Entrepreneurship 2 Tests

Jenny tried ABC peanut butter and now buys it regularly. This is an example of what type of consumer behavior?

Brand loyalty

Which software is required for a computer system to be able to access web data?

Browser

Businesses should view negotiation as a way to perform which activity?

Build strong relationships

A person who wants to start a new company and needs financial support should develop a business plan to present to which potential party?

Investors

What could entrepreneurs do to strengthen their businesses' relationship with their bankers?

Invite their bankers to visit their place of business

Why banks might be reluctant to lend money to a start-up business?

The start up has no record of repaying loans

What might result if a business has insufficient financing to meet unexpected major expenses?

Bankruptcy

Which is a common negotiating strategy?

Bargaining

What do businesses often need to do to continue operating when they experience negative cash flow?

Borrow funds

Businesses should organize their records in a systematic manner so that information can be in which situation?

Accessed when needed

Businesses often obtain cash to produce and sell goods by borrowing against which component?

Accounts receivable

A company received a shipment of raw materials. How would these materials would appear on an income statement?

As cost of goods sold

For what situation might a business need technical assistance to implement a new process?

Consumers and producers are borrowing more money

Which factor characterizes the growth phase of business cycles?

Consumers and producers are borrowing more money.

What type of software do many businesses require be installed on computer systems as a security feature?

Firewall

A business needing funds to purchase an expensive piece of equipment would apply for which type of credit?

Installment loan

What important factors should a small-business owner consider when deciding if he or she should hire an additional employee?

Necessary skills and affordability

Trade credit is a form of short-term financing for many businesses because it allows them to perform which activity?

Obtain goods for resale and pay for them later

A department received 200 beach towels in June and marked them to sell for $10.00 each. After a month, only 30 towels had sold and the department manager marked them down to $9.99. Within two days, over 50 of the beach towels had sold. What pricing technique has been used in this case?

Odd pricing

What strategy for pricing imitative new products should businesses avoid using?

Overcharging

Carson Manufacturing priced its Model 234A convection oven at 15% above production costs. What type of pricing objective did Carson set?

Target return

Businesses develop a quality culture by a combination of continuous improvement and which other component?

Teamwork

A business that has a short-term need for more employees should consider hiring which workers?

Temporary

Which is an example of a business paying property taxes?

The Bellman Corporation submits a $8,792 check to the government, which is based on the value of its office building.

Why would a business prepare a balance sheet?

To determine it's current financial situation

Why is it important for a business to identify its product's competitive advantage?

To develop an appropriate marketing strategy

Why does the Federal Reserve System raise interest rates?

To fight inflation

Why do businesses evaluate their relationships with banks?

To make sure the bank understands the business

Why do businesses establish specifications for selecting hardware and software systems?

To obtain systems that perform required functions

What is the primary goal of negotiation?

To reach an agreement

Why do lending institutions use loan evaluation criteria?

To reduce the possibility that the borrower will default on the loan

Why do businesses often try to develop a unique positioning concept for a new product?

To set it apart from competitors

Keeping reliable financial records helps businesses perform which action?

Track income and expenses

What would be part of a business's efforts toward risk management?

Training employees

What should be done first before trying to persuade others?

Understand the audience

In product-line pricing, high-end prices are used to influence the quality image of the line, while low-end prices are used for which activity?

Used as traffic-builders

Which is a risk that a business might face as a result of obtaining a long-term loan from a bank?

Variable interest rate increases

What should the first section of an executive summary contain?

a statement of the reports purpose

An entrepreneur who is starting a business would most likely contact a consulting agency to obtain assistance with which activity?

applying new technology

What advantages do small businesses accrue by participation in international trade?

finding new customers

Which is a barrier for businesses in the adoption of a quality culture?

focusing on quick fixes

Established businesses receive their primary flow of money from which source?

Sales

Which question would Allison ask herself when deciding if she should hire an assistant for her growing business?

"Does the workload require a full-time or part-time employee?"

Which question are businesses often asked during the process of applying for a loan?

"How will the money be used?"

Which is an example of a business's core values?

"We deal honestly and fairly with our customers and ourselves."

