ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT EXAM
100. One of the goals of change management is A. to obtain buy-in from stakeholders. B. to limit the effects of a change. C. to keep the people involved to a minimum. D. to reduce the time it takes to make a change.
A
12. During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025. The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over represents the owner's A. net profit. B. gross profit. C. sales income. D. operating expenses.
A
13. Non-corporations are taxed as pass-through entities, meaning that A. profits and losses are claimed on owners' personal tax returns. B. they do not have to pay payroll taxes. C. their income tax rates are lower than those of corporations. D. they pay only state and local taxes.
A
36. When determining financing needs, what factor should businesses consider that will help decide whether they can repay the debt? A. Liquidity B. Depreciation C. Equity D. Inventory
A
46. When a supervisor evaluates an employee's performance, the evaluation should be based on the __________ standards. A. organization's B. supervisor's C. competition's D. employee's
A
1. Which of the following is a type of intangible business property that is protected by law: A. Acreage B. Inventory C. Trademark D. Equipment
C
19. The future that you desire to create is known as a A. mission statement. B. goal. C. prediction. D. vision.
D
32. Which of the following is an example of an intangible asset: A. Equipment B. Inventory C. Office building D. Accounts receivable
D
14. Which of the following activities is an example of preparing before attempting to sell an idea: A. Explaining solutions to audience needs B. Determining the details of your idea C. Overcoming objections from the audience D. Affirming the audience's decision to "buy"
B
15. Managers are more likely to be able to persuade employees to follow new procedures if the managers have A. organizational skills. B. credibility. C. enthusiasm. D. self-motivation.
B
17. After writing your personal vision, what must you do to achieve it? A. Commit to your vision through hard work and dedication. B. Put your vision in a safe space and look at it again in five years. C. Get the highest-paying job that you can find out of high school. D. Spend all of your free time working on self-improvement.
A
18. Ryan keeps a list of his goals to remind himself of what he's working toward. Which tip for smart goal setting is Ryan following? A. Putting goals in writing B. Tying goals to a timetable C. Making goals specific D. Making goals difficult but possible
A
20. The entrepreneurial discovery process that involves finding a way to meet an existing demand by inventing new products from available resources is based on A. science. B. medicine. C. psychology. D. physics.
A
37. Which of the following 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: A. Being charged a penalty B. Losing interest on the account C. Paying a processing fee D. Receiving a variable rate
A
47. Which of the following is one way that businesses use marketing information: A. To predict change B. To analyze data C. To develop surveys D. To conduct research
A
49. Which of the following is an example of a durable good: A. House B. Haircut C. Gasoline D. Hamburger
A
71. Which of the following situations describes a business process changing due to technological factors: A. A manufacturing company purchases a new software program to run its machines. B. A small general store offers more discounts to compete with a new shopping mall. C. A waste treatment plant changes its disposal method to align with environmental law. D. A family-owned restaurant opens a second location in an effort to expand its brand.
A
77. An organization should include independent members on its board of directors because they A. provide an objective perspective. B. represent the interests of management. C. understand the company's inner workings. D. are less likely to act unethically.
A
8. What do business employees often need to do before they are able to write proposals? A. Research the problem B. Analyze personal biases C. Contact the customer D. Evaluate technical skills
A
81. Terry, a company buyer, has the job of choosing a particular assortment of products that will meet the market's needs and the company's goals. Terry is responsible for the company's product A. mix. B. item. C. line. D. sales.
A
85. Ariel, who designs and sells a line of purses and tote bags, recently sent free totes bag to local female news anchors. Ariel's goal is to have others see the local celebrities carrying the tote bags to generate interest in her product. What form of word-of-mouth marketing is Ariel using? A. Product seeding B. Celebrity testimonial C. Cause marketing D. Social media applications
A
87. Samples, premiums, and advertising specialties are examples of __________ used in sales promotion. A. communications channels B. publicity strategies C. marketing activities D. selling techniques
A
88. Why do some businesses sponsor local events? A. To obtain publicity B. To create news C. To generate revenue D. To sell products
A
67. To effectively manage a supply chain, companies should A. introduce frequent changes to the production process. B. ignore underperforming suppliers and distributors. C. monitor the performance of all supply chain partners. D. launch new products through multiple suppliers.
C
7. If a business considers where the consumers are and who they are before selecting a channel of distribution, the business is considering the __________ factor. A. human B. promotion C. market D. sales
C
82. A business manager who wants to increase the number of items the business offers needs to decide whether the new items will be compatible with the business's A. level of service. B. patronage motives. C. current product mix. D. advertising objectives.
C
86. An advantage to using direct marketing to communicate product information is that the business can A. expect a majority of recipients to respond to the message. B. effectively appeal to a mass audience. C. customize the messages. D. save money by personalizing offers.
