Entrepreneurship Ch 14

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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. A restaurant B. Retailing C. Real estate brokers D. Water parks

Uncertainty of returns in a business is referred to as _____. A. financial risk B. accelerated cash-out C. overpayment D. collateral

Which of the following is true of the ADA Technical Assistance Program? A. It provides specific advice to a business concerning how to comply with the pertinent requirements. B. It provides inspection of the workplace to determine compliance. C. It provides affirmation services to all businesses. D. It provides its services only to large businesses that have more than 500 employees.

Which of the following is true of theories based on the bounded rationality models? A. It assumes that people are inefficient processors of information. B. It assumes that people use complete information and incomplete analyses to make decisions. C. It assumes that people have unlimited abilities to obtain and process information. D. It assumes that the human mind is fundamentally irrational.

Which of the following ratios is determined by dividing total liabilities by total assets? A. Debt to assets ratio B. Debt to equity ratio C. Return on assets ratio D. Gross margin ratio

Which of the following should be included in an employee contract for a key employee? A. Offer rewards for providing adequate termination notice B. Specify that the employee must work at the organization for a minimum of two years C. Detail the consequences of insubordination within the workplace D. Encourage employees to poach clients from competitors

Which of the following statements is true of nondirect distribution? A. A product's final price is more than the manufacturing cost if intermediaries are involved. B. An agent sells products to consumers or end-users, typically in small quantities. C. Distributors and wholesalers tend to take on start-up products due to zero setup charges. D. A retailer represents a manufacturer's product to other business-to-business middleman firms.

_____ refers to family or friends letting you add your purchases with theirs in order to get lower prices. A. Piggybacking B. Accelerated cash-outs C. Free use D. Overpayment

________ provides a lender with the right to seize specific assets if the loan is not paid back as specified in the loan contract. A. Secured debt B. Collateral C. Debt capital D. Cost of capital

the _____ stage of a business, the emphasis of financial management is to build owner wealth, to conserve assets, to match cash inflows to outflows, and to maximize the return on capital assets by making optimal investing decisions. A. operations B. exit C. growth D. start-up

False

A company's goodwill is its best collateral.

False

A legal obligation to pay money in the future is called equity capital.

False

A measure of the amount of debt relative to total investment is called cost of capital.

FALSE

A privately owned company will always have greater value than a publicly owned company.

false

A publicly owned company will always have a greater value than a private one.

The company's stage of entrepreneurship

A solid valuation contextual factor analysis should include the following factors except

All of these

A solid valuation contextual factor analysis should include which of the following factors:

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? A. Building owner's wealth B. Clearing all debts C. Implementing bootstrapping techniques D. Establishing internal control over assets

A. Building owner's wealth

_____ is a measure of how much money can be made available to pay obligations within the fiscal year. A. Current ratio B. Return on investment C. Return on equity D. Profitability ratio

A. Current ratio

Which of the following is true of government agencies that issue grants? A. They publish RFPs that specify the conditions of a grant. B. They require each business to create a proposal using formats that best fits the business. C. They only provide funding after a long evaluation of applications which generally takes over a year to process. D. They are unstructured and prefer informal approaches from companies.

A. They publish RFPs that specify the conditions of a grant.

Present and Projected Cash Flow

According to the book, historically, what factor is largely the driving force in valuing a company?

If the owner plans to _____ a business, he or she should be removing all surplus cash and tightening the cash-to-cash cycle to the shortest time possible. A. transfer B. sell C. terminate D. start

The process of determining the effect of price and quantity changes on revenues and expenses refers to: A. accounting analysis. B. variance analysis. C. pro forma budgeting. D. financial flexibility.

Which of the following businesses should be most concerned with property, plant, and equipment? A. A wholesaler B. A rancher C. A retailer D. A hairstylist

Which of the following is a form of personal gift? A. Tax credits B. Free use C. Grants D. Tax abatements

B. Free use

If the owner plans to _____ a business, he or she should be removing all surplus cash and tightening the cash-to-cash cycle to the shortest time possible. A. transfer B. sell C. terminate D. start

B. sell

The level of probability that an investment will not produce expected gain is called _____. A. interest B. dividend C. risk D. diversification

C. risk

False

Community development organizations are private businesses that are authorized to make SBA insured loans to start-ups and small businesses.

Gifts of money made to a business for a specific purpose are referred to as _____. A. equities B. debts C. tax credits D. grants

The primary purpose of managerial accounting is to ________. A. help managers perform the control function B. aid in staffing decisions C. make manager's lives easier D. support good decision making

FALSE

Debt financing does not require collateral and offers the investor some form of ownership position in the venture.

True

Equifax is one of the four primary CRAs in the United States.

A direct mail approach needs major inventory investment.

A legal obligation to pay money in the future is called equity capital.

Advertising costs are usually based on cost per hundred thousand.

True

Giving a gift has tax implications.

cash flow

Historically, the value of a company has been largely driven by its present and projected __________.

All of these factors should be considered when performing a valuation.

James is the owner of a biotechnology company and wants to conduct a valuation. He should include all of the following factors in his valuation EXCEPT:

False

Knowing one's personal worth is not important when starting a business.

True

Limited liability companies' primary advantage is that owners may easily choose whether to be taxed as an entity or have tax items pass through.

True

Majority of small business start-ups are funded by bootstrapping.

True

Money borrowed for the purpose of investment in a business is called debt capital.

Tangible assets

Most of the value in manufacturing companies come from:

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

Private companies do not have to adhere to the SEC disclosure rules and regula-tions

True

Reduced taxes are the most common form of institutional gift financing.

Cash flow statements can be either direct statements or indirect statements.

Payments of profits to the owners of corporations are called dividends.

The new product development process is likely to be easier for services than for innovative goods.

10%; $100,000

The JOBS Act states in title III that investors cannot invest more than ___ of their annual income if their income is greater than ____________?

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.

FALSE

The valuation of a company can always be determined objectively.

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.

Government

Which of the following is NOT a small business administration loan program?

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

false

Operations management is primarily concerned with: A. directing and controlling. B. planning and organizing. C. staffing and planning. D. controlling and organizing.

Standard industrial classification system (SIC) codes have _____ digits. A. four B. six C. seven D. nine

When debt increases as a percentage of total investment, returns on equity: A. increase at a decreasing rate. B. decrease at an accelerated rate. C. increase at an accelerated rate. D. decrease at a decreasing rate.

Which of the following can be exercised only when presented with specified shipping records? A. A documentary draft B. A letter of credit C. A mail order D. A codicil

__ is a measure of how much money can be made available to pay obligations within the fiscal year. A. Current ratio B. Return on investment C. Return on equity D. Profitability ratio

_______ is a set of theories and techniques used to optimize the receipt and use of capital assets. A. Financial management B. Bootstrapping C. Profitability D. Cost of capital

The two largest governmental grant programs that are specifically intended for small business are: A. SBIR and STTR. B. SBA and SBDC. C. EDA and DBED. D. EDA and SBA.

A. SBIR and STTR

Uncertainty of returns in a business is referred to as _____. A. financial risk B. accelerated cash-out C. overpayment D. collateral

A. financial risk

When debt increases as a percentage of total investment, the value of the firm: A. increases at a decreasing rate. B. decreases at an accelerated rate. C. increases at an accelerated rate. D. decreases at a decreasing rate.

A. increases at a decreasing rate.

A business plan that provides information to potential licensees is referred to as a(n) _____ plan. A. screening B. invention C. operational D. concept

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) _____. A. consignment B. noncore project C. charge back D. arraignment

The first step of the strategic planning process for a small business is: A. performing a SWOT analysis. B. reviewing and confirming the goals that define the firm. C. mapping the prospective customers. D. studying the dynamics and trends of the industry.

The most common strategy employed by small businesses for handling money shortages is _____. A. adjusting scheduled payments B. using personal money C. selling investments D. laying off employees

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? A. The customer's end price is usually higher than your price due to price escalation. B. Pricing off a competitor's price is as easy as picking a percent, say 80%, and charging that price for your product or service. C. Some forms of price discrimination are illegal. D. Firms that compete on price may experience negative growth.

Which of the following is a characteristic feature of sales packets? A. They are usually large enough to read by passing traffic. B. They provide potential customers an education in a firm's product or service. C. They generally consist of pens or small calendars which are printed with the name and slogan of the company. D. They are generally hand-written.

