MGMT 275 Exam 2

50) In which form of business ownership are the owners called "members"? A) general partnership B) limited partnership C) limited liability company D) subchapter C corporation E) C corporation

C) limited liability company

2) A ________ is the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm. A) new venture panel B) startup team C) new venture team D) new project team E) startup cadre

C) new venture team

34) Cash plus items that are readily convertible to cash, such as accounts receivable, marketable securities, and inventories are classified as ________ on a firm's balance sheet. A) other assets B) intermediate term assets C) temporary assets D) current assets E) fixed assets

D) current assets

30) Once a venture capitalist makes an investment in a firm, subsequent investments are made in rounds and are referred to as: A) later funding B) successive funding C) subsequent backing D) follow-on funding E) ensuing backing

D) follow-on funding

5) Partnerships are organized as either: A) specific or general partnerships B) narrow or broad partnerships C) inward or outward partnerships D) general or limited partnerships E) partial or full partnership

D) general or limited partnerships

20) A(n) ________ is a chart that depicts the most important skills that are needed in a new venture and where skills gaps exist. A) expertise report B) talent profile C) abilities summary D) skills profile E) talent summary

D) skills profile

10) Which of the following is not a "primary" activity in the value chain? A) inbound logistics B) marketing and sales C) service D) technology development E) outbound logistics

D) technology development

9) The ________ is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user. A) consequence sequence B) business chain C) meaning chain D) value chain E) worth procession

D) value chain

30) A ________ sets forth the rights and duties of the general partners and limited partners, along with the details of how the partnership will be managed and eventually dissolved. A) partnership accord B) restricted partnership agreement C) business partnership agreement D) limited partnership concurrence E) limited partnership agreement

E) limited partnership agreement

26) Which financial statement records all of a firms revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss? A) balance sheet B) owner's equity statement C) statement of cash flows D) forecast E) income statement

E) income statement

49) Which of the following statements is incorrect about grant programs? A) Granting agencies are very visible and well-known, so it's normally not hard to find one. B) The federal government has grant programs beyond the SBIR and STTR programs. C) It's important to avoid grant-related scams. D) There are a limited number of organizations that offer new businesses grants. E) There are private foundations that grant money to both existing and startup firms.

A) Granting agencies are very visible and well-known, so it's normally not hard to find one.

6) ________ is a company's ability to meet its short-term financial obligations. A) Liquidity B) Profitability C) Effectiveness D) Stability E) Efficiency

A) Liquidity

In regard to business models, which of the following statements is incorrect? A) There is a standard business model that most firms follow. B) A firm's business model is inherently dependent on the collection of resources it controls and the capabilities it possesses. C) It is dangerous for a company to assume that it can be successful by simply copying the business model of another firm. D) A firm's business model is its plan or diagram for how it competes. E) It is often difficult to determine what another firm's business model i

A) There is a standard business model that most firms follow

17) Two fatal flaws can render a business model untenable from the beginning. These are utterly unsound economics and: A) a complete misread of the customer B) failure to copy the industry leader's business plan C) overemphasis on the importance of feasibility analysis D) overemphasis on the importance of industry analysis E) failure to complete a business plan prior to developing a business mo

A) a complete misread of the customer

5) In startup firms, inventory must be purchased, employees must be trained and paid, and advertising must be paid for before cash is generated from sales. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example? A) cash flow challenges B) marketing costs C) personnel costs D) capital investments E) lengthy product development cycles

A) cash flow challenges

4) The three reasons startups need funding are: A) cash flow challenges, capital investments, and lengthy product development cycles B) business research, cash flow challenges, and costs associated with building a brand C) bonuses for members of the new venture team, attorney fees, and lengthy product development cycles D) attorney fees, capital investments, and marketing research E) bonuses for members of the new venture team, marketing research, and personnel costs

A) cash flow challenges, capital investments, and lengthy product development cycles

6) A ________ is a formal statement of an organization's values on certain ethical and social issues. A) code of conduct B) code of behavior C) code of performance D) code of principles E) code of morals