C
92. Which of the following is a potential risk of implementing enterprise risk management (ERM) software: A. Standardization of reporting B. More emphasis on risk C. Loss of data during the transfer D. Less efficient use of resources
C
25. To determine their human resource needs, new business owners often find it helpful to A. list all the tasks involved in operating the business. B. ask a technical recruiter for advice. C. hire consultants or freelancers. D. allocate funds for additional payroll taxes.
A
27. Which of the following statements is true about new venture risk-taking: A. When an entrepreneur seeks a high profit, the risk is usually higher. B. When the entrepreneur seeks to limit risk, the reward tends to increase. C. An entrepreneur's financial risk is not closely related to rewards. D. The entrepreneur who does not care about profit is a high risk-taker.
A
11. Which of the following is one way that freedom in a private enterprise system is limited by laws: A. Certain occupations must be licensed. B. All workers must take ability tests. C. Specific pay scales are regulated. D. Employees must register with the state.
A
24. If an entrepreneur obtains a commercial bank loan to finance a new venture, s/he is often required to A. provide collateral. B. close savings accounts. C. relinquish contracts. D. charge the prime-interest rate.
A
31. Determine if the following statement is true or false: When developing an exit strategy for an entrepreneurial venture, the most important consideration is finding a suitable buyer. A. False, there are many factors to consider, such as company valuation and personal goals. B. True, if the buyer is inexperienced, the business risks monetary losses and long-term failure. C. False, the most important factor that an entrepreneur should consider is profitability. D. True, the valuation of a business is dependent on the buyer's financial resources.
A
55. Which of the following is a strategy for linking performance measures to financial outcomes: A. Analyzing click-through rates B. Developing advertising budgets C. Paying for direct-mail pieces D. Maintaining sales receipts
A
6. For which of the following markets would producers use a short channel of distribution: A. Local consumers B. Generation X C. Baby boomers D. Senior citizens
A
63. Which of the following is an example of a fixed operating expense: A. Insurance B. Sales commissions C. Advertising D. Travel expenses
A
65. Which of the following should a business consider when negotiating a service or maintenance contract on a piece of equipment: A. Does the cost of the contract exceed the cost of possible repairs? B. Is training and technical assistance available? C. How much profit does the seller make on the contract? D. Does the equipment require installation?
A
89. Which of the following are public relations activities: A. Writing press releases, distributing company newsletters, and sponsoring events B. Holding press conferences, identifying trends, and hiring new staff members C. Sponsoring events, developing new products, and distributing company newsletters D. Identifying trends, writing press releases, and hiring new staff members
A
90. The cost of employing product inspectors is a(n) A. appraisal cost. B. prevention cost. C. internal failure cost. D. external failure cost.
A
99. Which of the following employees would most likely be described as "innovative" by his/her supervisor: A. Jake, because he is always willing to adapt to changes during a project B. Madison, because she prefers to stick to traditional ideas and processes C. Elizabeth, because she gets frustrated when she needs to learn new skills D. Anthony, because he is usually quiet during brainstorming sessions
A
21. Dan is in the process of determining the types of computer software and telephone service that will best suit his new business and get it up and running. Dan is considering his business's A. financial constraints. B. technical needs. C. competitive advantage. D. staffing requirements.
B
16. Ali wants to negotiate with her boss to take on more job responsibilities. Before approaching her boss, Ali needs to determine her boss's position and A. abilities. B. interests. C. standards. D. procedures.
B
22. Which of the following statements is true about business startup requirements: A. New business owners usually need to register for patent protection. B. The financial needs to start a new business depend on the nature of the venture. C. Purchasing a franchise is usually easy and inexpensive for startup business owners. D. Equipment is the least expensive requirement for a startup business.
B
23. Why is it important for entrepreneurs to talk with industry experts when developing new business concepts? A. The industry experts usually improve your management skills. B. The industry experts typically provide useful information. C. The industry experts commonly enhance your confidence. D. The industry experts frequently offer financial support.
B
33. Which of the following is a characteristic of a profit-and-loss statement: A. Is the same as a balance sheet B. Summarizes expenses and revenue from sales C. Shows the owner's financial position D. Lists assets and liabilities
B
34. In managerial accounting, the number of hours that a business runs its machinery during the production process is classified as a(n) A. production output. B. cost driver. C. unexpected expense. D. inflexible transaction.
B
35. Businesses often obtain cash to produce and sell goods by borrowing against their A. current liabilities. B. accounts receivable. C. operating expenses. D. promissory notes.
