is referred to as _____.
Payables
An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the:
Sales volumes are not constant
Martin, an employee at a boutique store, is required to handle store displays and also ensure that all the sales records tally at the end of each business day. However, he committed fraud by recording fake sales and then keeping the products to himself. Which of the following managerial concepts would have helped the store avoid this deception?
Separation of duties
________ is setting a price at the highest level the market will bear, usually because there is no competition at the time.
Skimming
A _____ is an agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements.
Surety bond
Crux Inc. and Synapse Inc. are two competing businesses in the same city. They use the services of the same insurance company and have taken the same policy. Crux has a higher deductible than Synapse for the policy. Which of the following statements would be true in this case?
Synapse pays a higher premium than Crux.
Which of the following is true of financial statements?
The overall content and form of financial statements have been made standard by long usage.
Which of the following is not a benefit of correctly documenting your business processes?
The process is self-sufficient and does not require much time to review or update.
Which of the following is one of the disadvantages of the return on investment (ROI) analysis?
The profits received are not the same as cash.
Adding employees in a firm increases both the amount of work that can be done and the demands on the owner.
True
Adverse possession occurs when an owner of real property does not enforce property rights and allows a non-owner to use the property as if it were his or her own.
True
After determining whether one is hiring someone for an hourly or salaried position, one of the first steps in developing a compensation plan is to determine the organization's salary philosophy.
True
All capital assets cause you to incur four costs over time: (1) the cost of acquiring the asset, (2) the cost of owning the asset, (3) the cost of operating the asset, and (4) the cost of disposing of the asset.
True
An arm's length transaction is a business deal where the parties have a prior relation or affiliation, but where the business is conducted as if they were unrelated.
True
An often overlooked cause of cash shortages is a surplus of good news: Your business has proven to be wildly successful, and sales are growing at an exponential rate.
True
Cash flow statements can be either direct statements or indirect statements.
True
Clients and attorneys start with a natural conflict of interest related to money.
True
Employees whose experience and skills are critical to the success of a business are called key employees.
True
Equifax is one of the four primary CRAs in the United States.
True
If the business is a corporation or an LLC, the owner can only lose what he or she has invested in the business
True
In a C corporation and S corporation, the IRS expects the owner to pay himself or herself a salary that is roughly at market rates.
True
In managing risk from violation of tax regulations, small business owners should make paying taxes their first financial priority.
True
Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making.
True
Investing in multiple businesses increases the chances of offsetting possible losses incurred from one business.
True
It is nearly impossible to design a message that will appeal universally or to find media that will reach all consumers.
True
Liquidity is a measure of the ability of a business to meet both short-term and long-term obligations.
True
Making training an ongoing process is a good way to encourage dialog with employees when their learning curve goes flat.
True
Marketing and new product experts believe that most of the small business failures could have been avoided by following the new product development (NPD) process.
True
Obtaining outside equity financing can only be done if your business is organized as: a partnership, a corporation, or a limited liability company.
True
One of the difficulties in understanding and interpreting the income statements is the dispute over when one should recognize revenues
True
One of the policies for managing customer credit requires business owners to maintain constant "aging" of accounts to quickly identify customers who become delinquent.
True
Operational plans and private placement memos are the only two types of plans that add material to a full business plan.
True
Patents are essentially monopolies granted to inventors by the U.S. government giving patent owners the exclusive rights to make, use, or sell that invention for a certain period of time.
True
Payments of profits to the owners of corporations are called dividends.
True
People who buy ownership rights but are not part of the management of the business are known as outside equity investors
True
Promotion includes getting the message out to the target market so that they can make decisions about a product or service.
True
Reconciling the differences between the bank and book balances gives a corrected bank balance and a corrected book balance which are identical.
True
Risk from loss of key personnel and former employees setting up competition against your business can be managed by negotiating employment contracts with those key employees.
True
The SBIR and the STTR programs require that every U.S. agency that makes research grants provide a minimum of 2 percent of its grant budget to small businesses, as defined by the SBA.