A) code of conduct

2) The members of heterogeneous teams are: A) diverse in terms of their abilities and experiences B) diverse in terms of their abilities, but very similar in terms of their experiences C) similar in terms of their abilities and experiences D) diverse in terms of their experiences, but very similar in terms of their abilities E) sometimes diverse in terms of their abilities and experiences and sometimes similar along the same dimension

A) diverse in terms of their abilities and experiences

40) A disadvantage of corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders inthe form of dividends it is taxed again on shareholders' personal income tax returns. A) double taxation B) dual toll C) double duty D) double assessment E) dual harm

A) double taxation

12) Southwest Airlines uses its assets very productively. Its turnaround time, or the time that its airplanes sit on the ground while they are being loaded and unloaded, is the lowest in the airline industry. In terms of the primary financial objectives of a firm, this attribute is a measure of Southwest's: A) efficiency B) effectiveness C) stability D) liquidity E) profitability

A) efficiency

15) Equity financing (or funding) means: A) exchanging partial ownership in a firm, usually in the form of stock, for funding B) getting a grant or outright gift C) getting a loan D) getting a lease E) getting a loan guarantee

A) exchanging partial ownership in a firm, usually in the form of stock, for funding

32) James Williams is the Chief Operating Officer of a startup in the health food industry. He is also a member of his firm's board of directors. In board of directors terminology, James is a(n): A) inside director B) outside director C) expert director D) junior director E) senior director

A) inside director

1) Which of the following is typically not included in the founders' agreement for a firm? A) marketing plan B) legal form of business ownership C) buyback clause D) apportionment of stock E) identity and proposed titles of the founder

A) marketing plan

5) Trevor Parsons just took a job with Twitter. As part of his employment contract, Trevor signed an agreement that states that he will not disclose any of Twitter's trade secrets. The agreement that Trevor signed is called a(n): A) nondisclosure agreement B) non breach-of-trust agreement C) ethics agreement D) binding confidentiality agreement E) legitimacy agreement

A) nondisclosure agreement

14) A(n) ________ agreement binds an employee or another party to not disclose a company's trade secret. A ________ agreement prevents an individual from competing against a former employer for a specific period of time. A) nondisclosure, noncompete B) non breach-of-trust, nonchallenge C) voluntary truth, nonparticipate D) binding confidentiality, noncompete E) ethics, nonparticipate

A) nondisclosure, noncompete

49) The ________ provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time. A) pro forma balance sheet B) pro forma statement of cash flows C) pro forma income statement D) pro forms expense statement E) pro forma statement of owners' equity

A) pro forma balance sheet

5) The term ________ refers to initiatives, such as Netflix in movie rentals and Zipcar in car sharing, which revolutionize how products are sold in an industry. A) product model modernism B) business model innovation C) feasibility analysis innovation D) value innovation E) opportunity innovation

A) product model modernism

32) In regard to the stages (or rounds) of venture capital funding, the stage of funding that occurs when an investment is made very early in a venture's life to fund the development of a prototype and feasibility analysis is referred to as: A) seed funding B) second-stage funding C) first-stage funding D) mezzanine financing E) startup funding

A) seed funding

21) Jason Andersen just finished writing a business plan for a new type of office supply store. One thing Jason included in the "Management Team & Company Structure" section of his business plan is a chart that depicts the most important skills that are needed for his business and where skills gaps exist. Jason included a(n)________ in his business plan. A) skills profile B) talent report C) abilities profile D) expertise report E) talent summary

A) skills profile

Match the financial objective with its correct definition. A) stability/the overall health of the financial structure of the firm, particularly as it relates to its debt-to-equity ratio B) profitability/how productively a firm utilizes its assets C) liquidity/a company's ability to make a profit D) efficiency/a company's ability to meet its short-term obligations E) profitability/the overall health of the financial structure of the firm, particularly as it relates to its debt-to-equity ratio

