Entrepreneurship Final
49) To launch a successful Web site, business owners should consider:
A) a simple design that is easy to navigate.
65) A valuable method of preventing online fraud is to:
A) ask customers for their card verification value.
8) In general, entrepreneurs should ________ head-to-head price competition with firms that can more easily achieve lower prices through lower cost structures.
A) avoid
58) A measurement of the cost a company incurs to generate each purchase or customer registration is the:
A) cost per acquisition, or CPA.
12) The intentional and targeted promotion of a Web site is:
A) critical to online success.
46) Perhaps the best domain name is one that:
A) customers can easily guess if they know the company's name.
3) A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the:
A) extra value, convenience, service, and quality they offer their customers.
52) The pages on which visitors land after they click on a sponsored link in a search engine, e-mail ad, or online ad are referred to as:
A) landing pages.
38) A Web site or an application that combines content from multiple sources is a:
A) mashup.
55) The purchase funnel identifies ways to improve the online shopping experience. The process begins with ________ and ends with ________ .
A) promoting an online presence; a streamlined checkout process
1) One of the most valuable attributes of the Web is the ability to:
A) provide companies with instantaneous customer feedback.
28) Rather than trying to compete head to head with the dominant players on the Web with greater access to resources, entrepreneurs should consider focusing on:
A) serving a market niche.
23) The single most common reason for abandoning online shopping carts is:
A) shipping and handling charges were too high
24) Once a company has invested time and money developing a unique new product, in order to recoup some of the high R&D costs, they will likely use a:
A) skimming pricing strategy.
30) Customers will typically welcome well-constructed permission e-mail that directs them to company sites for information or special deals, unlike unsolicited and universally despised e-mail known as:
A) spam.
8) To avoid unpleasant surprises in launching an e-commerce effort an entrepreneur should:
A) test the Web site with real customers to make sure it is easy to navigate.
18) The entrepreneurs who are proving to be the most successful in e-commerce are those who know how:
A) their industries work, inside and out.
68) The Justice Department estimates that more than 20 percent of the cases customers have filed under the Americans with Disabilities Act involved changes the business owners could have made at a cost of:
A) $0.
44) Pandecker, Inc., estimates the variable costs of producing one unit to be $11.26. The company plans to produce 26,500 units. The fixed costs the company expects to incur are $82,770. What is Pandecker's break-even selling price?
A) $14.38
33) The index of retail saturation for site #2 is:
A) $164.27.
14) You are to prepare a projected income statement for a proposed business venture. Your desired income is $28,000 and you have the following published statistics: Costs of goods sold = 56.9 percent of net sales Operating expenses = 37.1 percent of net sales Gross profit margin = 43.1 percent of net sales. This information indicates the net sales on your pro forma "P & L" (income statement) would be:
A) $466,667.
39) Sarah's Smart Shop has an inventory turnover ratio of 3 times per year and an average inventory of $156,000. If Sarah could manage her inventory better and increase the number of turnovers to the industry average of 6 times per year, what average inventory would she need to generate the same level of sales?
A) $78,000
24) Less than ________ percent of all U.S. companies are publicly held corporations.
A) 1
43) Only about ________ percent of a typical business' inventory turns over quickly.
A) 20
20) Effective interviewers spend about ________ percent of the interview talking and ________ percent listening.
A) 25; 75
41) If the accounting period is one year with credit sales totaling $2,500,000 and accounts receivable totaling $200,000, what is the average collection period ratio?
A) 29.2 days
90) Factors typically discount ________ percent of the face value of a company's accounts receivable.
A) 5 - 40
34) According to the American Collector's Association, only ________ of accounts more than 90 days delinquent will be paid voluntarily.
A) 5 percent
50) Port Royal's profit margin on sales is:
A) 5.2 percent.
55) Almost ________ percent of business founders intend to pass theirs on to their children; however, only ________ percent have created a formal management succession plan.
A) 81; 47
61) The National Business Incubation Association reports that ________ percent of the companies that have graduated from a incubator stay in the local community.
A) 84
56) As of 2003, the World Trade Organization (WTO) had 155 member countries that represent over ________ of all world trade.
A) 97 percent
45) The Tanning Parlor is in the middle of the busy season. Owner Sunny Bright has hired extra help and encountered some unexpected repairs that have left her short of operating capital. What type of financing would Sunny most likely use in this situation?
A) A line of credit
52) Which of the following businesses would be most likely to offer installment credit to its customers?
A) A retailer of major appliances
7) ________ are those items of value the business owns; ________ are those things the business owes.
A) Assets; liabilities
58) The North American Free Trade Agreement (NAFTA) created a free trade area among:
A) Canada, Mexico, and the United States.
9) Which of the following is not true regarding the components of the income statement?
A) Cost of goods sold represents the total cost, excluding shipping, of the merchandise sold during the accounting period.
23) ________ is a transaction in which a company selling goods and services in a foreign market agrees to help promote investment and trade in that country.
A) Countertrading
33) Which ratio would best give an owner an indication that the business is undercapitalized?
A) Debt-to-net worth
14) Jane is arguing with Joan about how much cash their small retail outlet needs as they prepare their cash budget. Jane feels that with the Christmas season coming, their busiest time, they need more cash available while Joan feels they do not because their sales volume will be up significantly. Jane and Joan are discussing which step of the cash budgeting process?
A) Determining an adequate minimum cash balance
85) For small businesses going global, the SBA offers this program with a one-page loan application and a response time normally within 10 days.
A) Export Working Capital (EWC) Program
45) Malcolm won a contract to provide nuts, bolts, and washers to a small African country's military. Unfortunately, neither his bankers nor venture capitalists would provide the loans needed to buy the material to produce the order. The bank did not do international loans. Which barrier to international trade is Malcolm experiencing?
A) Financing
59) Which of the following do incubators offer their tenants?
A) Flexible rental space at discounted market rates
34) Based on the above calculations, what is the entrepreneur's best option?
A) He should choose site #1.
8) Cost of goods sold is located on which financial statement?
A) Income statement
9) ________ act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis.
A) Manufacturers' export agents
36) ________ is the difference between the cost of a product or service and its selling price.
A) Markup
84) ________ were created by the SBA to provide loans under $100,000 that are normally shunned by banks.
A) Microloans
28) An important source of credit information that collects information on small businesses that other reporting services ignore is:
A) National Association of Credit Management.
74) The ________ awards cash grants or long-term contracts to small companies that want to initiate or to expand their research and development efforts and give the opportunity to attract early-stage capital investments without having to give up significant equity or take on burdensome levels of debt.
A) SBIR
6) ________, published annually, provides a detailed breakdown of population, retail sales, spendable income, and other characteristics for census regions, states, metropolitan areas, counties, and cities. It also includes analyses of changes in metro markets, descriptions of newspaper and TV markets, and summaries of sales of certain merchandise.
A) The Survey of Buying Power
59) During the transfer of power, how should the owner deal with company problems and mistakes the successor makes?
A) Use them as a means for teaching.
66) Private placements of debt offer all but which of the following advantages?
A) Variable interest rates
68) The area labeled ________ is the "loss area."
A) W
2) The location has far-reaching ramifications, such as high-tech companies that need:
A) a highly skilled work force.
41) A reliable cost accounting system is necessary for accurate pricing. The traditional method of product costing, where the costs of direct materials, direct labor, and factory overhead are included in a finished product's total cost is called ________.
A) absorption costing
33) One of the biggest barriers to small business exports is lack of:
A) access to adequate financing.
32) The second step to creating a sound export strategy involves:
A) analyzing the product or service.
11) The largest single source of external equity capital for small businesses is:
A) angels.
50) The most common method used by commercial finance companies to provide credit to small businesses is:
A) asset based.
5) The first section of a balance sheet lists:
A) assets.
3) The ________ represents a "snapshot" of a business, showing an estimate of its value on a given date, while the ________ is a "moving picture" of the firm's profitability over time.
A) balance sheet; income statement
36) A ________ is a document an exporter draws on a foreign buyer, requiring the buyer to pay the face amount, either on sight or on a specified date, once the goods are shipped.
A) bank draft
27) Nance Technologies, Inc., has agreed to sell some of its computers to a company in Bascovina, a country whose currency is worthless outside its own borders. As part of the agreement, Nance will sell the foreign customer its computers in exchange for a specified number of tons of coffee, a major export of Bascovina. Nance has already arranged to sell the coffee to a major processor for a set price in U.S. dollars. Nance has engaged in:
A) bartering.