Which of the following is a form of personal gift? A. Tax credits B. Free use C. Grants D. Tax abatements

Which of the following is a type of informational plan that solicits information on customer interests? A. Invention plan B. Proof-of-concept website C. Private placement memorandum D. Operational plan

_____ is a measure of the amount of debt relative to total investment. A. Cost of capital B. Financial leverage C. Optimum capital structure D. Financial risk

_____ refers to the percentage expense of obtaining future funds. A. Risk B. Cost of capital C. Rate on investment D. Return on investment

Money contributed to businesses in return for part ownership of the business is called a(n) _____. A. debt B. equity capital C. gift D. loan

B. equity capital

The percentage amount that the payout of an investment differs from original cost is known as: A. dividend on capital. B. gain on investment. C. risk on investment. D. interest on the principle.

B. gain on investment.

For an owner, the main financial management emphasis while transferring a business to family members must be to: A. increase the cash-to-cash cycle to the highest time possible. B. increase asset value. C. optimize capital structure for profits. D. maximize debt.

B. increase asset value

In the Small Business Administration guaranteed loan payment programs, the owners must be _____ before they qualify. A. backed by personal equity for half the loan sum B. turned down by a bank C. partnered with a successful entrepreneur D. the heads of an already successful business

B. turned down by a bank

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? A. Grow customers B. Get customers C. Identify customers D. Keep customers

The practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer is termed as _____. A. perpetual inventory B. point-of-sale system C. just-in-time inventory D. optimum stocking level

The ratio of debt to equity that provides the maximum level of profits is called _____. A. cost of capital B. declining financial leverage position C. optimum capital structure D. weighted average cost

The rule of thumb for evaluating current ratio is that the minimum acceptable ratio is: A. 3.0. B. 1.0. C. 2.0. D. 4.0.

There are two points in the presentation where your listeners will be giving you value. Which of the following are those two points? A. In the contacts you make and the experience you gain. B. In the questions they ask and the contacts you make. C. In the questions they ask and the feedback they give. D. In the feedback they give and the experience you gain.

Which of the following is a difficulty that arises in understanding and interpreting the income statements? A. There is difficulty deciding whether to report the revenues. B. There is difficulty deciding what should be considered as expenses. C. There are disputes over when to recognize revenues. D. There are disputes over the preferred tax rate to incorporate.

Which of the following ratios is better when it is a lower number? A. Gross margin ratio B. Asset turnover ratio C. Debt to assets ratio D. Current ratio

Which of the following reconciles the net increase or decrease with the beginning cash balance and the ending cash balance? A. Net effect of foreign exchange rates B. Noncash investing and financing C. Net change in cash balance D. Noncash operating activities

Which of the following statements is not true of a product in the decline stage of the product life cycle? A. One reason for the decline of a product may come from the introduction of new technology. B. Some products' decline is permanent. C. Characteristics of the decline stage differ for each product. D. One reason for the decline of a product may be caused by a shift in consumer preferences.

Which of the following statements is true of a vision statement? A. An overview of a business and its immediate goals form a vision statement. B. A vision statement describes a firm's goal and its competitive advantages. C. A tagline or a slogan is a good way to present vision statements. D. A vision statement gives more detail about a business than an executive summary.

_____ is a strategic action. A. Increasing marketing efforts B. Using new distribution channels C. Acquiring a competitor D. Increasing prices

_____ ratios measure how productive a particular asset is in producing sales movement. A. Current B. Profitability C. Activity D. Leverage

FALSE

Crowd sourcing is a subset of crowdfunding

FALSE

Crowdfunding usually requires making requests for tasks and generating infor-mation and feedback

A(n) _____ refers to a set of goods or services that consists of only one or a few items. A. in-process inventory B. macro inventory C. just-in-time inventory D. micro inventory

Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio? A. 2:1 B. 1:1 C. 1:3 D. 3:1

If financed using unsecured debt, which of the following is not one of the ways a lender can collect any unpaid loan payments? A. By forcing you into bankruptcy B. By using court actions C. By filing a lawsuit against you D. By seizing specific assets

In _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings. A. check the box taxation B. double taxation C. single taxation D. pass through taxation

Michael Porter identifies five different threats of competition for any business. Which of the following choices is not one of Michael Porter's five threats? A. Rivals B. Suppliers C. Substitutes D. Investors

Responsibility for the actions of another is referred to as: A. direct liability. B. limited liability. C. exculpatory clause. D. vicarious liability.

The sales plan of a marketing strategy focuses on: A. the longer-term partnerships to be sought. B. the new markets to be pursued. C. the ways to leverage a firm's assets. D. the day-to-day specifics of how sales are achieved.

_____ are classic strategies for businesses of all types and they include differentiation, cost, and focus. A. Personalization strategies B. Altruistic strategies C. Retrenchment strategies D. Generic strategies

_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity

_____ 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. A. Job basics B. Job metrics C. Benchmarking D. Line of appeal

_____ measures the extent to which a business can meet its obligations for the long haul. A. Profitability ratio B. Current ratio C. Return on investment D. Debt-to-equity ratio

_____ ratios measure management effectiveness in creating wealth from sales and from invested funds. A. Liquidity B. Activity C. Leverage D. Profitability

Which of the following is true of the debt-to-equity ratio? A. It measures the relative risk that a business setback could cause bankruptcy. B. It is calculated using the formula: Total Liabilities/Total Assets. C. If the ratio is lower, it indicates lesser solvency. D. If the ratio is greater, it indicates increased business risk.

D. If the ratio is greater, it indicates increased business risk.

Which of the following statements is true regarding the Fair Credit Reporting Act? A. It requires that consumers investigate and directly report any inaccuracies to the source of the inaccurate information. B. It provides CRAs with a period of one year to investigate cases of inaccurate information. C. It requires that CRAs independently confirm information. D. It requires that the CRA forward copies of all relevant information to the source of the inaccurate information.

D. It requires that the CRA forward copies of all relevant information to the source of the inaccurate information.

_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity

D. Outside equity

_____ ratios measure management effectiveness in creating wealth from sales and from invested funds. A. Liquidity B. Activity C. Leverage D. Profitability

D. Profitability

Investing in multiple investments of differing risk profiles for the purpose of reducing overall investment risk is called _____. A. digression B. deviation C. specialization D. diversification

D. diversification

Crowdfunding refers to: A. approaching several foundations to acquire grants to fund a business. B. approaching several commercial banks to fund a business. C. funding a business through partnerships with several companies. D. funding a business online through gifts made to the business.

D. funding a business online through gifts made to the business.

Gifts of money made to a business for a specific purpose are referred to as _____. A. equities B. debts C. tax credits D. grants

D. grants

An organization, usually associated with universities, that supports start-up technology businesses by providing inexpensive office space, a variety of support services, and resources is called a(n) _____. A. LLC B. community development organization C. small business investment company D. incubator

D. incubator

The weighted average cost (WAC) refers to: A. a legal reduction in taxes by the government. B. the average equity capital costs incurred by a firm per year. C. the percentage cost of obtaining future funds. D. the expected average future cost of funds.

D. the expected average future cost of funds.

True

During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.

All business contracts have to be in writing to be enforceable.

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

Everyone responds differently to risk. When it comes to business risk, small business owners are mostly risk seeking rather than risk averse.

Expendables are necessarily fixed costs.

Expenses are the value given up to obtain something that the owner wants.

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

Face-to-face meetings with the client are infrequent if the services are provided at the client's location.

Factoring is a method of borrowing against payables

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

Financial flexibility of a business is a matter of judgment, whereas financial strength is an objective assessment.

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.

For me-too products, the stages of new product development are always extensively long.

In the U.S., government programs are the number one source for financing small businesses.

In the case of mediation, the dispute is put to a neutral third party who has the powers of a judge.

In the context of a business plan, a firm's responsiveness to customers is a key concern of bankers.

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.

It is preferable to hire a moderately qualified person if there is an immediate need for someone.

Knowing one's personal worth is not important when starting a business.

On-the-job techniques include orientations, job instruction training, lectures, and case studies.

Personal selling decreases business owners' flexibility in their presentation.

Planning, organizing, and staffing are primarily the responsibility of operations management.

Reviewing employees' performance is a one-time process done after the probationary period.

Small businesses typically use the strategy of innovativeness rather than imitativeness.

The accounting equation is simply stated as Assets = Liabilities - Owners' Equity.