A) stability/the overall health of the financial structure of the firm, particularly as it relates to its debt-to-equity ratio

4) Organizations (typically nonprofit) that are formed by firms in the same industry to collect and disseminate trade information, offer legal and technical advice, furnish industry-related training, and provide a platform for collective lobbying are called: A) strategic alliances B) trade associations C) networks D) joint ventures E) consortia

A) strategic alliances

1) Which of the following statements is incorrect regarding founding teams? A) The members of heterogeneous teams are diverse in terms of their abilities and experiences. B) Teams that are working together for the first time have an advantage over teams that have worked together before. C) The psychological support that cofounders of a new business can offer one another is an important element of a firm's success. D) The members of homogeneous teams are very similar in terms of their abilities and experiences. E) Studies show that more than one individual starts 50 to 70 percent of all new teams.

B) Teams that are working together for the first time have an advantage over teams that have worked together before.

34) A board of directors has three formal responsibilities: A) periodically update the firm's business plan, declare dividends, and write the firm's marketing plan B) appoint the officers of the firm, declare dividends, and oversee the affairs of the corporation C) write the firm's strategic plan, declare dividends, and conduct the annual meeting D) appoint the officers of the firm, conduct the annual meeting, and submit the firm's annual report to the Securities & Exchange Commission E) provide funding to the firm, write the firm's strategic plan, and submit the firm's annual report to the Securities & Exchange Commission

B) appoint the officers of the firm, declare dividends, and oversee the affairs of the corporation

10) Most founders' agreements include a ________, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested. A) redemption clause B) buyback clause C) statutory purchase clause D) voluntary recoup clause E) shareholder surrender clause

B) buyback clause

35) Zappo's competence in customer service, Apple's competence in designing consumer products, and Netflix's competence in supply chain management are examples of ________, which serve as each of these respective firms' competitive advantage of their rivals. A) foundational competencies B) core competencies C) core elements D) distinguishing attributes E) foundational attributes

B) core competencies

34) A ________ is a resource or capability that serves as a source of a firm's competitive advantage over its rivals. A) foundational competency B) core competency C) distinctive attribute D) center attribute E) core element

B) core competency

18) The four components of a firm's business model are: A) marketing plan, core strategy, business plan, and customer interface B) core strategy, strategic resources, partnership network, and customer interface C) economic environment, social environment, technological environment, and legal-regulatory environment D) opportunity recognition, feasibility analysis, business plan, and human resource plan E) marketing plan, operating plan, financial plan, and human resource plan

B) core strategy, strategic resources, partnership network, and customer interface

42) In the context of a firm's statement of cash flows, ________ include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds. A) investing activities B) financing activities C) operating activities D) liquidity activities E) capital activities

B) financing activities

27) A board of directors is typically made up of both: A) junior and senior directors B) inside and outside directors C) experienced and inexperienced directors D) novice and expert directors E) paid and unpaid directors

B) inside and outside directors

41) In the context of a firm's statement of cash flows, ________ include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings. A) operating activities B) investing activities C) capital activities D) financing activities E) liquidity activities

B) investing activities

) Which of the following is an example of a long-term liability? A) accounts payable B) real estate mortgage C) accrued expenses D) current portion of real estate mortgage E) owners' equity

B) real estate mortgage

0) Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm? A) C corporation B) sole proprietorship C) subchapter S corporation D) limited partnership E) limited liability corporation

B) sole proprietorship

7) On a firm's income statement, net sales consists of: A) operating expenses minus cost of sales B) total sales minus allowances for returned goods and discounts C) cost of sales minus allowances for returned goods and discounts D) cost of sales minus operating expenses E) total sales minus operating expenses

B) total sales minus allowances for returned goods and discounts

16) Which of the following statements is not true regarding the attributes of the founder or founders of a firm? A) Evidence suggests that important entrepreneurial skills are enhanced through higher education. B) Founders with prior entrepreneurial experience are more likely to avoid costly mistakes. C) Founders with experience in the same industry as their new ventures will typically have "blinders" on and are typically not as effective as founders new to the industry. D) Founders with broad social and professional networks have an advantage. E) New ventures that are started by a team rather than an individual have an advantage.