35) A technique in which a company uses the revenues from the sale of those products that were once considered as waste to be more competitive in pricing their main product is:
A) by-product pricing
5) More companies fail for the lack of ________ than for the lack of ________.
A) cash; profit
1) Entrepreneurs needing between $100,000 and $3 million in the current financial environment will likely find acquiring financing to be:
A) challenging.
28) The single most important ingredient in making a successful public offering is:
A) choosing a capable underwriter.
38) For small businesses, ________ are the very heart of the financial market, providing the greatest number and variety of loans to small companies.
A) commercial banks
10) A method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on specialized Web sites and raise money from ordinary people who invest as little as $100 is called:
A) crowd funding.
31) The ________ ratio measures the percentage of total assets financed by a small company's creditors compared to its owners.
A) debt
34) The higher the ________ ratio, the lower the degree of protection afforded creditors, and the closer creditors' interest approaches the owner's interest.
A) debt-to-net worth
95) Entrepreneurs have access to two different types of capital, ________ and ________ .
A) debt; equity
20) When estimating the firm's end-of-month cash balance, the owner should first:
A) determine the cash balance at the beginning of the month.
92) An arrangement in which materials do not move down a production line but rather, because of their weight, size, or build, are assembled on the spot is called a ________ layout.
A) fixed position
14) In a(n) ________, a domestic small business forms an alliance with a company in the target nation for the purpose of exporting to that market.
A) foreign joint venture
41) The most frequently encountered impediment to international trade for small and medium-sized service firms is:
A) foreign sales not sufficiently profitable.
35) The Fair Debt Collection Practices Act prohibits business owners from:
A) harassing people who are past due.
65) Entrances should invite entry. The way to accomplish this is to:
A) have wide entryways and attractive displays set back from the doorway that can lure customers into the store.
7) Questions like "What are you deeply passionate about?", "What can you be the best in the world at?" and "What drives your economic engine?" are important to define your ________, according to the work of Jim Collins.
A) hedgehog concept
44) When creating a Web site, the goal is to create a design:
A) in which customers "see themselves" when they visit.
14) The general trend of angel financing is that it has ________ as a source of capital for entrepreneurs over the past 9 years.
A) increased
48) The fee that banks collect from retailers whenever customers use a credit or a debit card to pay for a purchase is known as the:
A) interchange fee.
92) Factoring:
A) is a more expensive method of financing than borrowing from a bank.
12) A ________ is the process by which a company determines the duties and the nature of the jobs to be filled and the skills and experience required of the people who are to fill them.
A) job analysis
13) Luisa, the director of human resources, is discussing the duties and responsibilities of a new position and its working conditions with Delmar, the manager over the position. Luisa and Delmar are discussing a:
A) job description.
33) The type of job design that breaks work down into its simplest form and standardizes tasks is known as:
A) job simplification.
15) A ________ identifies the duties and responsibilities of a position and its working conditions, while a ________ identifies the qualifications required of the job candidate in terms of skills, education, and experience needed.
A) job specification; job description
76) In addition to the layout of the store, behavioral experts recommend that retailers consider the impacts of ________ , ________ and ________ on customer behavior.
A) lighting; sound; scent
65) A family limited partnership (FLP) is a strategy that allows business owning parents to transfer their company to their children and ________ their estate taxes while retaining control over the business.
A) lower
39) Entrepreneurs who are considering importing goods and services or outsourcing their manufacturing to foreign countries should begin by:
A) making sure that importing or outsourcing is right for their business.
11) Locating close to ________ is critical for manufacturers, service providers and other companies that will be competitive.
A) markets they plan to serve
32) A high debt ratio:
A) means that creditors provide a large percentage of the company's total financing.
43) The typical ________ is relatively small, contains from 3 to 12 stores, and serves a population that lives within a 10-minute drive.
A) neighborhood shopping center
48) The ________ ratio shows the portion of each sales dollar remaining after deducting all expenses.
A) net profit on sales
54) The ________ ratio measures the owner's rate of return on the investment in the business.
A) net profit to equity
12) When looking for an angel, the key is:
A) networking.
57) When building your management succession "survival kit,"
A) never assume your children want to take control of the business.
57) In inventory financing, a small business can typically borrow an amount equal to ________ percent of the inventory it pledges as collateral.
A) no more than 50
44) Many nations have lowered tariffs they impose on products and services brought into their border and rely on other:
A) nontariff structure as protectionist trade barriers.
26) A pricing technique that sets prices that always end in numbers like "99" for prices such as $9.99 and $19.99 is an example of:
A) odd pricing.
31) The formal underwriting agreement between the company and the underwriter is signed:
A) on the last day before the registration statement becomes effective.
46) A ________ combines the drawing strength of a large regional mall with the convenience of a neighborhood shopping center.
A) power center
76) When a bank proves the quality of its loan decisions to the SBA and becomes a ________ lender, the bank makes the final lending decision itself, subject to SBA review.
A) preferred
65) A ________ is a hybrid between a conventional loan and a bond; at its heart it is a bond, but its terms are tailored to the borrower's individual needs, as a loan would be.
A) private placement
70) The Americans with Disabilities Act:
A) protects disabled employees, job candidates, and customers.`D) All of the above
31) The first step to create a sound export strategy is to:
A) recognize that even the smallest companies and least experienced entrepreneurs have the potential to export.
32) Once a small business has established a firm written credit policy and has clearly communicated it, the next step in building an effective credit policy is to:
A) send invoices promptly.
6) A leadership style in which a leader takes on the role of a servant first and the role of a leader second is referred to as a ________ leader.
A) servant
18) A ________ interview is where the interviewer gives candidates a typical job-related situation to assess how they respond.
A) situational
40) In job enrichment, ________ is the degree to which a job requires a variety of different skills, talents, and activities from the worker.
A) skill variety
8) Entrepreneurs are most likely to give up more equity in their businesses in the ________ phase of their companies than in any other.
A) startup
49) Maria is excited about the new opportunity her company has offered her-she will be able to work from her home office with a company computer and a high speed internet connection while she spends time with her newborn son. This is possible because of the implementation of:
A) telecommuting.
72) Grants to small businesses made to strengthen the local economy in cities and towns that are considered economically distressed are made by:
A) the Department of Housing and Urban Development.
25) The biggest benefit of a public stock offering is:
A) the capital infusion the company receives.
25) If a job candidate files charges of employment discrimination against a company, the burden of proof in the case falls on:
A) the employer to prove that all pre-employment questions are job-related and nondiscriminatory.
42) The most common type of commercial bank loan granted to small businesses is:
A) the short-term loan.
13) On a projected income statement, a business owner's target income is:
A) the sum of a reasonable salary for the time spent running the business and a normal return on the amount invested in it.
52) A business should provide the owner with a reasonable rate of return based upon:
A) the time and money invested in the business.
35) Reilly's Law of Retail Gravitation:
A) uses the analogy of gravity to estimate the attractiveness of a particular business to potential customers.
26) A ________ is a special exemption to a zoning ordinance.
A) variance
83) In 2007, the SBA launched the Patriot Express loan program, which is designed to assist some of the nation's 25 million ________ who want to become entrepreneurs.
A) veterans and their spouses or widows
32) Optional product pricing involves selling the base product at:
A) what may be a "standard" margin and selling the options or accessories at a higher markup.
40) Some companies use ________ to encourage customers to participate in the design of their products, a process called ________ .
A) wikis; co-creation
91) Two important criteria for selecting and designing a production layout are:
A) worker effectiveness and material handling costs.
55) A checking account that never has idle funds-because it draws funds from an interest-bearing master account to cover checks written-is called a:
A) zero-balance account.
53) Rather than build the current year budget on increases from the previous year's budget, ________ evaluates the necessity of every item.
A) zero-based budgeting
60) A business founder relying on a lifetime gifting strategy to minimize the taxes on the estate she is passing on to her son can give him a maximum gift of ________ in company stock each year, tax exempt.
B) $13,000
32) The index of retail saturation for site #1 is:
B) $168.51.
15) Gaither Mack is preparing projected financial statements to include in the business plan he is preparing for the launch of a specialty retail store. Using published financial statistics, Mack finds that the typical net profit margin for a store like his is 7.3 percent. If Mack's target income for his first year of operation is $32,000, what level of sales must he achieve to reach it?