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.

The employee referral method is an example of an overused, high-cost recruitment method.

The first step of the strategic planning process for small businesses is considering your customers and the benefits you want to offer them.

The method of advertising is least likely to be used by businesses to convey their message to potential customers.

The primary advantage of bartering is that it is essentially tax-free as long as no cash is involved

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. F

When the fear appeal used by a marketing message is a too strong, it always causes the audience to react positively.

Your magic number is the number of customers you can comfortably provide with your product or service.

True

Investing in multiple businesses increases the chances of offsetting possible losses in-curred from one business.

FALSE

On websites like Indiegogo, do you only get your money if your campaign is suc-cessful?

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.

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.

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.

Executive summaries are written in a formal style, suitable for investors, bankers, and lawyers to read.

Giveaways, samples, and tastings are all examples of introductory techniques used in sales promotion.

If the business is a corporation or an LLC, the owner can only lose what he or she has invested in the business.

It is good to opt for distributors when a whole line of products need to be bought or warehoused.

It is nearly impossible to design a message that will appeal universally or to find media that will reach all consumers.

Managing risks to tools, equipment, inventory, and other physical assets is largely a function of developing and enforcing appropriate business policies and procedures.

Obtaining outside equity financing can only be done if your business is organized as: a partnership, a corporation, or a limited liability company.

Radio advertisements provide both geographic and demographic segmentation of a product or service.

When pricing your product, the optimum price is the highest price that will produce your desired level of sales in your intended market.

true

The best part of crowdfunding project is that they generate revenue rather than involving debt or giving up equity?

TRUE

The higher amount of leverage (debt/total assets), the greater the risk in the ven-ture.

False

The more debt that is included in the capital mix, the higher is the weighted average cost.

there is a 3-5-, or 7-year payback period.

Which of the following is not a con of debt financing?

A customer role that describes a person in an organization who is responsible for choosing which product or service will be obtained is the __________. A. decision maker B. purchaser C. end user D. influencer

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. A. optimum stocking level B. periodic inventory C. economic order quantity D. micro inventory

The rule of thumb is that perks should take no more than _____ of the annual personnel budget. A. 3 percent B. 15 percent C. 50 percent D. 75 percent

_____ 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. A. Goodwill B. Collateral C. Inventory D. Debt

The company's culture

According to the book, which is not a key factor influencing valuation?

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. A. copyright B. trade secret C. patent D. trademark

Hugh starts his own animation company by borrowing funds from his parents. His parents tell him that he can repay them when the business is generating profits. This is an example of _____. A. accelerated cash-out B. deferral C. free work D. free use

When an entrepreneur gets funding for his business from an account that his family had initially set up for his future education or a first home, it is referred to as _____. A. piggybacking B. accelerated cash-out C. free use D. overpayment

Which of the following ratios is determined by dividing total liabilities by total owners' equity? A. The acid test B. Debt to equity ratio C. The quick ratio D. Return on equity

_____ is a strategy whose goal is growth, based on selling in areas or to groups previously not served by the business. A. Market penetration B. Market expansion C. Product expansion D. Diversification

_____ refers to the percentage expense of obtaining future funds. A. Risk B. Cost of capital C. Rate on investment D. Return on investment

B. Cost of capital

The most common form of institutional gift financing is in the form of _____. A. state loans B. reduced taxes C. state grants D. donated capital

B. reduced taxes

A _____ describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized to date. A. fair market value B. disposal value C. book value D. replacement value

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. A. business interruption insurance B. credit insurance C. surety bond D. fidelity bond

A(n) _____ is a legal obligation to pay money in the future. A. equity capital B. stake C. debt D. gift

Any valuable asset that is donated to a business without any obligation to repay or to give any ownership interest is called a(n) _____. A. debt B. equity capital C. gift D. investment

Making ______ work requires giving employees permission to act, the knowledge to act, and the skill to act. A. nepotism B. training C. empowerment D. teamwork

The level of probability that an investment will not produce expected gain is called _____. A. interest B. dividend C. risk D. diversification

Which of the following statements is true of the financial statements and reports found in a business plan? A. The financial statements include the balance sheet, cash flow, and expense accounts. B. The assumptions accompanying the financial statements are not as important as other components of the financials. C. For all types of business plans, a set of financial reports or projections are the central component of the Appendix. D. The assumptions are simply what you assume will happen in the first year.

Direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria are referred to as _____. A. tax abatements B. grants C. tax credits D. debts

C. tax credits

FALSE

Crowdfunding is a loan source, which means it accrues debt or equity.

FALSE

Crowdfunding is always the best source of income to fund a startup

Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost? A. Benchmarking B. Factoring C. Pull-push strategy D. Economic order quantity

Which of the following is true of 401(k) plans? A. They refer to the leave policies which make no distinction between sick, vacation, and personal days and allow employees a set number of days off each year. B. They are compensation plans which take no more than 3 percent of the annual personnel budget. C. They allow the employee to have no control over the amount of their contribution and how the money is invested. D. They are typically easier to administer and are less expensive than traditional pension plans.

Which of the following is true of insurance? A. All risks are insurable. B. An insurance company only charges a fee for large businesses with over 100 employees. C. Insurance companies make profits by requiring a relatively large fee compared to the amount of loss that is possible. D. The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.

Which of the following is true of the entry wedge of second sourcing? A. It occurs when business firms leave a market. B. It occurs because many big businesses have policies that provide for set-asides for purchases from small businesses. C. It offers the advantage of being globally based. D. It provides a competitive pressure to ensure that suppliers keep providing the best service and prices.

Which of the following policies is a minimum standard for managing customer credit? A. Providing cash discounts to customers who delay payments B. Continuing credit sales to customers who become significantly late in paying C. Authorizing credit sales without any credit check to every individual customer D. Filing suits and liens against the assets of customers who default on payment

_____ exist for the purpose of addressing some identified social need that cannot be adequately met by market forces. A. SBAs B. Limited Liability Companies C. EDAs D. Foundations

_____ 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. A. Differential revenues and expenses B. Net present value analysis C. Cost-volume-profit analysis D. Activity-based cost estimates

_____ 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. A. Inventory valuation B. Capital budgeting C. Benchmarking D. Depreciation

_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity

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.

A screening plan provides information on the company, product/service, market, and critical risks to prospective business.

Brochures and flyers are types of promotional novelties.

In a professional corporation, the shareholders are responsible for debts of the corporation.

The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act.

The Sarbanes-Oxley Act only covers small businesses that are not publicly traded.

How many sections does the JOBS Act include?

TRUE

IndieGoGo gives the option of collecting funds from a failed campaign for a high-er commission

A common reason people leave a company is if they feel they are not developing professionally.

A job description defines and discusses all the essential knowledge, skills, and abilities that are needed to fill a position.

A lease is simply a rental agreement that specifies a minimum period of time for which one must make rental payments.

A niche market is a narrowly defined segment of the population that is likely to share interests or concerns.

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.

Advertising is often used to support the corporate identity and value propositions that are established through public relations efforts.

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.

Clients and attorneys start with a natural conflict of interest related to money.

In the context of a business plan, product quality, its benefits, service quality, and the competitive advantage are the primary concerns of potential customers.

Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making.

Investing in multiple businesses increases the chances of offsetting possible losses incurred from one business.

Liquidity is a measure of the ability of a business to meet both short-term and long-term obligations.

Making training an ongoing process is a good way to encourage dialog with employees when their learning curve goes flat.

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.

One reason why accounting is important to a small business is that it shows how much your business is worth.

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.

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

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.

The business-to-consumer (B2C) contract is an example of an Internet contract.

The concept of total product includes how customers describe one's good or service.

All of these are correct

Title I of the JOBS Act included a series of amendments to the all of the following EXCEPT:

All of these choices are correct

Types of Crowdfunding include

All of these are correct

Valuation Methods fall into which category:

All of these

Why should entrepreneurs know the value of their business?

FALSE

You can expect a crowdfunding campaign to fully cover the costs of bringing a product to market

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 _____. A. receivables B. deposits C. charge backs D. payables

The amount that revenues exceed expenses is referred to as _____. A. profit B. cash flow C. operating margin D. debt

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. A. acquisition cost B. costs of owning C. costs of disposition D. costs of operating

_____ ratios measure the business's ability to pay debts and expenses that are due in the current accounting period. A. Liquidity B. Profitability C. Activity D. Leverage

The number one source of financing for small businesses is from _____. A. the owners themselves B. angel investors C. government programs D. banks

A. the owners themselves

After determining an organization's compensation philosophy, the next step in developing a compensation plan is to: A. develop a job description. B. find comparison factors for salary. C. provide stock options or stock grants to employees. D. offer employer-sponsored health insurance.