To emphasize value, a rental car company should use which tagline?

"We provide more for less."

How much start-up money will a new business need to cover costs for the first 10 weeks if it intends to hire one full-time employee at a weekly salary of $550, one part-time employee to work 20 hours a week at a rate of $12 an hour, and spend $600 a week on other expenses?

$13,900

A business has cash-on-hand of $15,000, accounts receivable of $25,000, and monthly operating expenses of $31,250. If the business expects to be paid only half of the accounts receivable this month, calculate its current financing needs.

$3,750

Calculate the start-up monies a business will need based on the following information: $5,400 for three months' rent, $3,750 for furniture and supplies, $825 for utilities for three months, $12,000 in working capital, and wages of $5,500 per month for three months.

$38,475

Which is considered to be a psychologically appealing price?

$4.50

Calculate the amount of additional capital a business needs to obtain in order to purchase a new piece of equipment that costs $250,000 if a bank will loan 75% of the price and the business has $20,000 in available cash.

$42,500

In which situation might a small business be able to reduce the premiums it pays for insurance coverage?

. Buys from its professional organization

Estimate a company's market share if its anticipated sales for the upcoming year amount to $465,895, and the industry's anticipated sales are $2,950,450.

0.16

2.0 The Dawson Company estimates sales of $650,525. If the estimate of total sales in the industry is $3,550,500, what is the estimated market share for the company?

0.18

A retailer purchased merchandise. The invoice, dated March 1, offers terms of a 1% discount if paid by March 11, or the full amount due with no discount if paid by March 31. How would these terms be expressed on the invoice?

1/10,n/30

Merchandise has been purchased with terms 2/10, n/30, and the invoice is dated April 13. By what date must the business pay the invoice in order to take advantage of the discount offered?

23- Apr

Which term of sale would provide the purchaser with the greatest immediate cash discount?

3/10, n/30 EOM

Nonprofit corporations do not need to repay funding that they receive through which organization?

A foundation offering a grant

A growing economy provides which benefit to producers and consumers?

A higher standard of living

An entrepreneur might discuss the concept for a new business with an industry expert when which situation happens?

A lack of knowledge or experience in the field

Because Connor is unaware how to prepare his start-up company's tax return, he decides to outsource the activity. To whom should he offer a contract for this service?

A licensed accountant

Which example reflects a situation that is most likely to use a by-product pricing strategy?

A lumber mill packages and distributes bark chips and sells them as landscaping mulch.

Businesses position products by sending marketing signals to influence customers' perceived satisfaction of these products. These marketing signals come from which components?

Advertising media, sales promotions, and packaging

Which is a true statement about elevator pitches?

An effective elevator pitch includes the business's competitive advantage.

Before providing financial support, lenders and investors typically require new ventures to provide pro forma income statements to evaluate what about the venture?

Anticipated profitability

Building permits may show up in which component of a business plan?

Appendices

When a business buys buildings, vehicles, and equipment, money is flowing out of the business to acquire which components?

Assets

Which are the categories that businesses use to summarize information on their balance sheets?

Assets, liabilities, equity

Bundle pricing is used to attract customers by packaging two or more related or complementary products together for which situation?

At a lower price than if purchased separately

An insufficient cash flow is one of the main causes of which situation?

Business failure

A small-business owner is trying to decide whether to rent or buy office furniture. The monthly rental is $275 per person, and there are six people who will need furniture. The cost of buying the furniture is $6,500 per person. What should be advised for the small-business owner to do?

Buy the furniture because rental costs will exceed the purchase price in 1.97 years.

How can a business determine whether it is more profitable this year than last year?

By comparing the income statement's net profit figures for those two years

A small business is having temporary financial problems. A risk that the business might encounter if it has a loan from a bank is the possibility that the bank will perform which activity?

Call for the loan

A business that sets a low price on a main product and high prices on the supplies needed to operate the main product is using which pricing strategy?

Captive-product

An invoice totaling $10,525 offers a 3% discount for payment within 15 days or a 2% discount for payment within 30 days. These are examples of which discounts?