B) $438,356
79) Under the SBA's Patriot Express Program, the ceiling is ________ and the SBA guarantees up to ________ percent of the loan.
B) $500,000: 85
26) The cost to check a potential customer's credit at a reporting service starts at:
B) $85.
16) Michelle Becker's target income in her business for the upcoming year is $78,500. The company's gross profit margin averages 32.6 percent of sales, and its total operating expenses run 24.7 percent of sales. To achieve her target income, sales of Michelle's company should be:
B) $993,671.
18) The average venture capital firm screens about ________ investment proposals each year and ultimately invests in ________ of them.
B) 1,000; 1
25) Financial analysts suggest that a small business should maintain a current ratio of at least:
B) 2:1.
88) Disaster loans carry below-market interest rates and terms as long as ________ years
B) 30
29) According to the American Collectors Association, if a business is writing off more than ________ of its sales as bad debts, it needs to tighten its credit and collection policies.
B) 5 percent
19) Although there is no limit on the amount of stock it can buy, a typical venture capital firm will purchase less than ________ percent of the ownership in a small firm.
B) 50
26) Investment bankers who underwrite public stock offerings typically look for all but which of the following characteristics in a small company?
B) A solid position in a stable market
31) Which of the following statements about a company's culture is false?
B) As a company grows larger, its culture tends to remain constant.
21) Which of the following is not a recommended guideline for developing questions to ask candidates in job interviews?
B) Ask only questions calling for "yes or no" answers to avoid any controversy regarding the direction the job interview took; this way, you have better control of the situation.
25) ________, the exchange of goods and services for other goods and services, is one way of trading with countries that lack convertible currency.
B) Bartering
22) Which of the following best represents the three phases of an effective job interview?
B) Breaking the ice, asking informative questions, and selling the candidate on the company
55) ________ offer new businesses the protection of low-cost locations and a multitude of support services in an attempt to improve the companies' chances of success.
B) Business incubators
2) ________ is the most important, yet least productive, asset that a small business owns.
B) Cash
6) Which of the following measures a company's liquidity and its ability to pay its bills and other financial obligations on time?
B) Cash flow
7) A publication that reports on more than 120,000 places in the United States, many of which are not available through census data, and includes eleven economic indicators for major markets, is the:
B) Commercial Atlas and Marketing Guide.
28) ________ is the distinctive, unwritten code of conduct that governs the behavior, attitudes, relationships, and style of an organization.
B) Company culture
47) The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?
B) Floor planning
11) Which of the following is not a step in creating a cash budget?
B) Forecasting profits
42) Which of the following is true about inventory management for the small business owner?
B) Inventory is the largest capital investment for most businesses but few owners use any formal means for managing it.
40) Which of the following is/are true regarding cost-plus pricing?
B) It fails to consider competitors' prices appropriately.
62) ________ is the logical arrangement of the physical facilities in a business that contributes to efficient operations, increased productivity, and higher sales.
B) Layout
29) ________ ratios measure the extent to which an entrepreneur relies on debt capital rather than equity capital to finance a business.
B) Leverage
58) Most business incubator residents are engaged in which businesses?
B) Light manufacturing, service, or technology-related fields
30) Which of the following combinations of ratios would indicate that a company is financially mismanaged and is not a good credit risk?
B) Low liquidity; high leverage
37) Which of the following is not one of the three major advantages to establishing an international location?
B) Need for smaller staff
52) An American executive went to a foreign country to sign a business contract. While there, he found that there were numerous complex government regulations his company needed to meet before closing the deal. This executive was experiencing which barrier to international trade?
B) Political
46) ________ ratios indicate how efficiently the small firm is being managed.
B) Profitability
22) By planning cash needs ahead of time, a small business is able to achieve all but which of the following?
B) Provide the opportunity to forgo quantity and cash discounts.
15) Which of the following is not a characteristic of a typical angel investor?
B) Purchasing majority ownership in the company
86) The second most popular SBA loan program is the ________ and designed to encourage small businesses to purchase fixed assets, expand their facilities, and create jobs. :
B) Section 504 Certified Development Company Program.
59) Refer to the following information Smith Office Supply Industry Mean Current ratio 2.3 1.8 Quick ratio .4 .8 Average inventory turnover 2.0 3.9 Net sales-to-working capital 4.0 7.8 Debt-to-net worth ratio 3.0 1.7 Net profit to equity ratio 40.1 percent 22.2 percent Which of the following statements is most likely false?
B) Smith is sufficiently capitalized.
59) The North American Free Trade Agreement has which of the following provisions?
B) The elimination of tariffs on most goods
22) Which of the following is not a liquidity ratio?
B) Total asset turnover ratio
38) Mary's successful clothing store was located on the back edge of the parking lot of a large mall. She did not have to pay mall rents since she was not part of the mall, but drew many customers who parked at the mall and then noticed her store. The mall developers built a movie theater on the part of the parking lot directly in front of Mary's store, basically hiding her from most mall customers. After about six months, Mary's business dropped off so much she had to move. What retailer site selection criterion forced Mary to move?
B) Visibility
66) The area labeled ________ represents the firm's fixed expenses, while ________ represents its variable expenses.
B) X; Y
22) ________ is a system that divides a county or city into small cells or districts to control the use of land, buildings, and sites.
B) Zoning
11) Posting job openings on the Internet has proven to be:
B) a cost-effective method to attract candidates from other areas.
10) A resident buying office is:
B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there.
54) A company pledging its inventory, accounts receivables, or fixtures as collateral for a loan is using:
B) asset-based financing.
45) Exchanging goods and services for other goods and services, or ________, is an effective way for a small business to conserve cash.
B) bartering
49) The use of credit cards by consumers:
B) broadens a small company's customer base.
62) A loan from a stockbroker based on the stocks and bonds in the customer's portfolio:
B) can be "called" for payment in a matter of hours or days.
59) The percentage of shoppers who place at least one item in a shopping cart but never complete the transaction is called the:
B) cart abandonment rate.
66) The most common problem is the online transactions that customers dispute, referred to as:
B) chargebacks.
25) Job training for workers and reduced tax rates, to financial grants and loans, are examples of what some ________ offer as business ________ to locate in their jurisdictions.
B) cities; incentives
21) Geographic concentrations of interconnected companies, specialized suppliers, and service providers that are present in a region are called:
B) clusters.
44) A ________ contains from 12 to 50 stores and serves a population of 40,000 to 150,000 people.
B) community shopping center
24) The purpose of zoning regulations is to:
B) contain similar types of activities in suitable locations.
51) A successful Web site should include all of the following characteristics except:
B) continuous automated music that cannot be cut off.
47) Small companies have three options for selling to customers on credit:
B) credit cards, installment credit, and trade credit.
54) The ________ of a nation includes the belief, values, views, and mores that its inhabitants share.
B) culture
22) A pricing technique that sets different prices on the same products and services for different customers using the information that a company collects about its customers is called:
B) customized or dynamic pricing.
56) Incubator facilities are established in order to:
B) enhance economic development and diversify the local economy.
58) Financing through ________ is similar to trade credit and this source of financing offers reasonable credit terms with only a modest down payment with the balance financed over the life of the purchase.
B) equipment suppliers
73) The science of adapting work and working conditions to complement employees' strengths and to suit customers' needs is called:
B) ergonomics.
64) A(n) ________ attempts to minimize taxes on a family business passed from one generation to the next by creating two classes of stock-one for the parents (preferred voting stock), whose value is locked in, and another for the children (nonvoting common stock), whose value reflects the market value of the business.
B) estate freeze
91) Selling the small company's accounts receivable outright to another business is called:
B) factoring.
46) An arrangement under which employees work a normal number of hours with options regarding when they start and stop work is:
B) flextime.
47) Cora arrived at work at 7 a.m. today, and she will get off at 4 p.m. so that she can watch her son's soccer game. Her office mate, Emma, is not a "morning person" and usually arrives at the office at 10 a.m. and gets off at 7 p.m. Their company uses:
B) flextime.
54) A specially designated area in or near a U.S. customs port of entry that allows resident companies to import materials and components from foreign counties; assemble, process, manufacture, or package them, and then ship the finished product back out while either reducing or eliminating tariffs and duties is a:
B) foreign trade zone
21) The fact that the cash budget illustrates the flow of cash in a business helps the owner to:
B) get a seasonal line of credit rather than an annual line of credit.
57) The most common sponsors of business incubators are:
B) government agencies.