C) Founders with experience in the same industry as their new ventures will typically have "blinders" on and are typically not as effective as founders new to the industry.

16) ________ involves all the activities required to manufacture a product. A) Resource procurement B) Administration C) Operations D) Outbound logistics E) Inbound Logistics

C) Operations

44) William Woods recently launched a printing company. One thing William is thinking about creating is a panel of experts who can provide him ongoing direction and advice regarding the future of his business. William is thinking about creating a(n): A) analysis panel B) discussion board C) advisory board D) suggestion panel E) accountability panel

C) advisory board

3) Kimberly Jones is the founder of a company in the medical equipment industry. Kimberly's firm is still in the feasibility analysis stage and doesn't have a product that is ready to sell. The company is spending about $25,000 per month and expects to maintain that level of spending until it reaches profitability. The $25,000 a month is Kimberly's: A) consumption rate B) utilization rate C) burn rate D) usage rate E) liquidity rate

C) burn rate

43) A ________ is a group of organizations with similar needs that band together to create a newentity to address those needs. A) joint venture B) network C) consortia D) strategic alliance E) trade association

C) consortia

39) A corporation is formed by filing ________ with the Secretary of State's office in the state of incorporation. A) certificate of intent to incorporate B) articles of business C) corporate credentials D) a corporation permit E) articles of incorporation

C) corporate credentials

31) An important part of obtaining venture capital funding is going through ________, which refers to the process of investigating the merits of a potential venture and verifying the key claims made by the business plan. A) appropriate diligence B) fit diligence C) due diligence D) prior diligence E) responsible diligence

C) due diligence

5) Which of the following is the most important thing that an entrepreneur, or team of entrepreneurs, can do to build a strong ethical culture in their organization? A) implement an ethics training program B) write a mission statement C) lead by example D) hire an ethics compliance officer E) write a code of conduct

C) lead by example

49) The ________ is a form of business organization that is rapidly gaining popularity in the United States. The concept originated in Germany and was first introduced in the United States in the state of Wyoming. A) limited partnership B) general partnership C) limited liability company D) subchapter S corporation E) C corporation

C) limited liability company

3) Jenny Templeton is preparing to launch a home security firm. The team of people that will launch Jenny's firm are as follows: Jenny (CEO), Brent (VP-Finance), Carrie (VP-Sales), a four-person Board of Directors, a five-person Board of Advisors, and Jenny's primary investor, who will assume an advisory role. The group of people that will launch Jenny's firm is called its: A) startup squad B) new venture panel C) new venture team D) startup cadre E) startup troop

C) new venture team

Which of the following is a "primary" activity in the value chain? A) resource procurement B) technology development C) outbound logistics D) firm infrastructure E) human resource management

C) outbound logistics

2) Financial management deals with two things—managing a company's finances and: A) operations management B) inventory control C) raising money D) production management E) supply chain management

C) raising money

48) The main difference between the SBIR and the STTR programs is that the STTR program requires the participation of: A) an attorney B) a venture capitalist C) researchers working at universities or other research institutions D) a certified public accountant E) a government agency in conducting the research

C) researchers working at universities or other research institutions

39) Which of the financial statements used by businesses to keep track of their financial affairs isthe most similar to an ordinary person's end-of-the month bank statement? A) income statement B) balance sheet C) statement of cash flows D) statement of ratio analysis E) statement of owners' equity

C) statement of cash flows

10) Jason Graham's startup, which is in the electronics industry, was launched on January 1, 2009. However, prior to its formal launch, Jason spent many hours working on his business, particularly during the feasibility analysis stage. The time and effort that entrepreneurs put into their venture, that can't be easily measured from a financial point of view, is referred to as: A) effort equity B) intangible equity C) sweat equity D) worry equity E) fret equity

C) sweat equity

3) Which of the following was not identified as one of the four main financial objectives of a firm? A) stability B) efficiency C) timeliness D) liquidity E) profitability

C) timeliness

4) Which of the following statements is incorrect regarding sole proprietorships? A) There is one owner. B) Sole proprietor is in full control. C) Business ends at the owner's death or loss of interest in the business. D) Liquidity of the investment is high. E) Money must be raised by the sole proprietor

D) Liquidity of the investment is high.