True
The majority of small business start-ups are funded by bootstrapping
True
The total cost of keeping inventory is the sum of the cost to buy the inventory, the cost to store, protect, and maintain inventory, and the cost of making an order to purchase inventory.
True
The total liability issue in general partnerships is similar to that of sole proprietorships.
True
The usefulness of the income statement for managing a small business is related to the amount of detail available in the statement.
True
The value delivered to the customer is second in order of importance to the pricing decision.
True
To ensure your accounting information is accurate, reliable, and useful, the accounting system you choose should easily and efficiently maintain an internal "audit trail".
True
_______ is collected by the IRS and state agencies as a percentage of tax upon payroll.
Unemployment insurance
The most common strategy employed by small businesses for handling money shortages is _____.
Using personal money
The process of determining the effect of price and quantity changes on revenues and expenses refers to:
Variance analysis
Which of the following statements is true of the target market?
Your target market is the same as your Serviceable Obtainable Market (SOM)
Trendiness refers to:
a concept in public recognition which alludes to the fit of the topic to current fashion or public interest.
Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____.
articles of partnership
Brochures and flyers are types of promotional novelties.
False
Which of the following statements is true of a vision statement?
A tagline or a slogan is a good way to present vision statements
Diversification is a strategy whose goal is growth, based on:
Adding new products or services on the firm's existing collection of offerings.
If Connie gets her family and friends involved as investors, which of the following is most likely to be their concern?
Amounts and schedules for returns
Advertising costs are usually based on cost per hundred thousand.
False
From an entrepreneur's perspective, marketing is all about connecting your customer to your product or service. The first step in this process is:
Connecting the two through the value proposition
A(n) _____ is a one-page document on letterhead that introduces the business plan and owner to the recipient and indicates why the recipient is being asked to read the plan.
Cover letter
Which of the following terms refers to a concept in public importance which alludes to the degree to which the issue is immediate in its impact?
Currency
________ is a type of CRM report that segments by customer or customer group on purchases or dates of purchase.
Customer vector
A customer role that describes a person in an organization who is responsible for choosing which product or service will be obtained is the _______.
Decision maker
According to the Panel Study of Entrepreneurial Dynamics (PSED), when an entrepreneur comes up with the idea from others, the single greatest idea source is from:
Discussion with friends and family
Which of the following is true of follow-up?
Electronic approaches to follow-up dramatically lower the cost of marketing efforts
Marketing data gathered by simple observation - seeing what customers do, rather than asking them is:
Ethnographic research
Which of the following statements is true of business plans?
External legitimacy for a firm is best established by creating business plans.
A direct mail approach needs major inventory investment.
False
A screening plan provides information on the company, product/service, market, and critical risks to prospective business.
False
______ refers to business owners doing what they said they will do.
Follow-through
Which of the following statements is true of the financial statements and reports found in a business plan?
For all types of business plans, a set of financial reports or projections are the central component of the appendix
Which of the following statements is true of a business plan presentation?
Handoutsare mailed or distrubuted when the business plan changes frequently
Which of the following statements is not one of the three tests of the approach when crafting a customer-focused value proposition?
How does your price compare to competitors prices?
Which of the following statements best describes the process of idea screening in new product development?
It is the process of selecting the most promising ideas to be further evaluated for feasibility.
Which of the following statements is true of an executive summary?
It is the single most widely distributed written description of a business
Which of the following statements is true of an elevator pitch?
Its goal is to sell the idea of a business to another.
________ is a strategy whose goal is growth, based on selling in areas or to groups previously not served by the business.
Market expansion
_____ is a strategy whose goal is growth, based on selling more of the firm's product or service to the existing customer base.
Market penetration
Which of the following statements is not true of the product life cycle?
Stages in the product life cycle are not similar to those of the firms life cycle
The sales plan of a marketing strategy focuses on:
The day-to-day specifics of how sales are achieved
Which of the following statements is not true of creating a customer profile?
The goal of these interviews is to get as many responses as possible.
When writing your elevator pitch, remember that elevator pitches have four success factors. Which of the following is not one of those success factors?