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: A. break-even point. B. economy of scale. C. economy of scope. D. monopoly.

Market scope is important because: A. it helps business owners in determining the size of the target market. B. it helps business owners to decide where to focus their sales and advertising efforts. C. it helps business owners in designing a product. D. it helps business owners in calculating their magic number.

________ is the series of steps and activities required to complete a process. A. Work instructions B. A procedure C. Operations D. GAAP

Giveaways, samples, and tastings are examples of ________ techniques used in sales promotion. A. contest B. loyalty C. introductory D. discounting

The emphasis of financial management during the _____ phase is to obtain increasing amounts of cash inflows to pay for added inventory, productive assets, and employees. A. start-up B. exit C. growth D. operations

_____ ratios measure the relative risk that a business setback could cause bankruptcy. A. Liquidity B. Gross margin C. Leverage D. Profitability

A _____ is an example of a low customer contact business. A. retail establishment B. medical or legal office C. restaurant D. manufacturing business

Which of the following businesses requires a stake in the company and is good for brainstorming with other entrepreneurs? A. Empowerment zone B. Manufacturing business C. Remote location service D. Business incubator

Which of the following forms of business requires no government permission to set up? A. Limited partnerships B. C Corporation C. Professional corporation D. Sole proprietorship

Which of the following is a disadvantage of leasing? A. It requires a considerably high initial cash outlay than building or buying. B. It is expensive than building or buying a property that are of the same value. C. Lease expenses are not deductible business expenses. D. Renovation options are limited in a leased property.

Which of the following is a drawback to financing with gift capital? A. It can be very difficult and expensive to turn into a source of capital. B. You will be selling ownership in your business. C. The amount of financing you can raise is limited by the amount of wealth you have personally, the amount of wealth your business owns, and your reputation. D. No foundations exist to specifically provide start-up or working capital funding.

Which of the following is a recommended fair personnel policy guideline across family and non-family members? A. Owners should compare the family member hired to the nonfamily member who was not hired for a given position. B. Owners should not hold expectations that their family should work longer and harder than anyone else, because it is the family's business. C. Owners should have clearly differentiated personnel policies for family and non-family members. D. Owners should let family and nonfamily members pick and choose from a set of privileges or benefits.

Which of the following is not one of the three tests of the approach when crafting a customer-focused value proposition? A. How many customer pains can you solve? B. How many customer gains can you provide? C. How closely does your product or service fit the customer's job? D. How does your price compare to competitors' prices?

Off-the-job techniques include apprenticeships, internships, and job rotation. F

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. A. Cost-volume-profit analysis B. Marginal revenue costs analysis C. Break even analysis D. Cash flow analysis

Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes? A. Book value B. Salvage value C. Replacement value D. Disposal value

Which of the following is not one of the primary criteria for a small business's record keeping system? A. The ability to outsource the task. B. The timeliness of reports. C. The security of data. D. Understandability to the manager of the business.

Which of the following ratios measures the percentage of sales revenue available to pay operating costs and to provide profits after paying for inventory? A. Gross margin ratio B. Profit margin ratio C. Quick ratio D. Debt to assets ratio

True

Borrowing money for capital investment enhances the potential for higher rates of return for the owners.

According to the IRS, to be an independent contractor the person must: A. decide how the work must be done in consultation with an employer. B. have all his expenses paid for by an employer. C. perform a service that is not central to the operation of the business. D. not be employed for a distinct term or project.

Lenders use operating income as: A. a measure of how well management achieved sales. B. an indication of future sales. C. a measure of how much debt a business can support. D. an indication of a business's ability to control costs.

Which among the following is an example of an on-the-job training method? A. Lectures B. Case studies C. Coaching D. Role playing

Which of the following is defined as the practice of "pocketing" money from customers and hiding the theft by not recording the sale? A. Embezzlement B. Larceny C. Skimming D. Phony disbursement

Which of the following statements is true of an executive summary? A. It is written in an informal style for investors and lawyers. B. It gives fewer details about the business than an elevator pitch. C. It is the single most widely distributed written description of a business. D. It is typically put at the end of a business plan.

Restrictions imposed by loan contracts on the operations of a business, such as requiring that a specific minimum net worth be maintained, a specific debt-to-equity ratio not be exceeded, no dividends be paid to stockholders and so on, are known as _____. A. loan amortizations B. loan yields C. loan covenants D. credit assurance

C. loan covenants

TRUE

Crowdsourcing requires making requests for tasks and generating infor-mation and feedback.

Arbitration differs from mediation in that arbitration: A. works outside the court system. B. is less costly than mediation. C. requires that both parties represent themselves. D. has limited appeal possibilities.

Services have separability of production and consumption.

A sole proprietorship is not considered as a separate legal entity from its owner.

Access for employees and reasonable cost are critical for businesses with low customer contact.

Adding employees in a firm increases both the amount of work that can be done and the demands on the owner.

Identifying risks is the first task to be completed before a comprehensive insurance program can be developed for a business.

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.

In managing risk from violation of tax regulations, small business owners should make paying taxes their first financial priority.

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.

Title III

Which title of the JOBS Act established the rules under which an entrepreneurial firm can raise investment capital from the general public?

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

Skimming, odd-even pricing, and price lining are three possible pricing strategies available to small businesses.

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.

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.

The financial statements in a business plan include income statements, cash flow, balance sheet, and their respective assumptions.

Your hit rate is how many prospects or leads you need to approach in order to make one sale. Also called the conversion rate.

In the event of an unsuccessful campaign (didn't reach goal) you can choose to take the money on Indiegogo, while you can't on Kickstarter.

What is a major difference between Kickstarter and Indiegogo?

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? A. Obtaining increasing amounts of cash inflows B. Establishing internal control over assets C. Conserving the money that the business has D. Clearing all debts

The amount that revenues exceed expenses is referred to as _____. A. profit B. cash flow C. operating margin D. debt

A. profit

A financial plan for the future based on a single level of operations is called a(n): A. balance sheet. B. budget. C. income statement. D. statement of cash flows.

The most common form of institutional gift financing is in the form of _____. A. state loans B. reduced taxes C. state grants D. donated capital

There are three elements to most aspects of business law - finding the right information, negotiating the specific outcome you want, and: A. choosing the right attorney. B. taking care of the paperwork associated with it. C. checking the law. D. come to an agreement about a particular outcome.

To treat family and nonfamily employees as similarly as possible in a business, it is important to: A. have separate personnel policies for family and nonfamily members. B. create career ladders for nonfamily members. C. provide favorable treatment to nonfamily members. D. guarantee the possibility of employee ownership.

Which of the following would implicate employee empowerment? A. Providing learning opportunities at every level of the organization through training B. Letting employees make on-the-spot decisions for the companies' best interest C. Providing meaningful work for employees and keeping them occupied D. Showing appreciation for a job well done or giving credit to an employee who introduced a great idea

B. accelerated cash-out

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 _____. A. benchmarking B. bootstrapping C. piggybacking D. outside equity

B. bootstrapping

Something of value given or pledged as security for payment of a loan is called _____. A. chargeback B. capital equity C. collateral D. personal equity

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? A. Nepotism B. Capitalism C. Meritocracy D. Democracy

_____ measure a management's effectiveness in using the invested capital of the business to provide profits. A. Profitability ratios B. Gross margin ratios C. Return on investments D. Return on equity

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? A. Creating provisions for subcontracting work B. Developing an informal code of ethics for all employees to follow C. Ensuring that all employees have easy access to all assets D. Securing valuable assets from low-level employees

The number one source of financing for small businesses is from _____. A. the owners themselves B. angel investors C. government programs D. banks

The practice of acquiring inventory only in response to a completed sale is called a(n) _____. A. pull-through system B. economic order quantity C. optimum stocking level D. point-of-sale system

Uncertainty of returns in a business is referred to as _____. A. financial risk B. accelerated cash-out C. overpayment D. collateral

Which of the following is a tactical action? A. New distribution channels B. Mergers C. New product introductions D. Entering new markets

Which of the following is an advantage to renting capital assets? A. Renting usually protects you from unexpected costs of repairs. B. You have an ownership position. C. You can exercise control over cash outflows. D. The dollars paid in rent will not exceed the dollars you would spend to own the asset.