B
39. Which of the following payback periods in a cost/benefit analysis would businesses prefer if all other things were equal: A. 2 years B. 1 year C. 3 years D. 4 years
B
41. Ethan is developing common-size financial statements so that he can compare financial performance across several different companies. Ethan is conducting __________ analysis. A. horizontal B. vertical C. ratio D. trend
B
45. Why is it often necessary to provide employees with additional training? A. To increase socialization B. To improve performance C. To analyze diversity D. To identify sensitivity
B
52. Products that appeal to the majority of customers are often sold through __________ marketing efforts. A. segmented B. mass C. demographic D. psychographic
B
53. An important part of a market analysis involves collecting __________ information. A. confidential B. geographic C. employee D. property
B
56. What type of software do many businesses require be installed on computer systems as a security feature? A. Reality B. Firewall C. Spider D. Media
B
58. Which of the following is most likely to be a dynamic element of a business's external environment: A. Decrease in personnel B. Increase in competition C. Renewed emphasis on training D. New quality control measures
B
59. James needs to hire a bookkeeper for his growing business. To determine the new employee's salary, James obtained pay data from five companies in his industry that are similar in size. The research indicated the following: Company A pays $31,205: Company B pays $29,995: Company C pays $34,800: Company D pays $42,500: and Company E pays $36,500. James decided to set his bookkeeper's salary at $35,000. What measure of central tendency did James use to set his new employee's salary? A. Mode B. Mean C. Range D. Median
B
3. Which of the following is a characteristic of a business-format franchise: A. The name of the business is chosen by the franchisee. B. Products are bought directly from the supplier. C. It is the least popular franchise arrangement. D. Continuous assistance is provided by the franchisor.
D
60. Hill Industries uses specific criteria to evaluate vendor performance, including on-time delivery rate, return rate, and number of customer complaints. These metrics are also known as A. consensus scales. B. performance indicators. C. economic indicators. D. return on capital.
B
62. What is often the role of management in the achievement of quality in a business? A. To assign blame B. To lead the effort C. To judge the staff D. To eliminate conflict
B
64. What information does a business always need to have when it conducts a break-even analysis? A. Fixed costs and depreciation rates B. Variable costs and fixed costs C. Production time and variable costs D. Production time and depreciation rates
B
66. Which of the following is a situation in which a business could use the budget information to make operating changes: A. Total revenues exceed projected costs. B. Estimated sales exceed actual sales. C. Expected profits are increasing. D. Accounts receivable are on target.
B
68. An employee is comparing income statements from the past three years to evaluate changes and trends in the business's revenue. What type of business analysis is the employee conducting? A. Production B. Financial C. Information management D. Sales
B
69. Before assigning a new project to her employees, Joanna establishes the steps that her staff needs to take to complete the project. Joanna is utilizing A. human resource planning. B. business process thinking. C. agile project management. D. change management.
B
70. A manufacturing company is required by the local government to dispose of its waste in an environmentally safe way. This is an example of how process design can be affected by __________ factors. A. human B. regulatory C. technological D. natural
B
76. What is the relationship between shareholders and the board of directors? A. The shareholders pay dividends to the board of directors. B. The board of directors represents the shareholders. C. The shareholders make decisions for the board of directors. D. The board of directors holds the shareholders accountable.
B
78. When buyers and sellers have agreed on a value for a product, they have established the A. price policy. B. exchange price. C. equilibrium price. D. price line.
B
79. True or false: In determining the selling price of a good or service, most of the factors to be considered by the seller are internal to the business. A. True, most factors affecting price are internal to the business. B. False, most factors affecting price are not controlled by the firm. C. True, most factors affecting price are directly controlled by the business. D. False, most factors affecting price are directly controlled by the business.
B
80. A product idea is feasible if it A. meets sales quotas. B. creates a competitive advantage. C. costs a lot to produce. D. is a durable good.
B
83. What do many businesses identify and strive to improve in order to attract customers and be competitive? A. Commission plans B. Service standards C. Personal characteristics D. Operating quotas
B
9. Which of the following is an example of a manager developing a policy that impacts customer relations: A. Increasing use of security devices B. Extending business hours on weekends C. Revising bookkeeping procedures D. Scheduling employees' work hours
B
91. Because __________ measures of risk can be too general, it is also useful to perform __________ assessment of risk. A. quantitative: qualitative B. qualitative: quantitative C. preventative: responsive D. responsive: preventative
B
95. One way that managers can promote ethical behavior on the part of everyone in the business is by encouraging employees to A. develop a code of ethics. B. report unethical actions. C. be thoughtful of others. D. avoid social situations.
B
97. Which of the following pairs of businesses are examples of direct competitors: A. Ryan's Drugstore and Hally's Homemade Cards B. Hot n' Spicy Wings and Southern Fried Chicken House C. JTE Clothes Boutique and Carla's Hardware D. Modern Dry Cleaning and Trotterman Accounting Services
B
10. What should a successful brand promise be able to do? A. Customize the product for each customer B. Clarify the company's processes C. Communicate an appealing benefit D. Convey a high-quality image
C
30. By joining a community organization, such as the local chamber of commerce, an entrepreneur can network with others to A. evaluate personal skills and abilities. B. obtain selling experience. C. identify new venture opportunities. D. improve goods and services.
