P1 Studying Test 1

An individual starts a babysitting business with a loan of $1,000. The loan is for 2 years at a 5% COMPOUND interest rate.

$1,102.50

A farmer providing customer farming and tractor services averages $1,00 per day in revenue with a gross profit margin of 40%.

20

A family owns a tractor sales and supply store. Over the past decade sales of large tractors and implements have decreased as many of the old farms in the community have sold and been subdivided into smaller residential hobby farms.

Add a line of small lawn and garden tractors

A property care business provides landscaping maintenance, debris cleanup, and snow removal. The owner is reviewing several requests for its services.

Apartment complex paying $175 weekly

Gabe has worked as a journeyman electrician for an employer for the past 16 years. He paid a good salary. His only dissatisfaction is the hours are long and often when he requests time off he is denied because of customer worked. Recently, two new electricians were hired that do sloppy work and don't get along well with Gabe. Which benefit of entrepreneurship will Gabe most enjoy?

Autonomy

Which is one of the greatest benefits of entrepreneurships?

Being your own boss

The owner of a computer training center wants to know the book value of all the equipment in the center at the end of the year.

Balance Sheet

An entrepreneur who has a hobby in leathercraft wants to turn it into a business. She wants to sell purses, belts and other leathercrafts from her home. She is researching the business options available.

Build an online storefront

Which two groups benefit most from a well-written business plan?

Business owners, Investors

Based upon the education and skills gained from years of vocational training as an auto mechanic, as well as having grown up in a family of entrepreneurs, a young adult decides to open an auto mechanic shop.

Businesses

The owner of a car-detailing business wants to develop a reputation for customer service.

Customer complaints

The owner of a mobile food truck plans to sell tacos, hamburgers, and other foods to employees in a large office complex.

Certificate

An entrepreneur was building a website for a new dog grooming business.

Copyright

The owner of an online retail business dropships merchandise from the wholesale suppliers directly to her retail customers.

Cost of shipping

What are three characteristics of entrepreneurs?

Creativity, Determination, Enthusiasm

A successful software trainer has decided to open a corporate training business. The software trainer is putting together an organization chart and assessing what job roles will be needed.

Developing succession plans and building a board of advisors

Which are three risks of entrepreneurship?

Financial insecurity, Potential business failure, Long Hours

The owner of a pizza delivery business is seeking new customers.

Geographic

An entrepreneur moves into a small town and notices several stores selling guns and ammunition. The entrepreneur loves the compete in competitive shooting events, but learns there is no shooting range in the local community. Research into the situation reveals that a large number of recreational shooters and competitive shooters are traveling to a public range located in a neighboring town. The entrepreneur decides to open a shooting range in the local community. Based on the scenario provided, what should be emphasized in marketing to attract customers?

Location

A software development consultant works with several clients.

Loss of clients and possible lawsuit

An entrepreneur has been working for a flooring business in a neighboring town. He feels he is ready to open his own flooring business in his local community. Research into the situation reveals that there are only a few contractors in the area and they all charge a premium price for their work. The entrepreneur decides to begin advertising his services in his community. Which should be emphasized in marketing to attract customers to his new business?

Lower prices

A child daycare center needs to identify a value proposition that will help parents feel secure about using their services.

Offering a list of references from other parents. Providing live web cams parents can access from the Internet by using a secure logon.

Match each personal characteristic of successful entrepreneurs to its corresponding meaning.

Patience - Accepts that goals are not reached overnight Flexibility - Is able to adapt and willing to change Courage - Takes risks in spite of possible losses Empathy - Sensitive to thoughts and feelings of others

The owner of a new landscaping company has set a number of milestones for the first year of his business. Achieving which of the following goals will show that the business has broken even or better?

Profitable operations

A local bakery wants to develop close relationships with its customers to encourage return business.

Provide a free baked food each quarter to customers who sign up receive a monthly newsletter

An entrepreneur notices new demand for products featuring characters from a recent movies.

Reliability of supply

The owner of a tire shop in a large city wants to reach the largest number of people possible with promotional efforts. Which method should be used?

TV advertising

Which of the following should be addressed in the description section of a business plan?

Target markets

The owner of a used car sales business is analyzing the cash flow for his business for the prior year.

$100,000

The owner of Reliable Appliance Repairs is analyzing financial parts of the Income Statement including Net Sales, Total Cost of Foods Sold, Gross Profit, Total Expenses, Pre-Tax Profit and Net Profit.

$45,144: A $18,500: B $26,644: C $9,325: D

A welder has arranged for a loan from a family member in the amount of $10,000 with an annual simple interest rate of %6. The loan is due in 12 months.

$600

The Partners of a awning repair shop are assessing the amount of money needed to start a business at a new location. The partners have calculated that the business will generate more than enough revenue to cover monthly expenses after its second month in operation.

$84,920

The owner of a real estate office prepared a cash flow budget for the coming month.

- Available cash: $6,500 - Cash outflow: $4,600 - Cash inflow: $5,000 - Ending cash balance: $1,900

Match the business legal structure to its unique characteristic:

- Easy to set up, but has limited liability: Sole Proprietorship - Terminates upon death of a partner: General or Limited Partnership - Double-taxed, but best for international businesses: C Corporation - Similar to a C Corporation, but taxed at a lower rate: S Corporation - Owned by no one; pays no US federal tax: Nonprofit Corporation Best for a single member seeking low risk: Limited Liability Company

Match the business exit strategy to its result

- Exchanging ownership for cash, either by acquisition or merger: Harvesting - Transferring ownership to people who already operation the business: Management Buyout - A business owner sells ownership to a retirement fund for the employees of the business: Employee Stock Ownership Plan (ESOP) Dividing ownership of a privately held company into shares sold to the public: Initial Public Offering (IPO)

A massage therapist wants to open her own spa. She searches the prices charged at three local competitor spas and estimates she can average $80 per customer visit.

- Fixed Costs = $245,500:A - Average Price = $80:B - Variable Costs = $3.00: C - Break Even Point in unit = 3,187:D

The owner of a popular seafood restaurant needs to hire a new chef.

- Identify the skills required of the new chef: 1st - Write the job description, including minimum and desired requirements: 2nd - Post an ad in places most likely to be viewed by qualified candidates: 3rd - Accept and review applications to asses the most qualified candidate: 4th

A law is passed increasing the minimum wage from $10 to $15 per hour.

- Increased raw material costs - Increased labor costs

A business owner is applying for a loan with a bank.

- Payment history on existing loans - Amounts owed on existing loans - Types of credit already in use by the applicant

After a self-assessment, a potential entrepreneur has learned that she has a very low risk tolerance. Based upon this finding, which approach might be less stressful for the entrepreneur to have her own business?

Buy an existing business that is already successful

What is a primary benefit of starting a new business without purchasing a franchise or buying an existing business?

Developing your own rules

The owner of a pet daycare is presenting a plan to investors to expand the facility and promises the center will meet the needs of customers with a variety of schedules.

Providing extended hours to pickup and drop off pets before and after work

A carpenter wants to start his own business building custom cabinets. Unfortunately, he has no business training and needs assistance writing business plan, finding funding, and obtaining general advice.

SBA

An interior designer has learned that she must pay self employment tax on her individual earnings.

Sole proprietorship

A mechanic just graduated from motorcycle repair school and wants to start a business because there is a lack of motorcycle repair shops in the local town.

Start a new business and invest $50,000 in modern diagnostic tools