Which of the following is an example of debt financing? A. Incubators B. Crowdfunding C. Tax abatement D. Angels

Which of the following is one of the disadvantages of the return on investment (ROI) analysis? A. The profits received are not the same as cash. B. The calculations involved in the method are complex. C. It does not consider annual profits in its calculations. D. It does not rely on accounting information with which investors are comfortable.

Which of the following is true of financing small businesses? A. There are several resources available for financing start-ups. B. Funding is only important when a business is just starting. C. A business has fixed financial goals in all stages of its development. D. The most popular source of financing for start-ups is from commercial banks.

_____ ratios measure how productive a particular asset is in producing sales movement. A. Current B. Profitability C. Activity D. Leverage

C. Activity

In general, all forms of business organization can be categorized based on the owners' responsibilities for the organization's liabilities, and _____. A. how the business is taxed B. how the business is financed C. the business's target market D. whether it is a manufacturing or service organization

A. how the business is taxed

Ownership of corporations is established by _____. A. stock certificates B. share agreements C. member share certificates D. partnership share agreements

A. stock certificates

Money contributed to businesses in return for part ownership of the business is called a(n) _____. A. debt B. equity capital C. gift D. loan

The percentage amount that the payout of an investment differs from original cost is known as: A. dividend on capital. B. gain on investment. C. risk on investment. D. interest on the principle.

A business that collects, collates, and reports information concerning an entity's use of debt is referred to as a(n) _____. A. accelerator B. credit reporting agency C. debt reporting organization D. community development organization

B. credit reporting agency

Which of the following layouts is more typically found in upscale department stores? A. Grid layout B. Production line layout C. Free-form layout D. Process layout

_____ refers to a type of formal gift where someone buys something on behalf of the entrepreneur's business and lets the entrepreneur benefit from it. A. Overpayment B. Accelerated cash-out C. Picking up the tab D. Piggybacking

C. Picking up the tab

A legal "artificial" entity that is formed by filing specific documents with a state government is called a _____. A. sole proprietorship B. partnership C. corporation D. general partnership

C. corporation

Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____. A. articles of organization B. contracts of partnership C. articles of association D. articles of partnership

During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.

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

Your estimated number of prospective customers multiplied by your hit rate multiplied by the amount of each sale equals your sales forecast.

Publicly held companies are required to disclose all details regarding the financial statement. Therefore the investor has more reliable information.

Why have publicly held companies a higher valuation than privately held companies (same industry, revenue, profitability, etc.)

TRUE

Crowdsourcing is the umbrella term, under which crowdfunding falls

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 _____. A. replacement cost B. cost of operating C. cost of disposition D. acquisition cost

Which of the following is not something a manager needs in order to make good decisions? A. Methods to help compare alternatives. B. Efficient ways to condense information so it is understandable. C. Good information. D. A good support system.

E-tailers have high overhead and limited shelf space.

Imitation minus one degree of similarity is the business equivalent of an innovative strategy.

Statement of cash flows is also referred to as the statement of financial position.

The ADA Technical Assistance Program provides inspection and affirmation services to help small businesses.

False

In the U.S., government programs are the number one source for financing small busi-nesses.

The total liability issue in general partnerships is similar to that of sole proprietorships.

To ensure your accounting information is accurate, reliable, and useful, the accounting system you choose should easily and efficiently maintain an internal "audit trail".

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.

There are two general sources of gift financing: A. institutional and personal. B. friends and family. C. consumer and commercial banks. D. angel and venture investors.

Economic order quantity (EOQ) helps a business to think in terms of: A. factoring receivables. B. ordering costs and carrying costs. C. pledging receivables. D. ordering costs and operating lease.

_____ is provided by state and local governments, primarily to encourage specific activities that are expected to improve the blighted areas or provide additional employment. A. Debt capital B. Venture investment C. Tax abatement D. Equity capital

C. Return on investments

A(n) _____ is a legal obligation to pay money in the future. A. equity capital B. stake C. debt D. gift

C. debt

A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease. A. leveraged B. operating C. finance D. capital

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? A. Collect the entire amount owed and return it to Aaron. B. Sell it back to Aaron after collecting the entire amount owed. C. Collect the entire amount owed and keep all the money it obtains. D. Take mild actions and collect a token amount.

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: A. inventory level is not affected by demand. B. delivery times never fluctuate. C. sales volumes are not constant. D. estimate never exceeds demand.

_____ ratios measure the relative risk that a business setback could cause bankruptcy. A. Liquidity B. Gross margin C. Leverage D. Profitability

C. Leverage

Private businesses that are authorized to make SBA insured loans to start-ups and small businesses are called _____. A. community development organizations B. accelerators C. small business investment companies D. LLCs

C. small business investment companies

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. A. entry-level B. pioneering C. substitutive D. new entrant

Selling your product or service in a limited area, for a limited time is known as parallel marketing.

Variable costs decrease if output increases.

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.

A product can include goods, services, and ideas.

Every business faces risks in the real world, so every business plan needs to spend some time addressing them.

Meritocracy is the management philosophy of selecting and promoting people based solely on their being the most capable person for the job.

Money borrowed for the purpose of investment in a business is called debt capital.

Networking is a relatively low-cost, although time-intensive, method of recruiting.

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.

The goal of appendixes is to provide supporting information that helps detail or support the key selling points of a business plan.

The majority of small business start-ups are funded by bootstrapping

Reward, donation, equity, lending

What are the 4 types of crowd funding mentioned in class?

All businesses within an industry have to pay the same amount, as decided by the state, as unemployment insurance.

Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes.

Business risk is the probability that the future state of the business will be better than planned.

By agreeing to an exculpatory clause in a contract, one party is agreeing not to hold the other responsible for his or her actions.

Contingency fees are a fixed amount paid for a certain task.

Copyrights, trademarks, and patents provide automatic full protection to small business owners.

Customers can never be a source of risk for businesses.

Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market.

Distributors and wholesalers prefer taking on start-up products as there are no setup charges involved.

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

Guerilla marketing is a form of communication that encourages the customer to act immediately, such as coupons, sales, or contests.

If your business is wholesale or retail merchandising, the issues of property, plant, and equipment (PPE) constitute your greatest investments and your greatest costs.

In a negotiation process, proposing solutions that provide value and balance for all parties involved is considered the easiest step.

In employee leasing, the leased employees actually work for the hiring company rather than the leasing company.

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.

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.

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

Small businesses never experience any cash flow problems.

Something that is essential to how you live and does not have many substitutes or alternatives is called an elastic product.

The Family and Medical Leave Act applies to all employers.

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

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.

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.

When coming up with a new idea in the product development process, the focus is on the pains and gains of customers.

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.

true

In most cases, crowdfunding does not involve or generate debt or equity

Contractual provisions of insurance policies that specify what risks the insurance company is assuming are called coverages.

Employees whose experience and skills are critical to the success of a business are called key employees.

Equifax is one of the four primary CRAs in the United States

Eventually, mature industries begin a decline stage. Some industries face death, while others find new life in a process called retrenchment.

One of the policies for managing customer credit requires business owners to maintain constant "aging" of accounts to quickly identify customers who become delinquent.

Operational plans and private placement memos are the only two types of plans that add material to a full business plan.

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.

People who buy ownership rights but are not part of the management of the business are known as outside equity investors.

Promotion includes getting the message out to the target market so that they can make decisions about a product or service.

Reconciling the differences between the bank and book balances gives a corrected bank balance and a corrected book balance which are identical.

The majority of small business start-ups are funded by bootstrapping.

The primary areas for conflict resolution in exporting include nonpayment and contract default issues.

The primary reason to acquire and use a computerized accounting system in your business is to ensure the accuracy of your accounting information.

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.

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.

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

The value delivered to the customer is second in order of importance to the pricing decision.

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: A. discussions with friends and family. B. discussions with potential or existing customers. C. discussions with existing suppliers or distributors. D. discussions with potential or existing investors or lenders.

According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of: A. delayed payments from customers. B. lack of seasonal fluctuation in sales. C. delayed payments from vendors. D. unexpected increases in taxes.