C
40. An example of an internal change that could affect a business's sales forecast is a change in the A. length of a national recession. B. number of competitors in the market. C. size of the sales force. D. levels of consumer spending.
C
42. Jana noticed a problem while reviewing her company's monthly income statement. She verified that the total revenue was $4,590 and the total expenses were $1,452. However, the income statement showed a net income total of $1,383. Which of the following reflects the correct net income: A. $3,381 B. $5,973 C. $3,138 D. $1,833
C
43. Why do interviewers usually focus on asking questions that are related to a job applicant's performance? A. To understand complaints B. To take remedial action C. To determine qualifications D. To plan future training
C
48. Which of the following is a characteristic of the data collection step in marketing research: A. The least expensive step in marketing research B. The least tedious step in marketing research C. The step in which the most mistakes are made D. The step that is most interesting to researchers
C
50. Motives, perception, attitude, lifestyle, personality, and abilities are __________ factors influencing consumer behavior. A. political B. social C. psychological D. economic
C
54. One reason why it is important to accurately forecast sales for a marketing plan is because the forecast is the basis of other A. business reports. B. pricing strategies. C. operational activities. D. management techniques.
C
57. The FPD Company keeps copies of its brochures, catalogs, and flyers on file for future reference. This is an example of a company that is maintaining __________ records. A. inventory B. legal C. promotional D. asset
C
96. The ski shop manager set an objective to increase sales by 10% over the previous year even though the forecast was for a mild and rainy winter. The manager's objective was A. reasonable. B. practical. C. unrealistic. D. scientific.
C
98. Which of the following is the most critical component of a business plan: A. Market analysis B. Company description C. Executive summary D. Financial plan
C
26. The type of capital resources that a startup business needs to begin operating usually depends on the A. vendors' lead time. B. location. C. owner's preferences. D. industry.
D
28. Small-business owners develop and use operating procedures so that everyday tasks are performed in a(n) __________ way. A. innovative B. imprecise C. diverse D. standard
D
29. To develop repeat business and customer loyalty, a business owner might A. update equipment. B. increase prices. C. ridicule the competition. D. offer a new service.
D
38. Why do lending institutions carefully evaluate how well a business meets certain criteria before making a loan? A. To improve relations B. To provide service C. To prevent theft D. To reduce risk
D
4. Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are considered advantages of a A. sole proprietorship. B. partnership. C. trade union. D. corporation.
D
44. If employees are fired because their conduct is in serious violation of company policies, they are being terminated for A. incompetence. B. performance. C. resigning. D. cause.
D
5. Channels of distribution benefit consumers by A. increasing profits for businesses. B. lowering the prices of all consumer products. C. raising the quality of all consumer products. D. making a variety of products available to them.
D
51. Business goals are accomplished by means of marketing A. salespeople. B. budgets. C. profit. D. strategies.
D
61. A business converts inputs into outputs through its __________ activities. A. accounting B. management C. marketing D. production
D
72. Which of the following is a true statement regarding the relationship between a business's supply chain management and its performance: A. Good supply chain management leads to unsustainable business practices. B. Good supply chain management leads to decreased value for the customer. C. Poor supply chain management can result in customer satisfaction. D. Poor supply chain management can result in customer dissatisfaction.
D
73. Chad is buying a new car. Although the first car is a great deal and a more practical choice, he just loves the look of the second car. As a result, he decides to purchase the second car. His decision is based on which of the following internal factors: A. Insight or intuition B. Experience C. Framing D. Emotion
D
74. Time management helps to reduce stress because it A. provides less time for rest and relaxation. B. increases feelings of pressure and tension. C. encourages procrastination in planning necessary activities. D. allows adequate time for personal and professional activities.
D
75. Who typically reviews and approves the guidelines for running a corporation, which are also known as corporate governance policies? A. The investors B. The shareholders C. The management team D. The board of directors
D
84. What type of promotional media is a business using when it sends out a postcard telling customers who recently purchased products that the business is adding a new line of products? A. Participative B. Sales letter C. Persuasive D. Direct mail
D
93. Salespersons should have good communication skills, but the sales presentation should not include too many __________ words. A. expressive B. picturesque C. personal D. technical
D
94. Which management function lays the groundwork for all of the other management functions? A. Directing B. Organizing C. Staffing D. Planning
D
Basic torts relating to businesses often involve disputes concerning A. emotional stress. B. assaults. C. defamation. D. contracts.
D