43) A(n) ________ is a panel of experts who are asked by a firm's managers to provide counsel and advice on an ongoing basis. A) consultation board B) idea panel C) counseling panel D) advisory board E) suggestion panel

D) advisory board

26) Kate Harrison is in the process of launching an educational services firm. She plans to incorporate the firm. Because the firm will be incorporated, Kate is legally required to have a: A) board of investors B) board of advisors C) customer advisory board D) board of directors E) panel of advisors and peers

D) board of directors

36) When evaluating a balance sheet, the two primary questions are: A) whether a firm has sufficient short-term assets to cover its short-term debts and whether it is profitable B) whether a firm is profitable and whether a firm is financially sound C) whether its costs of sales is going up and whether it is generating excess cash that could be used to pay down debt or pay dividends D) whether a firm has sufficient short-term assets to cover its short-term debts and whether it is financially sound E) whether a firm is profitable and whether it is generating excess cash that could be used to pay down debt or pay dividends

D) whether a firm has sufficient short-term assets to cover its short-term debts and whether it is financially sound

19) ________ depict relationships between items on a firm's financial statements. A) Financial proportions B) Fiscal relations C) Fiscal projections D) Monetary balances E) Financial ratios

E) Financial ratios

"Don't be evil" is the corporate motto for: A) Facebook B) Twitter C) Zynga D) Apple Inc. E) Google

E) Google

45) ________, a relatively new approach to partnering, takes place when a service provided comes inside a partner's facilities and helps the partner design and manage its supply chain. A) Permeating B) Infiltrating C) Penetrating D) Fulfilling E) Insourcing

E) Insourcing

11) Peggy Owens owns a store that sells exercise equipment. Each January 1, she makes a very accurate account of all her merchandise and products waiting to be sold that are in her store. On January 1, Peggy is taking account of her store's: A) long-term assets B) owners' equity C) accounts payable D) accounts receivable E) inventory

E) Inventory

0) Which of the following statements is untrue regarding founding teams? A) The members of heterogeneous teams are diverse in terms of their abilities and experiences. B) The members of homogenous teams are very similar in terms of their abilities and experiences. C) Teams that have worked together before have an edge. D) Studies show that more than one individual starts 50 to 70 percent of all new firms. E) It is generally believed that new ventures started by an individual have an advantage over newventures started by a team

E) It is generally believed that new ventures started by an individual have an advantage over newventures started by a team

16) Which of the following is not a source of equity funding? A) initial public offering B) angel investors C) private placement D) venture capital E) government grants

E) government grants

50) Which of the following is incorrect regarding the typical role of consultants in business startups? A) give professional advice B) international consulting firms, like Accenture and Bearing Point, are financially beyond the reach of most small firms C) consultants fall into two categories: paid consultants and consultants who are made available for free D) give expert advice E) help manage the day-to-day activities of the firm

E) help manage the day-to-day activities of the firm

0) The statement of cash flows is divided into three separate activities: A) profitability activities, stability activities, and investing activities B) stability activities, earning activities, and financing activities C) operating activities, capital activities, and liquidity activities D) spending activities, earning activities, and capital activities E) operating activities, investing activities, and financing activities

E) operating activities, investing activities, and financing activities

33) Keith Barnes is a general partner in a venture capital firm that just funded South Florida Software, a software firm in Coral Gables, Florida. South Florida Software is incorporated, and Keith has taken a seat on the firm's board of directors. In board of directors terminology, Keith is a(n): A) subordinate director B) senior director C) distant director D) inside director E) outside director

E) outside director