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 _____. A. gaming the payment process B. timing the purchases C. noncash incentives D. trade discount payments

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: A. value proposition. B. long-term value. C. tangibility. D. total product.

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 _____. A. payables B. charge backs C. deposits D. receivables

The steps in Blank and Dorf's "Get Customers" funnel are awareness, interest, consideration, and purchase. Here, consideration refers to: A. the process of getting into the prospective customer's final list of brands of products or services they may purchase. B. the process of prospective customers taking some action to learn more about the product or service you offer. C. the process of getting your message out as much as you can to your target market. D. the end of the initial promotional funnel.

There are two general sources of gift financing: A. institutional and personal. B. friends and family. C. consumer and commercial banks. D. angel and venture investors.

When considering the service life cycle, which of the following statements is not true? A. It can be more difficult to extend the life cycle of a service over that of a product. B. Services go through the same four stages of the life cycle. C. New services will take a little time to attract customers. D. Initial advertising efforts will be to educate your clients about the service.

When writing your elevator pitch, remember that elevator pitches have four success factors. Which of the following is not one of those success factors? A. The length. B. The purpose. C. The delivery. D. The hook.

Which of the following describes angel investors? A. They are wealthy individuals who invest in companies in relatively early stages of development. B. They are individuals who act as brokers to help connect owners to organizations that provide funding. C. They are state-run organizations that buy stakes in companies in the early stages of development. D. They are government organizations that help small-scale companies grow.

Which of the following represents the problem with legal protection methods for intellectual property? A. There is no governmental agency that will assist small business owners in maintaining their legal rights. B. The cost of legal protection for intellectual property is so high that it is practically useless for a small business owner. C. Legal protection methods for intellectual property are primarily "reserved" for large businesses. D. Legal protection methods can only be offered for tangible property and not intellectual property. E. Holding legal rights to intellectual property provides the owner solely with grounds to pursue lawsuits against infringement.

Which of the following statements is true of documenting the operations of your business? A. Every business process does not have to be extensively documented. B. You will not have to give up any personal control of your business, even if you have employees. C. Businesses with no employees use a different process than do those businesses with employees. D. A typical start to the task of documenting the processes of an operating business is to start from the bottom up.

Which of the following statements is true of sales forecasting? A. In many cases, the best sales forecast you can come up with is an educated guess. B. It is better to have a high sales projection initially and adjust as actual sales happen. C. Using traditional retailers and distributors does not change the price you set at the factory. D. Ignore your capacity when identifying your potential market as you will not be serving the entire potential market.

Which of these is a disadvantage of a corporation? A. It incurs relatively high incorporation fees and high taxes. B. It requires its owners to have unlimited liability to the firm's debt. C. It is considered a separate, legal entity from its owner. D. It is automatically terminated upon the death of its owner.

_____ is a strategy whose goal is growth, based on selling more of the firm's product or service to the existing customer base. A. Market penetration B. Product expansion C. Market expansion D. Diversification

_____ is a type of CRM report that segments by customer or customer group on purchases or dates of purchase. A. Customer vector B. Sales report C. Customer service D. Interim report

_____ 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. A. Bank ledger balance B. Company book balance C. Overdraft balance D. Bank available balance

_____ 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. A. Goodwill B. Collateral C. Inventory D. Debt

A. Goodwill

_____ ratios measure the business's ability to pay debts and expenses that are due in the current accounting period. A. Liquidity B. Profitability C. Activity D. Leverage

A. Liquidity

A. There are several resources available for financing start-ups.

There are two general sources of gift financing: A. institutional and personal. B. friends and family. C. consumer and commercial banks. D. angel and venture investors.

A. institutional and personal.

A charge for the use of money, usually figured as a percentage of the principal is called _____. A. interest B. dividend C. tax D. chargeback

A. interest

At the _____ stage of a business, the emphasis of financial management is to build owner wealth, to conserve assets, to match cash inflows to outflows, and to maximize the return on capital assets by making optimal investing decisions. A. operations B. exit C. growth D. start-up

A. operations

Borrowing money is a better alternative to investing additional personal funds because obtaining equity investment from others: A. reduces the potential loss for any single investor. B. allows lesser debt to be included in the capital mix. C. increases the cost of capital for the business. D. increases the weighted average cost (WAC) of the business.

A. reduces the potential loss for any single investor.

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? A. It is offering discounts to customers for prompt payment. B. It is taking deposits and progress payments. C. It is factoring all receivables. D. It is taking on noncore paying projects.

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. A. executive summary B. cover letter C. appendix D. title page

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. A. exculpatory agreement B. subcontract C. unilateral contract D. option contract

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. A. noncompete clause B. exculpatory clause C. hold harmless clause D. power of sale clause

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? A. Both companies are not paying any premium. B. Synapse pays a higher premium than Crux. C. Both the companies pay the same premium. D. Crux pays a higher premium than Synapse.

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? A. procedure B. property C. work instructions D. process

Financial management requires that you have some method to measure and compare your financial position and financial results. Your financial position is reflected on your _______, your financial results on your _______. A. master budget; return on investment B. balance sheet; income statement C. return on investment; master budget D. income statement; balance sheet

From an entrepreneur's perspective, marketing is all about connecting your customer to your product or service. The first step in this process is: A. connecting the two through price. B. connecting the two through the value proposition. C. connecting the two through promotion. D. connecting the two through product placement.

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: A. adverse possession. B. employee collusion. C. employee nonfeasance. D. vendor fraud.

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. A. leveraged B. capital C. direct D. operating

Maintaining an inventory helps a business to have an optimal level of cash flow by: A. increasing the cost of carrying inventory. B. reducing the cost of processing orders. C. reducing cash inflow due to being out of stock. D. increasing cash outflow due to waste resources.

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 _________. A. decision maker B. purchaser C. influencer D. end user

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? A. Adverse possession B. Separation of duties C. Accession D. Rule against perpetuities

Money contributed to businesses in return for part ownership of the business is called a(n) _____. A. debt B. equity capital C. gift D. loan

Most small businesses are more _____ than _____. A. cost-directed, profit-directed b. imitative, innovative c. profit-directed, cost-directed d. innovative, imitative

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? A. Building owner's wealth B. Conserving what little money the business has C. Obtaining increasing amounts of cash inflows D. Minimizing debt and increasing asset value

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 _____. A. nonsufficient funds B. growth trap C. charge back D. reconciling

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? A. It will convert Bradham Corporation into a separate legal entity. B. It will dissolve the corporation into a sole partnership under Bradham. C. It will change Bradham's liability in the business to one that of a limited partner. D. It will hold that Bradham has no personal liability for Bradham Corporation's debt.

Which of the following is true of a private placement memo? A. It provides information to potential licensees. B. It is a complex legal document and should be drafted by a lawyer. C. It is a special form of informational plan posted on the Internet. D. It is designed to be used internally for management purposes.

Which of the following is true of financial management for a business exit? A. Its main emphasis is on conserving what little cash the business has. B. Its main emphasis is on maximizing the value of the business for successors. C. Its main emphasis is to obtain increasing amounts of cash inflows to pay for added inventory. D. Its main emphasis is on increasing amounts of cash inflows to pay for added inventory, productive assets, and employees.

Which of the following is true of financial statements? A. The customization of financial reports is illegal in all states. B. The overall content and form of financial statements have been made standard by long usage. C. Bankers and investors are typically new and unacquainted with standard financial statements. D. The differences unique to each industry cannot be represented accurately in financial statements.

Which of the following is true of leasing issues? A. Landlords do not have the right to move a business elsewhere at their discretion. B. It costs more to limit the landlord's ability to lease to competing businesses. C. It is irrelevant to look for stores in a landlord's property that match your business hours. D. There are no penalties or problems for rent default.

Which of the following is true of partnerships? A. It does not get terminated upon the death of one or more partners. B. It does not allow one partner to obtain bonding protection against the acts of the other partner(s). C. It cannot obtain financial resources from more than one person. D. It does not incur unlimited liability on its partners for the firm's debt.

Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations? A. Understate revenues and overstate deductible expenses B. Reconcile the cash register tape to the cash register contents every day C. Take cash from the businesses before it is recorded as revenue D. Borrow from tax money in order to make payments to creditors

Which of the following statements best describes the process of idea screening in new product development? A. It involves specifying the details of each idea's technological feasibility, its cost, how it can be marketed, and its market potential. B. It is the process of selecting the most promising ideas to be further evaluated for feasibility. C. It involves creating the first versions of products called prototypes which are used in further consumer testing. D. It is the process of mass producing a new product so that consumers can avail it.