Cash

A business that positions itself by emphasizing distribution expertise and efficiency is using which strategy?

Channel differentiation

Which are characteristics of a well-written executive summary?

Clear, concise, error-free

Persuasion is an important part of which function?

Communication

Which part of a business plan includes the history of the business?

Company description

2.0 Which touch points does a successful company often use to communicate its corporate brand to its target market?

Company website, sales calls, and trade shows

Some business records need to be maintained in secure locations because they contain which information?

Confidential

Before a business owner decides to hire a new employee, he or she must first perform which activity?

Consider the demand for the product

An individual with a higher income who pays a larger percentage of taxes on income than an individual with a lower income is in which type of tax system?

Contraction

When the demand for goods and services starts to fall and unemployment rises, the business cycle is in which phase?

Contraction

When a business decides to sell its products through franchise agreements, it is using which vertical marketing strategy?

Contractual

Which channel-management strategy involves a producer that owns its intermediaries?

Corporate Vertical Marketing System

Which do individuals usually need to be able to persuade others?

Credibility

Which would a bank consider when analyzing the personal financial statement of a prospective entrepreneur?

Credit report, personal tax returns, debts

A company considers hiring multigenerational and multicultural prospective employees. Which image does the company want to portray?

Culturally diverse

A business borrowing start-up money from a commercial bank is an example of which activity?

Debt financing

What is the most important factor for a west coast business to consider if it plans to use a supplier who is located in the same country on the east coast?

Delivery timeliness

What type of organizational structure is a business using if it groups employees according to the type of work they do?

Departmental

The government decides to pass a new law requiring certain standards of air cleanliness. They will levy a tax on production of automobiles that produce gas emissions above a certain limit. However, they provide tax incentives to automobile manufacturers for research and development of new cars with lower gas emissions. This is an example of which activity?

Direct controls

Which is an example of people using persuasion in business?

Distributing a report to company officers that recommends policy changes

How does a business estimate its percentage of market share in relation to its competitors?

Divides the business's sales by the total industry's sale

Which is an important question that a business should ask when selecting a vendor?

Does the vendor have the resources to consistently meet our business's needs?

Why would a business negotiate loans with the same bank where it maintains a checking account?

Due to an established relationship

Which is an example of current liabilities that a business should include in its balance sheet?

Employees salaries

When inflation levels are low, businesses often consider which activity?

Expanding operations

When inflation levels are low, businesses often consider which activity?

Expanding their business

Mary is seeking employment with a company that provides flexible working hours, on-site child care, and limited traveling. Which image would the company be portraying?

Family-Friendly

Which section of the business plan are cost estimates and the effect of each cost on the company?

Financial plan

A crucial part of creating a quality culture within a business involves encouraging all employees to perform which activity?

Find ways to improve

What advantages do small businesses accrue by participation in international trade?

Finding new customers

Which is a specification that a business might establish for selecting spreadsheet software programs?

Graphically display financial information

During the peak phase of a business cycle, a business could be expected to encounter which situation?

High prices

To many consumers, high prices are an indication of which situation?

High quality

The market-skimming pricing strategy is often used when a business is introducing which products or services?

High quality innovative products

A business conducts research so it can analyze market needs, which often includes which activity?

Identifying trends

Corporate branding provides a variety of products and product lines with which common factor?

Identity

By comparing the categories in an income statement, a business will be able to determine which status?

If it is spending too much on expenses

A business owner often has considerable influence when negotiating facility lease terms for which situation?

If the real estate market is saturated or slow

In the event of a power outage, a business has generators available, so it can continue operating and helping its customers. Where should the completed procedures for implementing the process be outlined?

In the contingency plan

What type of tax are businesses required to pay on the profits they earn?

Income

Which situation would an existing business need to obtain additional financing?

Increased sales create a need for more inventory.

If trends indicate that more competitors will enter a specific industry, existing businesses in the industry are most likely to respond by performing which activity?

Increasing promotion

What usually reduces the amount of the premium that a business pays for insurance?

Increasing the deductible from $500 to $1,000

Jane is developing a pro forma cash flow statement for her startup business. Which is external information that Jane can use to help estimate the startup business's cash inflows from sales?

