Entrepreneurship Quizzes 2

Which of the following statements is true of price elasticity? Gas for your car is an example of an elastic product. Inelastic products have many substitutes and price changes lower demand. Elasticity is the idea that the market's demand for a product or service is sensitive to changes in its price. Elastic products have few substitutes and price changes make little difference in demand.

Elasticity is the idea that the market's demand for a product or service is sensitive to changes in its price.

All federal, state, county, and city laws apply to your business on the day you open. True False

False

Cash flow management is about keeping large sums of cash on hand at all times. True False

False

In the United States, government programs are the number one source for financing small businesses. True False

False

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

False

With unsecured debt, a lender has the right to seize specific assets if the loan is not paid back asspecified in the loan contract. True False

False

Which of the following statements is true of catalogs? Creating and disseminating catalogs online increases company costs. Most part-time entrepreneurs typically use existing catalogs for their products. Catalogs do not target particular types of consumers. Catalogs do not focus on any particular types of products.

Most part-time entrepreneurs typically use existing catalogs for their products.

Which of the following is true regarding a small-claims court? Small-claims court is a legal option only available to entrepreneurs who can afford an attorney. Small-claims courts will only accept cases where the stakes are as large as $50,000. Small-claims courts are the only recourse for small business owners for litigation. Most small-claims courts are designed so that ordinary citizens can bring their cases in.

Most small-claims courts are designed so that ordinary citizens can bring their cases in.

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

Payment is expected even if you have no money to make the payment.

Value benefits come into play when you think about pricing your product. Which of the following statements is NOT true of value benefits? The value delivered to the customer is second in order of importance to the pricing decision. People will pay more for a product of high quality. The price customers are willing to pay is determined by their perception of value received. Small businesses are unable to compete on value.

Small businesses are unable to compete on value.

Brendon wants to sue Fitness Ace, a leading provider of fitness equipment, for negligence. He approaches Arthur Bailey Group, a law firm, which has good experience in handling product liability claims for victims of exercise equipment failure. Which of the following would be true if the attorney charges Brendon using a retainer? The attorney would take monthly fee and additional fees if circumstances change. The attorney would charge Brendon on an hourly basis. The attorney would charge separately for consultation and paperwork. The attorney would take a percentage of Brendon's recovery as his or her fee.

The attorney would take monthly fee and additional fees if circumstances change.

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

True

Many small businesses experience problems in cash flow management because of the mismatch between the timing of the receipt of cash and the timing of the need to expend cash. True False

True

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

True

The name of a business can be called its doing business as (dba) name. True False

True

The total cost of keeping inventory is the sum of the cost to buy the inventory, the cost to store, protect,and maintain inventory, and the cost of making an order to purchase inventory. True False

True

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

interest

Which of the following is an advantage of providing credit to customers? it ensures all customers make on-time payments it reduces the cost of selling it reduces the need to borrow money it speeds up the receipt of cash

it reduces the cost of selling

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

micro inventory

Amounts owed to vendors for merchandise or services purchased on credit are called charge backs. payables. receivables. consignments.

payables.

Giving a third party legal rights to debts owed to the business in order to provide assurance that borrowed money will be repaid is called capital leases. factoring receivables. pledging receivables. operating leases.

pledging receivables.

Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan within two weeks. The amount that Lucy owes Susan is termed charge backs. payables. receivables. deposits.

receivables.

The level of probability that an investment will not produce expected gain is called dividend. diversification. interest. risk.

risk.

An ideal situation is where a business receives new inventory just as the last unit of the previous orderis sold. However, this rarely occurs because the sales volumes are not constant. delivery times never fluctuate. inventory level is not affected by demand. estimate never exceeds demand.

sales volumes are not constant.

Any debt that must be paid in less than one year from the date of the financial statement on which it is reported is considered payables. commercial paper. short-term debt. a cash equivalent.

short-term debt