The length
The market of baby wipes began advertising their products for adult use, for everyone's use. This is an example of a product during which stage of the product life cycle?
The maturity stage
Which of the following statements is true of the company's section of a business plan?
The product/service subsection mentions any projection through a proprietary technology
Business owners can figure how to better target ads or promotions to particular types of customers if:
They link sales and purchases basis to they type of customer
Which of the following is a characteristic feature of sales packets?
They provide potential customers an education in a firm's product or service.
What is the global of appendixes?
To provide supporting information that helps detail the key selling points of a plan
When pitching your business plan to an influential person they are likely looking at your passion for the business; your expertise about the business and the plan; how professional you are in your work; and how easy it would be to work with you.
True
When pricing your product, the optimum price is the highest price that will produce your desired level of sales in your intended market.
True
Your estimated number of prospective customers multiplied by your hit rate multiplied by the amount of each sale equals your sales forecast.
True
Your hit rate is how many prospects or leads you need to approach in order to make one sale. Also called the conversion rate.
True
Which of the following statements is not true of target customers?
Usually you only have one type of target customer
Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition is known as:
Value proposition
The steps in Blank and Dorf's "Get Customers" funnel are awareness, interest, consideration, and purchase. Here, consideration refers to:
the process of getting into the prospective customer's final list of brands of products or services they may purchase.
When finally setting the actual price of your product or service, there are several contextual factors including your company objectives, your marketing strategy, competition, channels of distribution, and legal and regulatory issues to consider. Which of the following statements is not true when considering these factors?
Pricing off a competitor's price is as easy as picking a percent, say 80%, and charging that price for your product or service.
Planning, organizing, and staffing are primarily the responsibility of operations management.
False
Reviewing employees' performance is a one-time process done after the probationary period.
False
Small businesses never experience any cash flow problems.
False
Statement of cash flows is also referred to as the statement of financial position.
False
The ADA Technical Assistance Program provides inspection and affirmation services to help small businesses.
False
The Family and Medical Leave Act applies to all employers.
False
The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act.
False
The Sarbanes-Oxley Act only covers small businesses that are not publicly traded
False
The accounting equation is simply stated as Assets = Liabilities - Owners' Equity.
False
The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights.
False
Variable costs decrease if output increases
False
Which of the following is defined as the practice of "pocketing" money from customer and hiding the theft by not recording the sale?
Skimming
Which of the following businesses should be most concerned with property, plant, and equipment?
A rancher
Which of the following is true of partnerships?
It does not allow one partner to obtain bonding protection against the acts of the other partner(s).
Which of the following statements is true of joint ventures?
It does not require its partners to lose more than what each partner has invested in it.
Which of these is a disadvantage of a corporation?
It incurs relatively high incorporation fees and high taxes.
Which of the following is true of insuring the property of a business?
The value of the historical significance of a building often cannot be insured.
Which of the following clan be exercised only when presented with specified shipping records?
A documentary draft
Which of the following statements is true of nondirect distribution?
A product's final price is more than the manufacturing cost if intermediaries are involved.
The rule of thumb for evaluating current ratio is that the minimum acceptable ratio is:
2.0
The rule of thumb is that perks should take no more than _____ of the annual personnel budget.
3 percent
Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio?
3:1
Many businesses have either relatively few large sales events or highly seasonal sales that complicate forecasting cash inflows. Which of the following is not an example of such a company?
A restaurant
Ted, a 46-year-old IT professional, recently attended a job interview at Acton Org. He was not offered the job. Ted tried to find the reasons for his disqualification and the company could not provide a satisfactory explanation. He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college. Which of the following laws protect Ted from such discriminations?
ADEA
The total cost of obtaining an asset, including such costs as purchase price, transportation, installation, testing, and calibrating in order to ready it for its first productive use is termed as _____.
Acquisition cost
When determining the cost of a capital asset, the _______ is the sum of everything that you spend to acquire and prepare the asset for its first productive use.
Acquisition cost
_____ is an accounting method which assigns costs based on the different types of work a business does in order to sell a particular product or service.
