Small Business Management Final
A family business should always pursue an early entry strategy to bring children into the enterprise as soon as possible. True or False?
False
A warranty must be written to be valid. True or False?
False
Which of the following is not an indicator of job satisfaction levels? a) productivity b) teamwork c) tardiness d) suggestions
Teamwork
which of the following is not a risk that might be discussed in a typical critical risks section: a) price cutting by competitors b) sales that fail to meet projections c) a downturn in business affecting the entire industry d) the owner grows tired of the new venture and wants to leave
The owner grows tired of the new venture and wants to leave
Bankruptcy should be a last resort when negotiating with creditors. True or False?
True
Before making a final decision about going into business, potential owners should ask themselves a number of personal questions to assess whether their personality and temperament are compatible to owning and running a small business. True or False?
True
A business plan should describe which of the following about an enterprise a) it's current status b) its expected needs c) the projected results d) all of the above
all of the above
which of the following is an important characteristic of venture capital? a) the money is serve the needs of the business receving the investment b) the investor tends to maintain an active roe in the business receiving the investment c) the money is invested with the expectation of high risk d) all of the above
all of the above
which of the following is an important consideration when assembling a business plan: a) it should be free of spelling, grammatical, and typographical errors b) it should be no more than 50 pages long c) it should have a table of contents d) all of the above
all of the above
which of the following is an important element of the marketing plan? a) pricing strategy b) sales and distribution c) advertising and promotion d) all of the above
all of the above
In which stage of a market analysis might the prospective business owner use a consumer surveys: a) fact gathering b) organization of the facts c) analysis of the facts d) implementation of an action plan
analysis of the facts
which of the following is an advantage of an LLC? a) the liability of owners is limted to the amount of their investment b) the LLC doesn't paytaxes as an entity c) both of the above
both of the above
Which of the following is not a major disadvantage of going into business? a) challenge b) laws and regulations c) competition d) risk of failure
challenge
Most assets decrease in value if replacement value is use. True or false?
false
In estimating the money needed to start a business, which of the following should not be included in the calculation? a) start up costs b) expenses for 3-6 months c) first year profits d) all of the above
first-year profits
which of the following is a disadvantage of proprietorships a) the owner is expsoed to unlimted liability b) they are subject to many restrictions c) they have difficulty maintaining secrecy about their operations d) all of the above
the owner is exposed to unlimited liability
The Magnuson-Moss Warranty Act a) establishes the warranty of merchantability b) establishes the warranty for aparticular purpose c) provides that all warranties must meet certain requirements d) provides that implied warranties are invalid
Provides that all warranties must meet certain requirements
Under the federal bankruptcy laws, what type of bankruptcy is a Chapter 11 bankruptcy? a) liquididation b) reorganization c) renegotiation d) extension
Reorganization
What is "learning to be alone but not lonely" an example of? a) procrastination b) production issue c) office organization issue d) self management issues
Self-Management issue
ESOPs may be a viable way to pass control of a family enterprise if the owner has no immediate successor in mind. True or False?
True
Flexibility is a special trait that allows family firms to react and respond to various challenges and opportunities in an unrestricted manner. True or False?
True
If you don't have mutual respect, you can't create and maintain a business together. True or False?
True
Mortgage contract- gives the lender an interest in the real estate financed. True or False?
True
Small towns are often a good location for small retail businesses. True or False?
True
The major benefit of leasing is that the initial outlay of cash is much less than if buying outright. True or False?
True
Two ways to negotiate with creditors are extension agreements and composition agreements. True or False?
True
When starting a business, the quality of competition must be considered. True or False?
True
You should seek legal and financial counsel for estate tax questions. True or False?