Industry Analyses

Which is an example of an expense that a business would include in the operating-expenses category of an income statement?

Insurance payments

How does borrowing money to purchase a facility often result in a tax savings for a business?

Interest paid on a mortgage is tax deductible

What do businesses often negotiate with banks during the process of obtaining a loan?

Interest rate

What is a benefit of studying the external environmental factors of a business?

It can be a valuable forecasting tool.

Which statement is true about inflation?

It decreases the value of money

Which statement regarding risk management is true?

It involves taking calculated risks

Which is an advantage of a loan program provided by state or local development corporations?

It may offer small business loans at lower rates.

Why would a business owner consider developing a relationship with a virtual bank?

It might offer lower rates on loans

If a bank doubles its interest rates on loans, what will happen to the demand for money?

It will decrease

Which statement is true about inflation?

It will decrease the value of money

Stella and Corrine are employed by Barrington Enterprises. Both of the employees work in the accounts-receivable department and perform the same duties. Stella works Monday, Tuesday, and Wednesday morning, and Corrine works Wednesday afternoon, Thursday, and Friday. What staffing method is being used in this situation?

Job sharing

Which person would be able to help individuals choose a legal structure for their business, inform them of regulations and licenses, and help them apply for patents?

Lawyer

If trends indicate that the economy is moving toward a recession, a business is most likely to perform which activity?

Lay off workers

Who benefits the most when interest rates increase?

Lenders

Which is a factor that might make a business decide to buy rather than to lease a facility?

Long term cost

Joe's employees plugged the electrical cord for display lights into an old, worn extension cord. Joe instructed them to get a new heavy-duty cord. Joe is implementing which measures?

Loss prevention

An organization with a quality culture would have which executive-level managers?

Managers committed, involved, and take responsibility for quality.

Which is a disadvantage for a business frequently using promotional pricing to lower the base price of products?

Many consumers refuse to pay full price

A competitive analysis should be included in which component of the business plan?

Market analysis

It important for management to monitor all quality factors that affect business activities, so it can ensure that the company is performing which activity?

Meeting the customers expectation

Which is a characteristic of a good brand name?

Memorable

What should be listed as a long-term liability on a balance sheet?

Mortgage

Poor product development, unreliable manufacturing equipment, and product shortages are examples of which risks?

Operational

What does the management plan component of a business plan addresses?

Organizational resumes

A business that is introducing a new product and wants to obtain a large number of customers immediately might decide to use which pricing strategy?

Penetration

Which situation is a business paying more for insurance than it should?

Premium is $500 a year on property valued at $2,000.

Which step is necessary to the development of a job description?

Preparing a job analysis

What is a guideline to follow when completing a loan application?

Present in a positive manner but be honest

Which document can be informative for Sarah in evaluating her company's profitability?

Pro forma balance sheet

Which is an example of a corporate brand?

Proctor and Gamble

When determining its hiring needs, a business must first consider its financial status and which needs?

Productivity

John is trying to ensure that his business is attractive to potential employees. Which activity should he take?

Promote responsibility

Which statement regarding prospective risks is true?

Prospective risks have not happened before but could occur in the future.

Al is thinking about moving his company's headquarters to another city, which would be expensive but closer to the raw materials needed for manufacturing. What will be the benefit of moving?

Proximity

Rodney Corporation, a candy manufacturer, is using advertising and coupons to introduce the Wacky Bar, a new candy bar. What is the company trying to create about its brand?

Recognition

Because the economy was experiencing a rapid inflation rate and consumer spending fell, the NOP Manufacturing Company had to perform which activity?

Reduce its outputs

Communicating the core values of products is an effective way to perform which activity?

Reinforce a business's image

One of the most important reasons why management often focuses on improving quality throughout the organization is to achieve which goal?

Remain competitive

When a nation's inflation rate is low, what do prices tend to do?

Remain stable

Which are examples of cash outflows?

Rent, utilities, and supplies

It is important for a business to evaluate the financial condition of a potential vendor during the vendor selection process to assess which component?