Activity-based cost estimates
_____ is the name given to the bank's accounting system for all recognized transactions that affect the account, including deposits, electronic transfers, service fees, and checks presented to the bank for payment.
Bank ledger balance
According to the six factors most valuable to employees, which of the following is a reason employees leave a company?
Being denied professional development and learning opportunities to expand their job responsibility
A _____ describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized to date.
Book value
Orion Inc. was started as a small organization with five employees. After the first year's profits were made, the owners decided to invest the profits in expanding the business. This is an example of financing the business using _____.
Bootstrapping
A financial plan for the future based on a single level of operations is called a(n):
Budget
After being in business for 24 months, Paul's auto spare parts company Chromson Inc. grows to a relatively stable size. Which of the following would be Paul's primary financial management need at this stage?
Building owner's wealth
Putting two or more of the same or different products or services together and selling for a price somewhat under the products' individual prices is _________.
Bundling
Which of the following businesses requires a stake in the company and is good for brainstorming with other entrepreneurs?
Business incubator
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Jane purchases a picture frame from Tammy using a credit card. She notices a crack in the frame and returns it to Tammy. Jane contacts the credit card service provider for a refund. The credit card company removes the sale amount from Tammy's account which is referred to as a(n) _____.
Charge Back
Kevin has taken an apartment on lease for five years with a monthly rental of $3,500. At the end of five years, Kevin will be the legal owner of the apartment after an additional payment of $80,000. This type of lease is an example of a(n) _____ lease.
Capital
In Connie's business plan, which of the following components is most likely to be of interest to Mr. Johnson?
Cash flow and cash cycle
Approximately 90 percent of small businesses that fail do so because of ________.
Cash flow problems
Which among the following is an example of an on-the-job training method?
Coaching
Aaron, a businessman, has a method of keeping track of accounts receivable by sorting them into groups of those that are 30, 60, 90, and over 90 days past due. Which of the following actions will the collection agency which buys the delinquent account from Aaron do?
Collect the entire amount owed and keep all the money it obtains
Tammy has just opened a donut shop called The Rabbit Hole. Given that The Rabbit Hole is in its start-up phase, which of these would be Tammy's immediate financial management need?
Conserving what little money the business has
_____ refers to the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold.
Consignment
Sales promotion techniques used to introduce your brand to customers without an immediate call to purchase are _____________ techniques.
Contest
Identify the managerial accounting technique which looks at the fixed and variable costs of a business to arrive at a number of unit sales to maximize gains.
Cost-volume-profit analysis
Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business?
Creating provisions for subcontracting work
In the U.S., government programs are the number one source for financing small businesses.
False
In the case of mediation, the dispute is put to a neutral third party who has the powers of a judge.
False
According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of:
Delayed payments from customers
In a business, accepting payments by credit card causes significant differences between the bank and book balances because the credit card service provider:
Deposits the sale amounts in the business's account after deducting a service fee.
_____ is an arbitrary, but regular and systematic, method used to take asset value as an expense for the purpose of calculating net income or loss.
Depreciation
In the context of employee rewards, if entrepreneurs work based on an open-book policy and the company hits a downturn and promises cannot be met, employees are more likely to react badly since they have little or no understanding of the firm's situation.
False
It is preferable to hire a moderately qualified person if there is an immediate need for someone.
False
Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost?
Economic order quantity
Eddie, the owner of a fast-food joint, finds that he spends far lesser when he bakes breads in dozens than when he bakes two or three loafs at a time. This idea of Eddie's is similar to the concept of:
Economy of scale
Expendables are necessarily fixed costs.
False
A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the sales price in advance. In this example, which of the following techniques is the store using to increase cash inflows?
It is taking deposits and progress payments
Which of the following is true of the ADA Technical Assistance Program?
It provides specific advice to a business concerning how to comply with the pertinent requirements.
The practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer is termed as _____.
Just-in-time inventory
Axion Inc. is a small business started by Robert. As the business grew, he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion. Which of the following techniques should he adopt to achieve this?
Negotiate contracts with key employees that limit their freedom to go into competition
Which of the following reconciles the net increase or decrease with the beginning cash balance and the ending cash balance?