True
Which of the following is not a misconception in our society regarding business ethics? a) profit and morality are incompatible b) all ethical problems have simple solutions c) unethical behavior in business does take place d) ethics is simply a matter of complying with aws and regulations
Unethical behavior in business does take place
The two fees paid by the franchise to the franchisor are: a) legal and professional b) upfront and royalty based on gross revenues c) insurance and rent d) utilities and inventory
Upfront and royalty based on gross revenues
Which of the following is not an on-the-job training step? a) application b) inspection c) valuing d) deomonstration
Valuing
Which of the following is an advantage of a family-owned business? a) attractivenss to the individual b) eternal and internal positive aspects c) positive impact of family values d) all of the above
all of the above
Which of the following is an advice regarding strategies and strategic plans as solutions to the succession issue? a) focus on taxes b) timing strategy c) expansion or separation d) all of the above
all of the above
which of the following issues is generally not affected by a business legal form? a) insurance b) liability c) taxes d) capital requirements
insurance
which of the following things should be included in the business description section a) an introduction to the owner and a discussion of their reasons for wanting to strt the business b) a three year projection of the expected c) background information on the industry and key competitors d) information on where the business will be located and the type of building it will occupy
An introduction to the owner and a discussion of their reasons for wanting to start the business
The prospective business owner might use a consumer surveys in one of the following stages of the market analysis. Which stage is it? a) analyzing the facts b) implementing an action plan c) gathering the facts d) organizing the facts
Analyzing the facts
which of the following is not one of the Five C's of Credit used by banks when deciding to make a loan? a) conditoins b) corporation c) capital d) character
Corporation
which of the following is not a question that a typical financing source would ask a business owner? a) how much money do you need b) what do you plan to use the money for c) how long before your business starts turning a profit? d) do you have a backup plan in case of a critical problem?
How long before your business starts turning a profit?
which of the following is not an important strategy in preparing an executive summary? a) include tables summarizing key financial information b) write it after the rest of the plan is completed c) answer all the fundamental questions about the business d) keep it short; limit it to no more than three pages
Include tables summarizing key financial information
which of the following is not key document that should be included in the financial forecasting section: a) cash flow statement b) income tax return c) income statement d) balance sheet
Income Tax Return
Insurance companies can provide financing to small businesses in which of the following ways: a) by making a loan to a small business b) by providing reduced cost insurance policies to new businesses c) by allowing an owner to borrow against the cashh value of their life insurance policy at a low interest rate d) both a and c
Both a and c
Which of the following statements is not true about the formation of a valid contract? a) an offer must be reasonably definite b) both parties must be bound c) capacity refers to knowledge of the subject of the contract d) contracts to perform illegal acts cannot be enforced
Capacity refers to knowledge of the subject of the contract
Which of the following benefits can be attained by creating and running a small business? a) competition b) risk of failure c) challenge d) laws and regulations
Challenge
Which of the following is not a common cause of small business failure a) fraud b) incompetence c) disaster d) communications breakdown
Communications breakdown
Which of the following is not an advantage of owning a small business? a) independence b) job security c) competition d) flexibility
Competition
which of the following is not a type of loan made by banks to small businesses? a) line of credit b) consignment c) accounts receivable loans d) collateral loans
Consignment
Which of the following is an example of a pressure that may arise in a family-owned business that is both within the family and within the business: a) continuity of family investment and involvement b) resolving issues raised by family members who are not employed by the company but have a stake in the company c) addressing requests from non family member workers who want a stake in the company's success d) responding to issues raised by the IRS or local government
Continuity of family investment and involvement
Contracts must always be in writing to be enforceable. True or False?
False
Which of the following is considered an intangible asset? a) oudated inventory b) accounts payable c) leasehold interest d) goodwill
Goodwill
Which of the following is not an advantage of owning a small business? a) it offers a high level of indpendence b) it appeals to people who prefer minimal flexibility in their schedules c) if offers an opportunity to provide jobs to family members d) it provides an opportunity to make more money than working for someone else
It appeals to people who prefer minimal flexibility in their schedules
Under the Federal bankruptcy laws, what type of bankruptcy is a Chapter 7 bankruptcy?