55) The net profit to asset ratio measures:
B) how much profit a company generates for each dollar of assets that it owns.
81) Products with the highest markup should be placed:
B) in prime selling space.
18) Foreign licensing has its greatest potential in the licensing of:
B) intangibles, such as technology, copyrights, and trademarks.
41) For product-based businesses, ________ often represents their largest capital investment.
B) inventory
28) When a company is forced into liquidation, owners are most likely to incur a loss when selling:
B) inventory.
25) Small businesses selling on credit find that:
B) it is expensive, requires a great deal of effort, and it is risky.
35) The ________ design strategy adds more tasks to a job to broaden its scope.
B) job enlargement
37) One common mechanism to attract international visitors is to include several:
B) language buttons.
3) The first obstacle an entrepreneur must overcome on the way to creating a truly global business is:
B) learning to think globally.
35) A ________ is an agreement between an exporter's bank and the foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods.
B) letter of credit
11) On a company's statement of cash flows, depreciation is:
B) listed as a source of funds because it is a noncash expense, already deducted as a cost of doing business.
80) The most valuable space in a store is the:
B) main entry-level space.
63) If the value of the borrower's collateral drops, a stockbroker can make a ________, requiring the borrower to provide more collateral for his margin loan.
B) margin call
6) The primary disadvantage of equity capital is that the entrepreneur:
B) must give up some-perhaps most-of the ownership in the business to outsiders.
26) Although many business owners see checking references as a formality and pay little attention to it, the process is:
B) necessary and often invaluable.
45) The ________ ratio measures a company's ability to generate sales in relation to its assets.
B) net sales to total assets
29) The biggest barrier facing companies that have never exported is:
B) not knowing where or how to start.
50) A type of business that does well when located near competition is:
B) one that carries products for which customers comparison shop.
13) Angels are an excellent source of ________ money, often willing to wait ________ years or longer to cash out their investment.
B) patient: 7
48) A ________ center combines the drawing strength of a large regional mall with the convenience of a neighborhood shopping center.
B) power
1) Setting prices for products and services requires entrepreneurs to balance a multitude of complex forces as entrepreneurs determine prices for their goods and services that will draw customers and:
B) produce a profit.
13) A glass manufacturer that requires an extremely pure, very fine sand in its production process would be most concerned about the:
B) proximity to raw materials.
19) A ________ interview involves offbeat questions to determine how job candidates think and reason, allowing the interviewer to assess their capacity for creativity.
B) puzzle
26) The ________ ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities.
B) quick
27) A location in a city offering a high quality of life can be attractive to the entrepreneur and may make ________ easier.
B) recruiting employees
45) In job enrichment, ________ is the degree to which a job allows a worker to complete a whole or identifiable piece of work.
B) task identity
71) A federally sponsored program which offers loan guarantees to create and expand businesses in areas with below-average income and high unemployment is called:
B) the Economic Development Administration.
49) A quota is:
B) the maximum amount of a product that can be imported into a country.
39) Patel Industries recently filled an order from one of its customers, Oxmoor Gardens, a small garden supply store. Oxmoor's owner recently received an invoice from Patel for $1,278.64 with selling terms of "2/10, net 30." Therefore:
B) the selling terms are offering Oxmoor a 2 percent discount if the bill is paid within 10 days; otherwise the full amount of the invoice is due in 30 days.
67) A leveraged buyout is an arrangement in which managers and/or employees borrow money from a financial institution and pay the owners:
B) the total agreed-on price at closing using the cash generated from the company's operations to pay off the debt.
39) The recent turbulence in the financial markets has caused banks to ________ their lending standards, making it ________ for small businesses to qualify for loans.
B) tighten; more difficult
51) Asset-based borrowing permits small businesses:
B) to use normally unproductive assets such as accounts receivable and inventory.
65) Line T is the ________ line, while Line S is the ________ line.
B) total expense; total revenue
40) The most frequently encountered impediment to international trade for small and medium-sized manufacturers is:
B) transportation and shipping costs.
17) A/An ________ is a private, for-profit organization that purchases equity positions in young businesses that will potentially produce returns of 300 to 500 percent over five to seven years.
B) venture capital company
23) When Jan and Detmar Wolcinski bought their 152-year-old house, they began remodeling it with one goal in mind: opening a bed and breakfast inn. The Chadwick Inn has exceeded the Wolcinski's expectations in its first year of operation, but now some neighbors are starting to complain about the increased traffic in their neighborhood and the late hours some of the Inn's guests keep. The Wolcinski's greatest challenge in the near future is most likely:
B) zoning laws prohibiting commercial businesses in a residentially zoned area.
39) The Sound Shop buys a popular programmable telephone from a supplier for $12.19. If the desired markup of retail price on the telephone is 35 percent, the retail price should be:
C) $16.46.
42) Pandecker, Inc., estimates the variable costs of producing one unit to be $11.26. The company plans to produce 26,500 units. The fixed costs the company expects to incur are $82,770. If Pandecker's profit target is $75,000, what price should it charge?
C) $17.21
81) The maximum loan under the SBA's Community Express Program is ________ with an SBA guarantee of up to ________ percent with a streamlined application process .
C) $250,000; 85
38) In the United States alone, companies import more than ________ worth of goods and services annually.
C) $3.2 trillion
4) The Kauffman Foundation reports that the average amount of capital that entrepreneurs use to start small businesses in the U.S. is nearly:
C) $80,000.
19) It is recommended that new business owners estimate cash disbursements as best they can and then add on another ________.
C) 10-25 percent
32) Typically, the entire process of going public takes ________, but it can take much longer if the issuing company is not properly prepared for the process.
C) 120 to 180 days
22) Approximately ________ percent of all venture capital invested comes from corporations.
C) 14
30) A collection agency typically takes ________ percent of the amounts they collect on past due accounts.
C) 25 to 30
78) About ________ percent of SBA-backed loans go to start-up companies.
C) 29
43) A business with a payables turnover ratio of 10.4 times a year would have an average payable period of about:
C) 35 days.
46) It is estimated that approximately ________ companies, most of them small, engage in barter exchanges every year.
C) 350,000
38) Macy's buys white, pinpoint oxford blouses at $14 each and sells them at $30 each. Macy's percentage (of retail price) markup is:
C) 53.3 percent.
56) In discounted accounts receivable financing, a small business can typically borrow an amount equal to ________ percent of its receivables it pledges as collateral.
C) 55 - 85
36) Shopping malls typically average ________ parking spaces per 1,000 square feet of shopping while a typical central business district offers ________ spaces per 1,000 square feet of shopping space.
C) 5; 3.5
28) Small companies with fewer than 20 employees account for more than ________ percent of U.S. export sales.
C) 70
54) More than ________ percent of all companies in the world are family owned.
C) 80
2) Experts estimate that nearly ________ of the world's online population has used the Internet to make a purchase.
C) 84 percent
30) Two valuable resources for entrepreneur's to investigate for going global should include:
C) A and B above
35) ________ is one indication that a small business may be undercapitalized.
C) A debt-to-net worth ratio above 1:1
85) What is the 40-30-20-10 rule in retailing?
C) An expression of the decline of the value of store space as you move front to back in the store
13) On March 10th, a business owner receives an invoice from a supplier for $416.27 with "net 30" credit terms marked on it. On April 7th, the owner writes the supplier a check for $416.27 and mails it. When would this cash disbursement show up on the company's cash budget?
C) April 7th
80) The ________ provides loans to entrepreneurs in economically challenged communities and viewed as high-risk borrowers.
C) Community Express Program
4) Which of the following associations is correct?
C) Current assets - inventory
87) Small businesses devastated by floods, earthquakes, fires, and other maladies would seek assistance through which SBA loan program?
C) Disaster
51) ________ is the practice of selling substantial quantities of a product in a foreign market at prices that are below either the home-market price or below the full cost of producing it.
C) Dumping
5) Which of the following information is not available from Census data?
C) Expenditures on dining out
3) Which of the following statements concerning cash management is false?
C) Fast-growing businesses are least likely to experience shortages.
27) ________ small businesses take the time to conduct a credit check.
C) Few
6) Which of the following items would not be listed as a current asset in a company's financial reports?
C) Fixtures
48) Arturo, a sales representative for a small manufacturer, works out of an office in his home, using his laptop computer, a fax machine, and a beeper to communicate with the home office, which is located in a city 58 miles away. Arturo actually goes to the main office, on average, once every 10 to 14 days. His company is using which work arrangement?