Net change in cash balance
The amount that revenues exceed expenses is referred to as ______.
Profit
Documenting the operations of your business, you must understand how three items relate to each other. Which of the items below is not one of those three related items?
Property
Which of the following concepts is based on the perception that promises have been made in exchange for certain employee obligations such as giving of their energy, time, and technical skills?
Psychological contract
The practice of acquiring inventory only in response to a completed sale is called a(n) _____.
Pull-through system
Which of the following statements is not true of psychological contracts?
Putting a psychological contract in writing is unnecessary and ill-advised.
Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan within two weeks. The amount that Lucy owes Susan is termed _____.
Receivables
Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations?
Reconcile the cash register tape to the cash register contents every day
Maintaining an inventory helps a business to have an optimal level of cash flow by:
Reducing the cost of processing orders.
Which of the following is a disadvantage of leasing?
Renovation options are limited in a leased property
Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who manages the budgets and expenses of the business. David prepares the quarterly budget and maintains a company book for recording all transactions. The company book balance that David regularly updates is the sum of:
The cash inflows and cash outflows recorded in the firm's accounting records
The weighted average cost (WAC) refers to:
The expected average future cost of funds
Which of the following is true of insurance?
The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
Which of the following represents the problem with legal protection methods for intellectual property?
There is no governmental agency that will assist small business owners in maintaining their legal rights.
Which of the following is true of 401(k) plans?
They are typically easier to administer and are less expensive than traditional pension plans.
Mr. Hill, who runs a key-chain manufacturing unit, buys raw materials from his supplier during the first week of every month. The supplier's policy states that all payments need to be cleared within 50 days of buying the materials. This schedule ensures that Mr. Hill gets an extended period to make payments thus controlling when the payment is made. Which of the following strategies is Mr. Hill using to control cash outflow?
Timing the purchase
The best prevention method for avoiding a cash flow problem is attending to and understanding the operations of a business—its patterns of generating cash inflows and outflows.
True
The business-to-consumer (B2C) contract is an example of an Internet contract.
True
To treat family and nonfamily employees as similarly as possible in a business, it is important to:
create career ladders for nonfamily members.
Operations management is primarily concerned with:
directing and controlling.
After determining an organization's compensation philosophy, the next step in developing a compensation plan is to:
find comparison factors for salary.
Arbitration differs from mediation in that arbitration:
has limited appeal possibilities.
Small businesses use the periodic inventory method because it:
meets the requirements of local and federal taxing agencies.
In evaluating potential employees, a small business owner:
should design interview questions such that "yes" or "no" answers are not applicable.
There are three elements to most aspects of business law - finding the right information, negotiating the specific outcome you want, and:
taking care of the paperwork associated with it.
Responsibility for the actions of another is referred to as:
vicarious liability.
Which of the following is not something a manager need in order to make good decisions?
A good support system
Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case?
It will dissolve the corporation into a sole partnership under Bradham.
Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _________.
Noncore projects
Which of the following should be included in an employee contract for a key employee?
Offer rewards for providing adequate termination notice
Which of the following is an advantage to renting capital assets?
Renting usually protects you from unexpected costs of repairs.
The capital budgeting equation used to measure the relationship between initial investment and the profits that are expected to be received from making the investment is called _____.
Return on investment
Which of the following forms of business requires no government permission to set up?
Sole proprietorship
Percentage of concession in gross invoice amounts provide to encourage prompt payment are called ________.
Trade discounts
A _____ is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive.
Trade secret
A common reason people leave a company is if they feel they are not developing professionally.
True
Lenders use operating income as:
A measure of how much debt a business can support
A job description defines and discusses all the essential knowledge, skills, and abilities that are needed to fill a position.
True
All business contracts have to be in writing to be enforceable.
False
_____ measure a management's effectiveness in using the invested capital of the business to provide profits.
Return on investments
Which of the following is not one of the primary criteria for a small business's record keeping system?
The ability to outsource the task
Which of the following is a difficulty that arises in understanding and interpreting the income statements?
There are disputes over when to recognize revenues