Risk levels of doing business with the vendor

One procedure for determining future hiring needs involves analyzing which component?

Sales volume

One reason why banks often consider a business's collateral when evaluating a loan application is because the collateral is which component?

Secondary source for repaying the loan

To avoid triggering intense price competition that erodes profits and rewards customers for ignoring value, when should businesses should use penetration pricing?

Selectively

Which is an example of a business obtaining funds through equity financing?

Selling stock to investors

Which statement regarding executive summaries is true?

Sequence the main ideas the executive summary in the same order that they appear in the full report.

Which type of credit might business owners obtain in order to purchase seasonal goods for resale?

Short-term loans

When determining start-up financing needs, a new business owner should consider the amount of money that will be needed to pay which component?

Short-term operating expenses

Which technique helps to build trust in negotiations?

Show respect by actively listening

When negotiating a lease with a commercial property company, a small-business owner should consider issues such as building maintenance, exterior landscaping, and which other factors?

Signage restrictions

An important aspect of continuous quality improvement within an entire business organization requires management to perform which activity?

Solicit input from employees

When a business owner temporarily lowers prices for select items and places advertisements in local newspapers to announce the sale, which promotional pricing strategy is being used?

Special- event

retailer reduces prices by 20% on much of its stock during a one-day Columbus Day Special. The purpose of these markdowns is to achieve which goal?

Stimulate storewide sales

Which type of information can be obtained from a business's organizational chart?

The chain of command

Recently, a finance manager moved to another state, and the marketing director left to start a new business. None of the company's remaining employees have the necessary skills and knowledge to take over the job vacancies. How may this problem have been avoided?

The development of a succession plan

Which is an example of a technological trend that would affect business?

The expanded use of computers

Why should managers understand the external environmental factors of business?

The factors affect the direction a business takes.

When developing an executive summary for a written report, what should the writer include?

The most important points

What does the bottom line on a business's income statement indicate?

The net income

If interest rates go down, which situation would most likely occur?

The stock market will go up

When trying to persuade others, why is it often helpful to use stories and anecdotes?

They reinforce a message

What is one advantage of dealing with independent insurance agents?

They represent several companies

Why is it important for businesses to develop standards?

To achieve quality by providing employees with guidelines to follow

Why is it important for a business to communicate the core values of its products?

To appeal to the target market

Which is the most important question that a business considers when positioning its products?

What product benefit does the target market find most appealing?

Besides having a clear understanding of what is wanted from negotiation, it is important to also know which other factor?

What the other person wants

When do businesses often decide to purchase a facility rather than lease space?

When interest rates are low

2.0 Buying bargains can make customers feel as though they are which type of shopper?

Wise

Which is a risk a business might face if it obtains a long-term loan from a financial institution and pays off the loan before it is due?

being charged a penalty

To open a new business, an entrepreneur often needs to purchase inventory and equipment. What are these commonly called?

capital resources

What is the process of grouping various jobs according to certain characteristics?

classification

A business that offers the best service in the industry usually has which attribute?

competitive advantage

2.0 What will exist if there is a real market opportunity?

demand

Although hiring a highly skilled employee is an added expense, a business owner benefits because the employee's activities increase the firm's overall productivity based on which attribute?

expertise

The ultimate objective of the business in using brand names or slogans is to achieve which goal?

encourage sales

Where do many businesses finance the purchase of goods and services for resale?

from suppliers

Existing businesses need to provide what kind of data in the financial plan component of their business plans?

historical financial data

Copyrights and trademarks are examples of which record

legal

A business that sells an item at cost in the hope of attracting many customers who will buy other products is using which pricing?

loss-leader

A new business owner is applying for start-up funds from a commercial bank. What should the owner include in the loan application?

personal financial statement

One of the purposes of developing a business plan is to perform which action for the business?

provide direction

Which component of the business plan sets specific assignments and deadlines for putting the plan into action?

strategy and implementation

Why do businesses organize employees according to some type of specific structure?

to assign responsibilities

What is one of the major purposes of a job description?

to outline specific job tasks

Why do many businesses use the computer technology known as dashboards and scorecards?

to track key performance indicators