Which of the following statements concerning financial management is correct? A. The details of financial management are standard across businesses in different industries. B. Obtaining money for your start-up is only the beginning of financing a small business. C. Financial management needs remain the same through the life of the company. D. Once a financial management system is in place it only requires periodic review.

Which of the following statements is not true of the product life cycle? A. There are four stages to the product life cycle. B. Stages in the product life cycle are not similar to those of the firm's life cycle. C. Not all products survive the introduction phase of the product life cycle. D. Most small businesses can only afford to launch a product on a small scale.

Which of the following statements is true of an elevator pitch? A. It is shorter than a vision statement or tagline. B. Its goal is to sell the idea of a business to another. C. It does not sound like a sales pitch. D. It is a summary of the business, its business models, and immediate goals.

Which of the following statements is true of business plans? A. Firms without a business plan are less likely to close down than firms with plans. B. External legitimacy for a firm is best established by creating business plans. C. Typically, the higher-performing firms in any industry tend to be those who do not have any business plan. D. Having a business plan guarantees higher profits.

Which of the following statements is true of the company section of a business plan? A. The overall description of the business financials forms the core part of this section. B. The product or service subsection mentions any protection through a proprietary technology. C. The company background subsection includes information about the pilot sales efforts and the floor plans. D. The tagline and elevator pitch of the business form the subsections of company description.

Which of the following statements is true of the target market? A. Your Total Available Market (TAM) represents the customers that you think would be interested in your particular product or service. B. Your target market is the same as your Serviceable Obtainable Market (SOM). C. Your Penetrated Market (PM) is your target market divided by your actual number of customers. D. Your Serviceable Available Market (SAM) is never the same as your Total Available Market (TAM).

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? A. Proximity B. Currency C. Power D. Cultural resonance

_____ is the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the market. A. Industry analysis B. Competitive advantage C. Resource distribution D. Market relinquishment

_____ 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. A. Barter B. Consignment C. Noncash incentive D. Benchmarking

________ is setting a price at the highest level the market will bear, usually because there is no competition at the time. A. Premium pricing B. Skimming C. Odd-even pricing D. Partitioned pricing

_____ is a measure of the amount of debt relative to total investment. A. Cost of capital B. Financial leverage C. Optimum capital structure D. Financial risk

B. Financial leverage

B. Its main emphasis is on maximizing the value of the business for successors.

Which of the following is true of an LLC? A. LLCs are the same as partnerships. B. LLCs have a choice of being taxed as either corporations or partnerships. C. LLCs are a legal form of business that have no flexibility regarding taxes. D. LLCs are the same as S-corporations.

B. LLCs have a choice of being taxed as either corporations or partnerships.

Which of the following is the formula for calculating owner's return on equity (ROE)? A. Net Income/Average Investment B. Net Income/Owner's Equity Investment C. Total Liabilities/Total Owner's Equity D. Total Liabilities/Total Assets

B. Net Income/Owner's Equity Investment

B. deferral

After successfully operating for five years, Tina plans to sell her computer service center. Which of the following would be Tina's main financial management need as she exits the business through sale? A. Obtaining increasing amounts of cash inflows B. Building her wealth and conserving assets C. Optimizing capital structure for profits D. Conserving the money that the business has

As a new entrepreneur, Anthony's magic number for 2013 is $42,000. If the current tax rate for his business is 30 percent, calculate the amount that Anthony's firm would need to sell for him to get his magic number. A. $50,000 B. $50,495 C. $60,000 D. $60,854

Direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria are referred to as _____. A. tax abatements B. grants C. tax credits D. debts Direct reductions

In a business, accepting payments by credit card causes significant differences between the bank and book balances because the credit card service provider: A. records the gross amount of each credit card sale. B. deposits the amount of the sale in the business's account on the date of the sale itself. C. deposits the sale amount in the business's account after deducting a service fee. D. retains the sale amount in the business's account in the event of customer challenge.

In evaluating potential employees, a small business owner: A. should hire a moderately qualified person in case filling the position is an urgent requirement. B. should ensure that only a single interviewer meets with a candidate in order to avoid conflicting evaluations. C. should design interview questions such that "yes" or "no" answers are not applicable. D. should accept the candidate's word that he or she possesses a certain skill or knowledge base.

Industry analysis is defined as the technique used to: A. determine the magic number in a particular industry. B. determine the extent to which a product is similar to another product. C. study the dynamics and trends of an industry.

Marketing data gathered by simple observation - seeing what customers do, rather than asking them is: A. secondary research. B. a focus group. C. ethnographic research. D. branching.

Percentage of concession in gross invoice amounts provided to encourage prompt payment are called _____. A. receivables B. noncash incentives C. trade discounts D. charge backs

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 _________. A. partitioned pricing B. product line pricing C. bundling D. prestige pricing

Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _____. A. discount projects B. charge backs C. noncore projects D. consignments

Sales promotion techniques used to introduce your brand to customers without an immediate call to purchase are _____________ techniques. A. loyalty B. discounting C. contest D. introductory

Small businesses use the periodic inventory method because it: A. gives instant access to accurate inventory records. B. records the receipt and sale of each item as it occurs. C. meets the requirements of local and federal taxing agencies. D. uses bar codes that are unique to each item of inventory.

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: A. the actual amount of cash that is available to the firm at any specific time. B. the deposits and withdrawals recorded in a bank's accounting records. C. the cash inflows and cash outflows recorded in the firm's accounting records. D. the negative balance in a depositor's bank account.

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 _____. A. rate of investment B. return on equity C. return on investment D. net present value

The fourth step of a small business' strategic planning process involves: A. considering the customers and the benefits to offer them. B. refining the firm's capabilities in order to maintain a competitive advantage. C. determining the best strategic direction and strategy for the firm. D. studying the dynamics and trends of the industry.

The makers 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? A. The decline stage B. The introduction stage C. The maturity stage D. The growth stage

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 ______. A. cash B. currency C. information D. growth trap

What is the goal of appendixes? A. To inform customers and partners about a firm and its products B. To establish marketing strategies and identify major competitors C. To provide supporting information that helps detail the key selling points of a plan D. To explain the growth plan and competitive strategies

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? A. Open-book policy B. Work facilitation C. Psychological contract D. Autonomy

Which of the following forms of direct response advertising allows very specific targeting and is appropriate for business-to-business selling? A. Television B. Radio C. Magazine D. Billboard

Which of the following is a drawback to financing with debt? A. You will be required to make periodic reports detailing how the money is being used. B. You will be selling a portion of your business. C. Payment is expected even if you have no money to make the payment. D. Your business must be organized as one of three legal forms of business.

Which of the following is an advantage of personal selling? A. It helps in easily establishing and promoting a favorable opinion by the media. B. It helps business owners in generating finance for their business. C. It allows business owners to find out the buyers' main concerns and address them. D. It increases business owners' publicity.

Which of the following is most likely to be the key information that joint venture partners seek in a business plan? A. Asset or collateral base B. Cash flow and cash cycle C. Intellectual property protection D. Stability of firm

Which of the following is not a benefit of correctly documenting your business processes? A. There should be less waste and scrap in your processes. B. There should be fewer employee mistakes. C. The process is self-sufficient and does not require much time to review or update. D. Extensive documentation will make selling your business much easier.

Which of the following is true about trade name? A. There can be only one business using the same name within a state. B. Assumed name is completely different from trade name. C. Most states allow several firms to use the same trade name, as long as the firms are in different lines of business. D. Most states allow several firms to use the same trade name even if they are in the same town and have received a service mark.

Which of the following is true of a differentiation strategy? A. It requires a firm to offer a combination of cost benefits that appeals to the customers. B. It is generally pursued by all small businesses. C. It is aimed at mass markets. D. It is used by businesses that pursue a very low cost operation.

Which of the following is true of customer retention? A. It focuses on increasing customers' cognitive dissonance. B. It focuses on satisfying prospective customers to make a sale successful. C. It handles problems that crop up after a sale. D. The CRM aspect of customer retention is based on short-term monitoring of customers.

Which of the following is true of follow-up? A. It increases cognitive dissonance in customers. B. It is typically done only once after a sale. C. Electronic approaches to follow-up dramatically lower the cost of marketing efforts. D. It refers to business owners doing what they said they would do.