Liquidation
which of the following is not an advantage of a corporation? a) transfer of ownership b) more favorable tax rates c) limited liability for the ownerss d) all of the above
More favorable tax rates
Which of the following is not a reason why many family businesses may not have succession plans? a) owners are too busy keeping their businesses alive to plan for their own exit b) owners do not have any confidence in the offspring or relatives who are supposed to replace them c) owners do no want to spend the time to obtain the necessary governmental approvals d) owners do not see family perpetuity as a major concern
Owners do not want to spend the time to obtain the necessary governmental approvals
which of the following is not a requirement for receiving a small business administration loan: a) be of good character b) show the ability to operate a business successfullly c) have at least 3 letters of reference from other small business owners d) have enough capital in an existing frim so that, with an SBA loan, the business can operate on a sound financial basis
Show the ability to operate a business successfully
which of the following persons votes the board of directors into office? a) stockholders b) new president c) management of the business d) all of the above
The stockholders
which of the following are advantages of warehouse-receipt loans: a) they free up a small business from having to pay the cost of storing inventory in a warehouse b) they allow a businesss to operate with relatively small investment in working capital c) they are perfect for buying inventory that mst be sold quickly, such as food or perishable items d) all of the above
They allow a business to operate with a relatively small investment in working captial
Which of the following is not an essential contribution that small business make to the U.S. economy? a) they are sources of experimentation and innovation b) they allow their owners an abundance of lesiure time c) they create opportunities for women, minorities, and recent immigrants d) none of the above
They allow their owners an abundance of leisure time
which of the following are typical characteristics of angel investors: a)they usually prefer a hands off role with the businesses in which they invest b) they limit their investments to debt financing c) they are often experiened entrepreneurs d) all of the above
They are often experienced entrepreneurs
which of the following are typical for short-term loans: a) they are paid back in one month or less b) they are paid back in one year or less c) they are always backed by collateral d) both b and c
They are paid back in one year or less
Which of the following is not a characteristic of a small business, as defined by the Small Business Act of 1953: a) they are sources of experimentation and innovaton b) they are owned by only 5 or fewer people c) they are not dominant in their field of operation d) none of the above
They are sources of experimentation and innovation
Which of the following is not true about code of conducts? a) they are a written statement of ethical guidelines to which an enterprise adheres b) they are becoming more common in industry c) recent ones are more meaningful with regards to societal developments d) they describe only practices mandated by laws and regulations
They describe only practices mandated by laws and regulations
which of the following is an advantage of partnerships? a) they enjor increased access to credit and capital b) they offer all partners protection from unlimited liability d) they provide clear ways for a business to contiue operating even if one of the partners dies d) all of te above
They enjoy increased access to credit and capital
Which of the following is not a way that small businesses play an important role in the U.S. economy? a) they act as market demand "shock absorbers" b) they are more likely to employ less sklled workers c) they prevent the mobility of capital resources d) they purchase, use, and revitalize used capital equipment
They prevent the mobility of capital resources
According to the Council for Economic development, which of the following characterizes a typical small business: a) management is independent because the manager usuallly owns the firm b) capital is supplied by, and ownership is held by, one or a few individuals c) the area of operations is primarily local d) all of the above
all of the above
Information about which of the following should be included in the location section: a) local labor supply b) proximity to suppliers c) transportation options d) all of the above
all of the above
Setting realistic goals are an important part of every business plan. These goals should have which of the following features to be effective a) they must be specific b) they must be measurable c) they must be tied to deadlines e) all of the above
all of the above
Under federal bankruptcy laws, Which of the following is considered protected assets, also referred to as exempt assets? a) interest in a motor vehicle up to $2,400 b) professionally prescribed health ads c) interest in jewelry up to $1,000 d) all of the above
all of the above
What are some reasons that a company might want to regularly review and update its business plan: a) having an updated plan avilable often makes it easier to get quick financing b) an updated plan is a better resource if the company encounters challenges and needs solutions c) the plan might contain ideas yet to be implemented that might improve the business d) all of the above
all of the above
When considering a home-based business, which of the following steps should be considered to help assure maximizing the use of time? a) staying organized b) fight procrastination c) learn to be alone d) all of the above
all of the above
Which of the following areas should be covered in the action plan? a) the owner as a person b) the financial picture c) other key factors, such as marketing, insurance, building, etc d) all of the above
all of the above
Which of the following covers what small businesses do to complement large businesses? a) introduce new goods and services to the marketplace b) purchase, use, and revitalize used capital equipment c) help ensure the mobility of capital resources d) all of the above
all of the above
Which of the following is a common management trap that can lead to business failure? a) failute to diversify market b) absentee management c) lack of marketing research d) all of the above