C) Flexplace
45) Which of the following is/are not true regarding pricing for service firms?
C) For most service firms, labor and profit comprise the largest portion of the cost of the service.
5) ________ frequently convey the idea of quality, prestige, and uniqueness to customers.
C) High prices
52) Which of the following is not true of home-based businesses?
C) Home-based retail businesses represent the fastest-growing segment of all home-based businesses.
3) Which of the following pairs describing leadership (first column) and management (second column) is accurate? Leadership Management
C) Involves doing things right Involves doing the right things
34) The classic auto assembly line is based on which job design principle?
C) Job simplification
1) ________ is the process of influencing and inspiring others to work to achieve a common goal and then giving them the power and the freedom to achieve it.
C) Leadership
24) ________ ratios tell whether or not the small company will be able to meet its short-term obligations.
C) Liquidity
47) Which ratio would be most helpful to a business owner to measure the profit per dollar of sales?
C) Net profit on sales
84) Which of the following statements concerning store layout is true?
C) Only about one-fourth of a store's customers will go more than halfway into a store.
37) ________ ratios help a business owner evaluate the company's performance and indicate how effectively the business employs its resources.
C) Operating
27) CD Connection sells popular CDs at three price levels: $11, $14, and $17. This illustrates which of the following pricing techniques?
C) Price lining
17) Which of the following types of questions should a business owner ask a candidate in a job interview?
C) Questions based on on-the-job scenarios that require open-ended answers
4) Which of the following is not a behavior typically exhibited by effective leaders?
C) Require employees to gather necessary resources to complete their tasks; they will be more likely to "feel ownership" than if you did it for them.
30) Nature's Way, a health food store, has just opened in a popular neighborhood shopping center next to Silver's Gym, a physical fitness center catering to both men and women. Nature's Way is relying on which location principle?
C) Retail compatibility
53) Which of the following is not an asset-based financing technique?
C) Term loan
24) Which government agency is responsible for enforcing employment laws?
C) The Equal Employment Opportunity Commission
41) Which of the following is an advantage of locating in a central business district?
C) The ability to attract customers from the entire trading area
43) ________ tells what portion of the total revenue remains, after covering variable costs, to contribute toward meeting fixed expenses and earning a profit.
C) The contribution percentage
83) Which of the following sections of a retail store would be most valuable?
C) The front right corner of the store
51) Which of the following is the greatest advantage of operating a home-based business?
C) The low cost of setting up and operating the business
37) Carmen is starting a childcare center. One location closed after a murder on the property and is near a neighborhood where there are many single parents. What city site selection factor might give Carmen problems with her childcare center?
C) The reputation of the location
73) Malcolm wants to start a business in the prosperous little town of Grove City, a rural town of 10,000 about 65 miles from Pittsburgh, Pennsylvania. His business will create 25 manufacturing jobs. What federal agency would most likely be interested in guaranteeing a bank loan for Malcolm?
C) U.S. Department of Agriculture's Rural Business Co-op Service
72) Which of the following is not a characteristic of an effective business sign?
C) Uses complementary color schemes and ornate typefaces.`
11) Which of the following statements concerning the impact of competition on a small company's prices is true?
C) When going up against larger, more powerful rivals, small firms should consider using nonprice competition as a way to differentiate their products or services rather than head-to-head price competition.
63) A combination of hardware and software that allows employees to have access to the Internet but keeps unauthorized users from entering the company's network is called:
C) a firewall.
89) A process layout would be best suited to:
C) a manufacturer of handmade metal gifts.
50) A compensation system in which employees' pay depends on how well they perform their jobs is known as:
C) a pay-for-performance compensation system.
50) An embargo is:
C) a prohibition or suspension of foreign trade of specific imports or exports.
23) The "big three" of cash management include:
C) accounts receivable, accounts payable, and inventory.
51) Leasing allows business owners to forecast cash flows more ________ because lease payments are ________ amounts paid over a particular time period.
C) accurately; fixed
52) In asset-based borrowing, the ________ is the percentage of an asset's value that a lender will lend.
C) advance rate
48) All of the following are effective ways to encourage customers to return to a site except:
C) advertise with "pop-ups."
56) A sweep account is a checking account that:
C) automatically moves all funds in a company's checking account above a predetermined minimum into an interest-bearing account.
41) In job enrichment, ________ is the degree to which a job gives a worker the freedom, independence, and discretion in planning and performing tasks.
C) autonomy
2) The ________ shows what assets the business owns and what claims creditors and owners have against those assets, and is built on the basic accounting equation: Assets = Liabilities + Owner's Equity.
C) balance sheet
15) When examining a state's available labor force, the potential business owner needs to know:
C) both the number and education of the available workforce.
61) A(n) ________ is the most basic type of trust, which allows a business owner to put up to $1.3 million into trust, naming his spouse as the beneficiary upon his death. The spouse receives the income from the trust throughout her life, but the principal in the trust goes to the couple's heirs, free of estate taxes, upon the spouse's death.
C) bypass trust
34) A technique that involves selling a product for a low price and charging a higher price for the accessories that accompany it is called:
C) captive-product pricing.
75) When a bank makes enough SBA-guaranteed loans to become a ________ lender, the SBA promises a faster turnaround time for the loan decision, typically 3 to 10 business days.
C) certified
15) The most important ingredient for a successful joint venture is:
C) choosing the right partner.
43) A situation that occurs when a company pays for clicks that are generated by someone with no interest in or intent to purchase its products or services is called:
C) click fraud.
34) The final step in creating a sound export strategy is to:
C) collect your money.
9) TIGER:
C) contains the names of every street in the country and detailed block statistics for 345 urban areas.
94) One of the easiest and most common methods of debt capital available is:
C) credit cards.
64) A(n) ________ is a private nonprofit financial institution that will make small loans to its members for the purpose of starting a business.
C) credit union
23) The ________ ratio is a measure of the small company's ability to pay current debts from current assets and is the liquidity ratio most commonly used as a measure of short-term solvency.
C) current
9) One of the best sources for prospects for new positions may come from:
C) current employees.
39) Factors such as ________ should be sought out in the selection of retail and service business locations.
C) customer traffic, transportation network, adequate parking, physical and psychological barriers
13) In a(n) ________, two or more U.S. small businesses form an alliance for the purpose of exporting their goods and services. The companies get antitrust immunity and share responsibility for the business equally.
C) domestic joint venture
19) If a business owner cannot afford to invest in foreign facilities and does not have time to learn the foreign market, but is willing to give someone else the right to make and market her product for a fee and royalties, her best bet for entering the foreign market is:
C) foreign licensing.
77) The majority of loans provided by the SBA are:
C) guaranteed.
27) According to a survey by CareerBuilders, almost ________ of candidates either exaggerated or falsified information about their previous employment on their resumes.
C) half
2) Unlike entrepreneurs of the past, today's entrepreneurs:
C) have to piece their capital together from several sources.
2) For an entrepreneur, expanding into international markets:
C) helps it grow faster and survive competition better.
43) Entrepreneurs basically "borrow from themselves" by pledging their ________ as collateral for the loans they receive in a ________ .
C) home; home equity loan
30) Company culture has a powerful impact on:
C) how people in a company treat their customers.
22) The first step in establishing a successful global franchise arrangement is to:
C) identify the country or countries that are best suited to the franchiser's business concept.
44) An excessively high average payable period ratio:
C) indicates the presence of a significant amount of past-due accounts payable.
50) A customer who purchases a television from Ace Appliance Store and pays for it in 36 monthly payments is most likely using:
C) installment credit.
61) A margin loan:
C) is a loan from an entrepreneur's stockbroker that uses the entrepreneur's investment portfolio as collateral for the loan.
52) As a motivator, money:
C) is only a short-term motivator, losing its impact over time.
16) Before a Web site can become the foundation for a successful e-business:
C) it must be created with the target audience in mind.
39) The ________ design strategy involves building motivators into a job by increasing the planning, decision-making, organizing, and controlling functions workers perform.
C) job enrichment
44) Type of job design that involves building motivators into a job by increasing the planning, decision-making, organizing, and controlling functions workers perform is:
C) job enrichment or horizontal job loading.
49) Typically located near affluent residential neighborhoods where their target customers live, ________ centers are designed to look less like shopping centers and malls and more like the busy streets in the central business districts that once existed in town and cites.