Which of the following is true of insuring the property of a business? A. All the value of a property has insurable value. B. The value of land is the most commonly insured property. C. The value of the historical significance of a building often cannot be insured. D. The lower the deductible, the lower the policy premium payments will be.

Which of the following statements is not true of creating a customer profile? A. The process for a start-up should begin with face-to-face interviews with potential customers. B. It should be typically applied at the decline stage of the product life cycle Analyze the results of interviews by first looking at the problems your interviewees were trying to solve. C. The goal of these interviews is to get as many responses as possible. D. The hardest part of preparing the interview is figuring out what the problem context is.

Which of the following statements is not true of psychological contracts? A. Small business owners often implicitly or explicitly communicate conflicting terms when making psychological contracts. B. To avoid breaking a psychological contract, denote strict limits on what you promise employees. C. Putting a psychological contract in writing is unnecessary and ill-advised. D. A psychological contract refers to an employees' beliefs about the promises between the employee and the company.

Which of the following statements is true of a business plan presentation? A. Typically, a business plan presentation does not follow the content of a business plan. B. The content of a business plan presentation remains the same for different audiences. C. Handouts are mailed or distributed when the business plan changes frequently. D. Listeners check presentations for the content and not for the professionalism and passion of the presenter.

Which of the following statements is true of joint ventures? A. It requires both partners involved to allocate revenues and expenses equally between them. B. It is not considered a separate entity from any of the partners that own it. C. It does not require its partners to lose more than what each partner has invested in it. D. It is never taxed as a partnership.

Which of the following statements is true of low customer contact businesses? A. Customer access is relatively important when compared to high customer contact businesses. B. Some examples of low customer contact businesses are restaurants and dry cleaners. C. Empowerment zones offer businesses low-cost space and tax advantages. D. Business incubators are expensive and offer limited small business support services.

Which of the following statements is true of marketing research? A. Marketing research can falls into one of three categories. B. Marketing research can verify the size of the potential market but does not tell you where potential customers are likely to shop. C. Marketing research can tell you what customers consider a reasonable price. D. Marketing research cannot verify the size of the potential market.

Which of the following ways does borrowing help increase potential profits? A. By increasing the weighted average cost (WAC) of the business B. By allowing less debt to be included in the capital mix C. By providing capital funds for additional business opportunities D. By increasing the cost of capital of the business

legal "artificial" entity that is formed by filing specific documents with a state government is called a _____. A. sole proprietorship B. partnership C. corporation D. general partnership

C. By providing capital funds for additional business opportunities

C. Optimizing capital structure for profits

Something of value given or pledged as security for payment of a loan is called _____. A. chargeback B. capital equity C. collateral D. personal equity

C. collateral

Any valuable asset that is donated to a business without any obligation to repay or to give any ownership interest is called a(n) _____. A. debt B. equity capital C. gift D. investment

C. gift

C. growth

C. optimum capital structure

A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by: A. purchasing and accepting inventory before it is sold to a customer. B. delaying the shipment of the completed product to the customer. C. keeping safety stock in case the estimate exceeds the demand. D. assembling the product in the absolute minimum time possible.

According to the six factors most valuable to employees, which of the following is a reason employees leave a company? A. Being put through different types of training B. Being asked to make on-the-spot decisions for the companies' best interest C. Being shown that the decisions employees make and the work they perform have a direct impact on the product or service provided D. Being denied professional development and learning opportunities to expand their job responsibility

An organization that supports start-up technology businesses by providing inexpensive office space, a variety of support services, and resources is called a(n) _____. A. LLC B. community development organization C. small business investment company D. incubator

Approximately 90 percent of small businesses that fail do so because of ________. A. not enough money flowing out of the business B. too much money flowing in to the business C. lack of profitability D. cash flow problems

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? A. Lay off employees who seem most likely to go into competition with Axion B. Groom other candidates to replace the employees currently working at Axion C. Cross train the employees to neutralize job specialization D. Negotiate contracts with key employees that limit their freedom to go into competition

Business owners can figure how to better target ads or promotions to particular types of customers if: A. they track sales of their competitors. B. they identify the defects in their products. C. they use the diversification strategy rather than the product expansion strategy. D. they link sales and purchase basis to the type of customer.

Diversification is a strategy whose goal is growth, based on: A. selling more of the firm's product or service to the existing customer base. B. selling in areas or to groups previously not served by the business. C. selling existing customers a product or service they have never bought before. D. adding new products or services to the firm's existing collection of offerings.

During the start-up phase of a business, the emphasis is on: A. finishing all outstanding projects, collecting all money due, disposing of all business assets, and finally paying off any outstanding debt. B. removing all surplus cash and tightening the cash-to-cash cycle to the shortest time possible. C. piggybacking with other successful firms. D. conserving what little cash the business has.

If Connie gets her family and friends involved as investors, which of the following is most likely to be their concern? A. Cash flow and cash cycle B. Intellectual property protection C. Monitoring compliance D. Amounts and schedules for returns

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? A. Taking a consignment B. Offering trade discount C. Gaming the payment process D. Timing the purchase

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) _____. A. incentive B. liquidity C. overdraft D. charge back

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? A. ADA B. OSHA laws C. Sarbanes-Oxley Act D. ADEA

Trendiness refers to: A. a concept in public interest which alludes to events with a broad appeal within the market or population. B. a concept in public recognition which alludes to how close the issue being discussed is to you, your family or business. C. a concept in public interest which alludes to the graphic interest held by an event. D. a concept in public recognition which alludes to the fit of the topic to current fashion or public interest.

Which of the following explains the difference between limited partnership and general partnership? A. In limited partnerships, all partners are equally liable to the firm's debt unlike general partnerships. B. In limited partnerships, partners incur single taxation on earnings unlike general partnerships. C. In general partnerships, whenever the mix of partners is changed, that partnership is dissolved unlike limited partnerships. D. In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.

Which of the following statements is not true concerning marketing and marketing plans? A. For start-ups, marketing plans help define how the firm will build its brand and relationship with customers. B. When building your marketing plan, there is low-cost help available in several ways. C. For established businesses, a marketing plan helps the company maintain customer relationships. D. Not all business plans have a marketing section.

Which of the following statements is not true of target customers? A. Target customers are described in terms of demographics. B. What target customers are looking for should be based on discussions with potential customers. C. Hopefully the desires of your target customers closely match the value benefits your product offers. D. Usually you only have one type of target customer.

_____ refers to business owners doing what they said they would do. A. Trendiness B. Cognitive dissonance C. Follow-up D. Follow-through

_______ is collected by the IRS and state agencies as a percentage of tax upon payroll. A. Liability insurance B. Workers' compensation insurance C. Malpractice insurance D. Unemployment insurance

________ information and reports are used when planning, organizing, staffing, directing, and controlling. A. Variance analysis B. Financial accounting C. Cost-volume-profit analysis D. Managerial accounting

_____ measures the extent to which a business can meet its obligations for the long haul. A. Profitability ratio B. Current ratio C. Return on investment D. Debt-to-equity ratio

D. Debt-to-equity ratio

_____ exist for the purpose of addressing some identified social need that cannot be adequately met by market forces. A. SBAs B. Limited Liability Companies C. EDAs D. Foundations

D. Foundations

A charge for the use of money, usually figured as a percentage of the principal is called _____. A. interest B. dividend C. tax D. chargeback

An organization authorized by the SBA to make insured loans to small businesses that are expected to increase economic activity within a specific geographic area is referred to as a(n) _____. A. community development organization B. accelerator C. economic cooperation organization D. limited partnership

In Connie's business plan, which of the following components is most likely to be of interest to Mr. Johnson? A. Cash flow and cash cycle B. Growth rate C. Competitive advantage D. Amounts and schedules for returns

The amount that revenues exceed expenses is referred to as _____. A. profit B. cash flow C. operating margin D. debt

Entrepreneurship Ch 14

संबंधित स्टडी सेट्स

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Vocabulary Unit 12 - Level F

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moduel 3 + 4

SECTION 1 GENERAL INSURANCE +

Art of 19th century

SCM Exam 3

Micro Exam

Chapter 15

1 - Thermodynamics

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AZ 104

Graphs and Euler Circuits

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LECTURE 9

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MIS 412--Chapter 10

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