all of the above
Which of the following is a duty of a principal? a) to compensate and reimburse b) to cooperate c) to provide safe working conditions d) all of the above
all of the above
Which of the following is a duty of an agent? a) to perform b) to notify and account c) to be loyal d) all of the above
all of the above
Which of the following is a misconception in our society regarding business and ethics: a) profit and morality are incompatible b) all ehtical problems have simple solutions c) ethics is simply a matter of complying with law and regulations d) all of the above
all of the above
Which of the following is a step in management by objective? a) compare results to objectives b) identify strategies c) review objectives with each employee d) all of the above
all of the above
Which of the following is a training method? a) structured discussion b) role playing c) programmed instruction d) all of the above
all of the above
Which of the following is a type of governmental regulation? a) environmental b) employment c) zoning e) all of the above
all of the above
Which of the following is an example of a diverse pressure that may arise in a family-owned business? a) continutiy of family investment and involvement b) addressing requests from non family member workers who demand a stake in the company's success c) responding to issues reaied by the IRS or local government d) all of the above
all of the above
Which of the following is an important issue that must be considered when developing a succession strategy? a) understanding the contextual aspects b) identifying successor qualities c) carrying out the succession plan d) all of the above
all of the above
Which of the following is essential of a contract? a) legality b) contractual capacity c) agreement d) all of the above
all of the above
Which of the following is one of the contextual aspects that contribute to an effective succession plan? a) time b) type of venture c) abilities of managers d) all of the above
all of the above
Which of the following is one of the three important steps in implementing a succession plan? a) groom an heir b) agree on the plan c) consider outside help d) all of the above
all of the above
Which of the following is what many home-based business operators used as an approach to select their business? a) solving a problem b) tapping a hidden talent c) using resources from the home d) all of the above
all of the above
Which of the following purpose can an effective appraisal systems serve? a) personal development b) reward c) motivation d) all of the above
all of the above
which of the following are characteristics of straight commerical loans? a) they are usually made for a period of 30-90 days b) they are generally based on a firms financial statements c) they are usually self liquidating d) all of the above
all of the above
which of the following are important characteristics of venture capital? a) the money is invested with the expectation of high risk b) the money is designed to meet the needs of the business receving the investment c) the investor typically wants to maintain an active role in the business receiving the investment d) all of the above
all of the above
which of the following features are effective in setting realistic goals as an important part of every business plan? a) they must be specific b) they must be measurable c) they must be tied to deadlines d) all of the above
all of the above
which of the following information should be included in the location section? a) proximity to suppliers b) transportation options c) local labor supply d) all of the above
all of the above
which of the following is a category that debt financing is divided into? a) short term loans b) intermediate term loans c) long term loans d) all of the above
all of the above
which of the following is a disadvantage of the corporate legal structure? a) it tends to have high organizational costs b) it allows less secrecy c) it is subject to more government regulation d) all of the above
all of the above
which of the following is an advantage of a limited liability company? a) profits pass through the company to the owners, who pay the taxes b) owners are allowed to participate fully in management activities c) the liability of woners is limited to the amount of their investment d) all of the above
all of the above
which of the following is an attribute of a typical joint venture? a) it is a legally recognized partnership between 2 or more companies b) they are usually treated like partnerships c) each member shares in the investment d) all of the above
all of the above
which of the following is likely to be included in a typical partnership agreement: a) the duties of each parnter b) rules for adding new parnters to the business c) division of the profits or losses d) all of the above
all of the above
which of the following is one of the four types of services commonly offered by state or local development companies? a) buying, developing, and selling industrial sites b) buying and building plants for lease or sale c) providing funds by direct intermediate or long term loans or by purchasing of stock in the business d) all of the above
all of the above
which of the following is typically seen in a partnership agreement? a) methods to be followed if original parnters withdraw b) division of the profitss or losses c) the division of assets in case the partnership dissolved d) all of the above
all of the above
which of the following loans are made by banks to small businesses? a) commercial loans b) term loans d) collateral loans e) all of the above
all of the above
which of the following should be included in the business description section of business plan? a) a brief history of the company b) description of product or service's unique qualities and value to consumers c) goals and milestones d) all of the above
all of the above
which of the following should be included in the management section? a) resumes of all key people in management b) description of the legal structure c) outline emplyee compensation d) all of the above
all of the above
which of the following things should be included in the management section a) information on how emplyees will be compensated b) resumes of all managers and key employees c) a description of the firm's legal structure d) all of the above
all of the above