C) lifestyle
44) A ________ is an agreement with a bank that allows a small business to borrow up to a predetermined specified amount during the year without making an application each time.
C) line of credit
54) When investing surplus cash, the small business owner's key objectives should be on the ________ of the investment.
C) liquidity and safety
31) A technique offering customers discounts if they purchase in quantity is referred to as:
C) multiple-unit pricing.
23) Successful interviewers always listen for these in an interview to see whether it matches the candidate's words. This interviewer is referring to the candidate's:
C) nonverbal clues or body language.
14) Burt is applying for a position as a staff accountant. The job specification for the position might list all of the following items except:
C) prepare daily sales reports.
37) Because of the risk/return tradeoff, small businesses that borrow money repay it with interest at the:
C) prime interest rate plus a few percentage points.
88) An arrangement of workers and equipment according to the sequence of operations performed on a product is called ________ layout.
C) product or line
12) When the cost of transporting finished goods to market is high relative to their value, the key location criterion is:
C) proximity to markets.
60) Savings and loan associations typically specialize in loans for:
C) real property.
78) The most progressive companies seeking environmentally-friendly designs are using:
C) recycled materials, installing high efficiency lighting, and striving to meet LEED standards.
45) The ________ serves a large trading area (10 to 15 miles or more), contains from 50 to 100 stores, and draws customers from a population that lives within 20- to 40-minutes driving time.
C) regional shopping mall
96) Equity capital represents the personal investment of the owner (or owners) in a business and is sometimes called ________ because of the potential outcome.
C) risk capital
66) Entrepreneurs who are planning to retire often use two strategies:
C) sell to outsiders or sell to nonfamily insiders.
93) A small business that uses factoring:
C) sells its accounts receivable to a third party to get the capital it needs.
33) Once a credit account becomes past due, a small business owner should:
C) send a "second notice" letter requesting immediate payment.
40) Efficient cash managers:
C) set up a payment calendar in order to both pay on time and take advantage of cash discounts for early payment.
5) All of these are steps small companies follow when they begin conducting global business on the Web except:
C) setting up links to related company Web sites.
18) When a firm sells goods or services on credit, the owner needs to remember that for cash budgeting purposes:
C) she must account for a delay between the sale and the actual collection of the proceeds.
63) When evaluating existing buildings, retailers:
C) should recognize that the store's appearance and layout create an image for the customers of the business.
70) A(n) ________ makes only intermediate and long-term SBA guaranteed loans. It specializes in loans many banks would not consider.
C) small business lending company
77) A bakery is an example of a business that may benefit from intentional use of ________ within the space.
C) smell
27) Bettina has just calculated her company's current ratio. To calculate the quick ratio, she should:
C) subtract inventory from current assets before dividing by current liabilities.
12) One key to setting prices properly is based on understanding a company's:
C) target market.
43) In job enrichment, ________ is the degree to which a job substantially influences the lives or work of others-employees or final customers.
C) task significance
18) One direct way to lower annual operating costs is to locate in a state where:
C) taxes and regulatory costs are lowest.
48) A bank loan that imposes restrictions or covenants on the business decisions an entrepreneur makes concerning the company's operations is called a:
C) term loan.
67) The Americans with Disabilities Act of 1990 requires:
C) that businesses have all facilities available to physically challenged customers and employees.
7) The primary advantage of equity capital is:
C) that it does not have to be repaid like a loan does.
12) A cash budget is based on the cash method of accounting, meaning that cash receipts and cash disbursements are recorded in the forecast only when ________ is expected to take place.
C) the cash transaction
62) In a grantor-retained annuity trust (GRAT),
C) the grantor retains the voting power and interest income from the stock in the trust for up to ten years before the business goes to the beneficiaries.
40) Commercial banks provide ________ of loans to small business.
C) the greatest number and variety
16) Before entering into any partnership arrangement, entrepreneurs must consider:
C) the impact of giving up some personal control and sharing profits with others.
29) The document outlining the details of the agreement between the entrepreneur and the stock underwriter is called:
C) the letter of intent.
86) Manufacturing layout decisions take into consideration:
C) the product, the process, the space availability within the facility, ergonomic considerations, and key economic considerations.
29) The primary variable(s) that influence(s) the scope of a trading area is/are:
C) the type and size of the business operation.
36) The ________ ratio tells how many times the company's earnings cover the interest payments on the debt it is carrying.
C) times-interest-earned
33) The goal of the SEC's Regulation S-B and S-K is:
C) to open the doors to capital markets to smaller companies by cutting the paperwork and the costs normally required to make a public offering.
28) The region from which a business can expect to draw its customers over a reasonable time span is called its:
C) trading area.
34) Businesses selling less well-known brands should:
C) use customer testimonials and endorsements.
66) When designing the layout of a store, office, or plant, a business owner's primary focus is usually on ________, however, it should be on ________.
D minimizing costs; minimizing injuries and enhancing employees' productivity
49) Port Royal's debt-to-net worth ratio is:
D) 0.57:1.
37) Macy's buys white, pinpoint oxford blouses at $14 each and sells them at $30 each. Macy's percentage (of cost) markup is:
D) 114.3 percent.
40) A business that turns over its receivables 5.9 times a year would have an average collection period of about:
D) 62 days.
20) Management consulting firm McKinsey and Company states that more than ________ percent of the pricing problems on new products are the result of companies setting prices that are too low.
D) 80
55) The advance rate on inventory-based loans is usually between 10 to 50 percent, but a business pledging high-quality accounts receivable as collateral may be able to negotiate up to an ________ percent advance rate.
D) 85
60) According to the National Business Incubation Association, graduates from incubators have a success rate of ________ percent.
D) 87
24) Experts estimate that ________ percent of industrial and wholesale sales are on credit, while ________ percent of retail sales are on credit.
D) 90, 40
26) Which of the following is/are often used by companies exporting to countries that lack a convertible currency?
D) A and C only
1) Becoming a global entrepreneur requires:
D) All of the above
1) Solid cash management enables a business owner to:
D) All of the above
10) A cash budget:
D) All of the above
10) When choosing a state in which to locate, one must evaluate which of the following?
D) All of the above
12) Creating projected (pro forma) financial statements would allow a business owner to answer which of the following questions?
D) All of the above
12) Foreign distributors offer small businesses which of the following benefits?
D) All of the above
14) When would a business choose to locate near the source of the raw material?
D) All of the above
16) The final price a business owner sets within the acceptable price range depends on:
D) All of the above
16) What factors can drastically affect a company's cash flow?
D) All of the above
16) Which of the following is a common problem in joint ventures?
D) All of the above
17) Many joint ventures fail because the parties involved neglected to:
D) All of the above
17) Which of the following would be a potential source of information for preparing a sales forecast?
D) All of the above
2) Leadership is:
D) All of the above
21) Analyzing financial ratios could alert a business owner to which of these problems?
D) All of the above
24) The drawbacks of countertrading include which of the following?
D) All of the above
27) In an initial public offering, the underwriter, or investment banker, serves to:
D) All of the above
29) A company's culture manifests itself in:
D) All of the above
3) Entrepreneurs using the Census Bureau's Web site to evaluate potential locations have access to which of the following information about the residents in those locations?
D) All of the above
31) To encourage credit customers to pay invoices promptly, a business owner should:
D) All of the above
34) To be eligible for the simplified registration process under Regulation S-B and S-K, a company must:
D) All of the above
35) In a Regulation D stock offering, the company:
D) All of the above
36) The advantages of job rotation include:
D) All of the above
36) To qualify for a Rule 147 (intrastate) public stock offering, a company must ________ in the state in which it makes this offering.
D) All of the above
38) The average inventory turnover ratio:
D) All of the above
4) Which of the following information is available from U.S. Census data?
D) All of the above
40) The central business district (CBD):
D) All of the above
41) Before making a loan to a business startup, banks prefer to see:
D) All of the above
42) An effective search engine optimization (SEO) strategy can be maintained through:
D) All of the above
42) Which of the following are disadvantages of locating in a central business district?
D) All of the above
42) Which of the following is a domestic barrier to small business exporting?
D) All of the above
43) Old assumptions regarding global business assumptions for exporting includes:
D) All of the above
44) Which of the following inventory management techniques would help a business owner make the best use of his company's cash?
D) All of the above
46) It has been reported that the use of credit cards increases the ________ of customer spending.
D) All of the above
47) Which of the following is an important consideration for an entrepreneur evaluating a shopping mall or center location?
D) All of the above
48) Barter offers business owners the benefit of:
D) All of the above
49) A term loan:
D) All of the above
5) Which of the following represents capital?
D) All of the above
50) Responsible online merchants should make sure shipping and handling charges are:
D) All of the above
50) Which of the following statements concerning leasing is true?
D) All of the above
53) Business owners new to international business are sometimes shocked:
D) All of the above
53) Studies regarding succession of family businesses reveal that:
D) All of the above
53) Which of the following is a potential disadvantage of a home-based business?
D) All of the above
57) The break-even point:
D) All of the above
58) Which of the following is an assumption of break-even analysis?
D) All of the above
6) Which of the following is an important issue that business owners should consider before launching an e-commerce effort?
D) All of the above
6) Which of the following statements is/are true regarding export management companies?
D) All of the above
60) Which of the following is a guideline for becoming a successful international competitor?
D) All of the above
61) To minimize the likelihood of invasion by hackers, e-commerce companies rely on several tools, including:
D) All of the above
63) In a grantor-retained annuity trust (GRAT):
D) All of the above
64) Which of the following statements concerning layout is true?
D) All of the above
69) SBICs:
D) All of the above
69) Under the Americans with Disabilities Act, a newly constructed:
D) All of the above
74) Which of the following is an example of ergonomics?
D) All of the above
75) Studies and experts have concluded that changes in office design have a direct impact on workers':
D) All of the above
79) An effective retail layout should:
D) All of the above
8) A Geographic Information System (GIS):
D) All of the above
8) A cash budget reveals important clues about how well a company ________.
D) All of the above
8) Which of the following is true regarding hiring mistakes?
D) All of the above
8) Which of the following trade intermediaries lowers the risk of exporting for a small business?
D) All of the above
17) Businesses facing rapidly rising costs should consider:
D) All the above
4) Before going global, entrepreneurs should ask themselves questions regarding:
D) All the above
87) The objective(s) of a manufacturing layout include:
D) All the above
90) A good manufacturing layout requires all but which of the following?
D) An assembly line
48) John wants to expand into the foreign markets, but he cannot convince his partners. They believe that international markets are the domain of large corporations. John is facing which barrier to international trade?
D) Attitude
10) Which of the following techniques would you not recommend to a company desiring a stronger recruiting strategy?
D) Avoid hiring retired workers; they too often fail to have anything to offer.
31) The index of retail saturation:
D) B and C above
7) An export trading company:
D) Both A and C above
37) The type of job design that adds more tasks to a job to broaden its scope is known as:
D) Both B and C
55) An American executive went to a Middle Eastern country to sign an oil contract. Before the contract was signed, the American and the Arab official met for tea. Relaxing, the American put his feet up on a table. The official became angry and left the room. Later it was found that showing the soles of shoes was a serious insult. This represents which barrier to international trade?
D) Cultural
16) The ________, published by the Department of Labor, lists more than 20,000 job titles and descriptions and serves as a useful tool for getting a small business owner started when writing job descriptions.
D) Dictionary of Occupational Titles
11) ________ are domestic wholesalers who do business in foreign markets, buying goods from domestic companies and selling them in foreign markets, often handling competing lines.
D) Export merchants
46) ________ is a method of financing frequently used by retailers of "big ticket items" such as autos.
D) Floor planning
32) Successful organizational culture supports exceptional performance and is compatible with the firm's stated values and beliefs. Which of the following best illustrates this concept?
D) Honesty and integrity, diversity, respect for work and life balance, a sense of purpose and a sense of fun, and participative management in a learning environment
67) Which of the following is a characteristic of a typical private placement of debt?
D) It operates much like a bond, but its terms are tailored to the borrower's individual needs, as a loan would be.
5) Which of the following is not one of the vital tasks small business leaders must perform?
D) Keep flexible and do not be concerned about preparing for the next generation of management.
49) Which of the following is an effective way to trim overhead?
D) Negotiate fixed loan payments to coincide with company cash flow.
23) ________ pricing strategies work best in markets where no "elite" segments exist or in highly competitive markets where similar products are trying to gain a foothold.
D) Penetration
20) Which of the following characteristics for selecting a city would be of greatest interest to a retail store selling fine china and collectibles?
D) Population characteristics
10) Entrepreneurs should make sure they do not fall victim to any of the e-commerce myths. Which of the following is not an e-commerce myth?
D) Privacy and site security is an important issue on the Web.
7) ________ typically lead(s) sales; ________ typically lag(s) sales.
D) Purchases; collections
3) When searching for capital to launch their companies, entrepreneurs should remember several "secrets" to successful financing. Which of the following is not one of those secrets?
D) Raising money should not take very long; therefore, if it does not come quickly, it probably will not come at all.
82) In the ________ program, participating lenders use their own loan procedure and applications to make loans of up to $350,000 to small businesses and the SBA guarantees 50 percent of the loan. .
D) SBAExpress
21) When evaluating a company as a potential investment target, venture capitalists look for all but which of the following?
D) Stable industry
56) You are provided this information about a retail store called "BoardSports:" BoardSports Industry Mean Current Ratio 1.5 : 1 2: 1 Quick ratio .75 : 1 1 : 1 Debt ratio 0.87 : 1 0.75 : 1 Average collection ratio 46 days 33 days Net profit on sales ratio 5.5% 8.2% Net profit to equity ratio 7.7% 13.2% What can you reasonably assess about the current financial status of this company?
D) The company is in poor financial condition with significant changes required.
11) To be successful online, small companies must create Web sites with features that appeal to experienced Web shoppers, such as:
D) The successful Web site will include all the above.
47) The small country of Bascovina wanted to protect its infant basket industry and imposed a 400 percent tariff on all imported baskets. The high tariff dropped the bottom out of imported basket sales, and imports of baskets stops. Why did this happen?
D) The tariff makes the price of imported baskets so high that they are not competitive.
58) When transferring power in a management succession, the small business owner should do all but which of the following?
D) Transfer power quickly and step back, letting the successor run the business completely without any advice or interference by the owner.
67) The area labeled ________ is the "profit area."
D) Z
46) A tariff is:
D) a duty, or tax, that a government puts on products that are imported into the country.
7) All of the following represent benefits of selling on the Web except:
D) ability to advertise in a cheaper media form.
31) Strategies for successful e-commerce efforts should include all of the following except:
D) adding value to recipients by sending spam e-mail.
19) The "Best and Worst States for Doing Business" indicates that California is one of the least attractive states in which to do business based on these factors:
D) all the above
38) An entrepreneur can potentially improve collections by:
D) all the above
68) An arrangement in which employees and/or managers contribute a portion of their salaries and wages, over time, toward purchasing shares of a company's stock from the founder until they own the company outright, is referred to as:
D) an ESOP.
20) Foreign licensing is:
D) an agreement in which a licenser gives a licensee in another country the right to use that licenser's patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits.
59) The loans from commercial finance companies to small businesses:
D) are often similar to the types of loans commercial banks offer, but commercial finance loans usually carry higher interest rates.
17) What is the state's overall attitude toward your kind of business? Has it passed laws that impose restrictions on the way a company can operate? Does the state offer small business support programs of financial assistance to entrepreneurs? These questions help an entrepreneur to assess the overall:
D) business climate.
20) Venture capitalists look for ________ as the most important ingredient in the success of any business.
D) competent management
16) A labor force that has technical training would be most important to a:
D) computer company.
57) The North American Free Trade Agreement, also known as NAFTA, served to:
D) create a unified market of 465 million people and $18.1 trillion in goods and services.
1) The first phase of determining where to locate a business is:
D) determining which regions of the country are experiencing growth.
42) In job enrichment, ________ is the degree to which a job gives the worker direct, timely information about the quality of his performance.
D) feedback
9) The first place an entrepreneur should look for startup capital is:
D) his own savings.`
23) A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.
D) initial public offering
21) Domino's Pizza and McDonald's operating in Japan and Europe are examples of:
D) international franchising.
47) The real benefit of barter for the entrepreneur is that:
D) it is "paid" for at the wholesale cost of doing business, yet it is credited at the retail price.
38) The ________ design strategy involves cross-training workers so they can move from one job in the company to others, giving them a greater number and variety of tasks to perform.
D) job rotation
51) Chris openly shares the company's financial results with employees. This represents:
D) open book management.
53) Ideally, a company reaches a point where increases in operating efficiency mean that expenses as a percentage of sales revenue flatten or even decline. This is referred to as:
D) operating leverage.
52) "Stick to what you are good at and ________ everything else" is an approach to reduce overhead costs.
D) out source
1) In order to reach profit objectives, entrepreneurs must be aware of their firms':
D) overall financial position and any changes in the financial status.
20) A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:
D) ratio analysis.
89) A program offered by communities that combine private and public funds to make loans to small businesses, often at favorable interest rates, is the:
D) revolving loan fund.
82) When the typical shopper enters a store, (s)he turns ________ and moves in a ________ fashion which increases the value of this section of the space.
D) right; counterclockwise
15) A cash budget is only as accurate as the ________ forecast from which it is derived.
D) sales
37) A contract in which a business selling an asset on credit gets a security interest in that asset (the collateral), protecting its legal rights in case the buyer fails to pay, is a:
D) security agreement.
56) The first step in creating a management succession plan is to:
D) select the successor.
9) A firm's cash budget should:
D) show the amount and timing of cash receipts and cash disbursements on a quarterly basis.
10) The statement of cash flows:
D) shows changes in working capital by listing sources and uses of funds.
42) For the most meaningful interpretation, the small business owner should compare his firm's average collection period to:
D) the average for the industry and the firm's credit terms.
19) Cash requirements can be determined by dividing cash expenses by:
D) the average inventory turnover.
30) The "wait to go effective" is the time period when:
D) the company is waiting for SEC approval after filing the registration statement.
36) An effective approach to successful collections includes:
D) timely, well-communicated payment expectations with well-documented records.
51) One of the requirements to be able to offer ________ is to make certain that the firms' cash position is ________.
D) trade credit; strong enough to support the additional pressure
4) The first step in managing cash more effectively is:
D) understanding the company's cash flow cycle.
68) SBICs:
D) were created by the Small Business Investment Act to use a combination of private and federal guaranteed debt to provide long-term capital to small businesses.
An entrepreneur considering two sites for a men and boys' shop determines that he needs sales of $158 per square foot to be profitable. Site #1 has 13,500 potential customers who spend an average of $160.20 per year on men and boys' wear. Two competitors occupy 14,200 square feet of space. Site #2 has 10,800 potential customers spending an average of $152.10 per year on men and boys' wear. One competitor has 10,000 square feet.
Refer to the following information to answer the(se) question(s):
56) Tools that measure a Web site's ability to attract customers, generate sales, and keep customers coming back are:
A) Web analytics.
28) ________ pricing is a technique that involves marking down the normal price of a popular item in an attempt to attract more customers who make incidental purchases of other items at regular prices.
A) Leader
25) ________ is a short-term strategy that assumes that competition will eventually emerge.
A) Life cycle pricing
13) ________ value is the price customers would be willing to pay if they perfectly understood the benefits offered, while ________ value is what determines the price they are willing to pay.
A) Objective; perceived
5) The Internet penetration rate is greatest in North America with 78.3% and the second region of the world in penetration is:
A) Oceania/Australia.
21) When pricing a new product, a small business owner should strive to always satisfy which three objectives?
A) Product acceptance, maintaining market share, and earning a profit
35) Approximately ________ of Web users speak English.
B) 27 percent
4) An estimated ________ percent of small business owners in the U.S. have Web sites.
B) 64 percent
36) An estimated ________ percent of adults participate in social networks and the highest level of participation is social media is among adults ________ years of age.
B) 65; under 30
62) The security software that can trace a hacker's location is identified by which of the following?
B) Intrusion detection software
20) Which of the following is not a common reason customers leave Web sites before checking out?
B) The privacy policy was not posted.
14) ________ monitor customers' behavior while they are on a site, giving Web-based businesses the information they need to make their Web sites and their online ________ efforts more effective.
B) Tracking tools; marketing
26) According to Gerry Goldsholle, founder of two Web sites aimed at small companies, he suggests to "________" when you first launch your Web site.
B) Try it, learn from it, and fix it
25) Although e-commerce can lower many costs of doing business, it still requires:
B) a basic infrastructure in the distribution channel to process orders, maintain inventory, fill orders, and handle customer service.
30) Although many retailers must match competitors' prices on identical items, maintaining a ________ pricing policy may not be healthy for a small business because it robs the company of the opportunity to create a distinctive image in its customers' eyes.
B) follow-the-leader
4) The top business challenge that drives pricing decisions is the:1
B) increased price sensitivity of customers.
29) Your local grocery store uses a pricing technique known as ________ on a weekly basis, in which they mark down the price of several popular items, sometimes well below their normal price, in an effort to increase customer traffic and to boost sales of other items.
B) leader pricing
15) An important part of any e-commerce effort is:
B) the ability to understand the underlying business and to develop a workable business model.
10) A business with a 25 percent gross profit margin that reduces its price by 10 percent would have to ________ its sales volume just to break even.
B) triple
21) There is plenty of room for improvement in customer service on the Web. Research by Harris Interactive reports that more than ________ of online shippers said that they expect higher levels of customer service than they do in offline, traditional stores.
C) 22 percent
17) Building a Web strategy based on a clear definition of the company's target audience and an understanding of those customers' needs, wants, likes, and dislikes is:
C) also critically important for a company's presence on the Web.
54) One of the most valuable benefits of giving customers a reason to return to your site is that it can be an effective tool to:
C) build customer loyalty.
33) An MP3 player is sold at a price close to the break even point, but the accessories for the product are priced at a premium, offering impressive contribution margins. This is an example of:
C) captive-product pricing.
29) Many Web sites seek to create, develop, and facilitate a:
C) community of customers with similar interests.
60) The ________ is the percentage of visitors to the site who actually make a purchase and the average is about ________ percent
C) conversion rate; 3.2
64) Web sites have two conflicting goals regarding security. The first is to establish a presence on the Web so that customers from across the globe can have access to its site, and the second goal is to:
C) maintain a high level of security so that the business, its site, and the information it collects are safe from hackers and intruders intent on doing harm.
45) A company that pays a search engine for the right to submit either selected pages or the entire content of the Web site is referred to as:
C) paid or sponsored listings.
18) The acceptable price range of a product or service is the area between the ________ defined by customers in the market and the ________ established by the company's cost structure.
C) price ceiling; price floor
6) A key ingredient to setting prices properly is to understand a company's:
C) target market.
14) Ultimately, the "right" price for a product or service depends on one factor:
C) the value that it provides for a customer.
3) A study by the Pew Internet and American Life Project reports that ________ percent of Americans research products and services online before buying them, an increase of ________ percent in the year 2000.
D) 60; 35
19) The "ideal price" for a product:
D) All of the above
19) The most common reasons for leaving a site without purchasing include which of the following?
D) All of the above
2) Which of the following statements about price is true?
D) All of the above
47) The ideal domain name should be:
D) All of the above
9) The Web is one of the most efficient ways of reaching both new and existing customers and when properly promoted, a Web site can:
D) All of the above
13) Successful e-tailers have discovered that these factors enhance their reputations for online customer service:
D) All of these factors enhance a Web-based reputation.
39) Examples of Web 2.0 tools include:
D) All the above
53) Popular social media tools for small businesses include:
D) All the above
7) An entrepreneurial company can differentiate itself by creating a distinctive image in customers' minds or by offering:
D) All the above provide the opportunity for differentiation.
33) Visitors begin to evaluate the credibility of a Web site as soon as they arrive. Which of the following does not help develop a site's credibility?
D) Avoiding the promotion of brand names
57) The number of visitors to a company's Web site who view a single page and leave without viewing other pages is referred to as the:
D) bounce rate.
15) One of the most important determinants of customers' response to a price is whether they perceive the price to be a fair exchange:
D) for the value they receive from the product or service.
32) For entrepreneurial companies that lack brand and name recognition, and if building name recognition is one of the keys to success on the Web, one effective and affordable option may be to:
D) form strategic alliances with larger companies that can add credibility.
9) Generally, entrepreneurs should avoid head-to-head price competition with other firms that can more easily achieve lower prices through:
D) lower cost structures.
22) The most significant ways online companies can bolster customer service include all of the following except:
D) make financing available.
27) The amount of time the average person spends online is ________ than he or she spends watching television.
D) more
41) Search engine listings that are the result of "spiders," powerful programs that crawl around the Web and analyze sites for keywords links, and other data are :
D) natural, or organic listings.
24) The ________ while downloading a Web page is one of the most important determinants of its sales effectiveness.
D) time required
