Bus 220 Final
Entrepreneurs can use their credit cards for their payments that gives them a leverage of __________
25 days to repay the amount -this is also a positive cash flow situation for the entrepreneurs
general partnership
A more complex business form that has two or more people sharing unlimited liability in a new business venture
What examines an employee's goals and the outcome of those goals over a particular given period?
A performance review
Which law requires that there be no discrimination in the hiring, management, or dismissal of employees with disabilities?
Americans with Disabilities Act
__________ is a report that creates a listing of all checks that have been written and all that have cleared through the bank
Check register
What is NOT one of the four classic analysis techniques?
Competitive analysis
What are considered alternative sourcing tools for funding a business?
Crowdfunding and crowdsourcing
What is NOT true with regard to managing the flow of data?
Data measurement methods must be complex, i.e. truth they should be simply
___________ states that employees judge how well they are treated in the context of how well others are being treated
Equity theory
Who established a minimum wage for workers?
Fair Labor Standards Act
T/F Entrepreneurs typically do not have the right to fire employees
False
T/F Workers' compensation laws in the US require the rates of workers' compensation insurance to be the same in all states.
False
T/F • Credit cards are a form of equity investment
False; it is not a form
A business with employees will be required to calculate and deduct various payroll taxes for....?
Federal, state, and local authorities
In recent years, the ______ has become one of the most popular forms of incorporation for new businesses.
LLC
What forms of business has two classes of partners?
Limited liability partnership
What are the largest firms that have been a leading source of venture capital in US?
Microsoft, Cisco, and Intel
What is ratio analysis
Provides a picture of the company's health
______________ do an extremely good job recruiting and placing people with companies that have unique skill requirements
Recruiting companies
What type of legal business organization is characterized by the fact that the person who owns the business and the business itself are treated as the same entity?
Sole proprietorship
What incorporation is required to pay an income tax?
Subchapter C
____________________ requires businesses to provide unfettered access to all disabled people
The Americans with Disabilities Act
What can help manage the cash flow of a new entrepreneurial firm?
The ability of a firm to barter for services
An important feature of a Subchapter C Corporation is that there are no limits to....?
The number of shareholders that an organization can obtain
What is payment based on some percentage of sales?
a commission
Quick ratio examines...?
a company's pure cash position relative to its current liabilities by removing inventory from the firm's assets
What is the next step in the hiring process after the job description has been created?
advertising the position
Liquidity ratios
are used by banks and other creditors to determine credit worthiness
A business owner hires a mechanic to work on cars owned by the customers. The mechanic makes a mistake that leads to significant and costly damage to a customer's car. Which type of insurance can be purchased to cover the damages?
bonding
What type of insurance can be purchased to cover losses from employee embezzlement?
bonding
What should a cash flow not be confused with?
budget
What is covered in The Fair Labor Standards Act (FLSA)?
covers virtually all workers except those who work on small farms and administrative employees.
___________ are those liabilities or debts that the business has to pay within one year
current liabilities
What are sources of nonequity capital to start a business?
debt and grants
job description
describes the skills and capabilities that a candidate should have
ROA
examines a firms ability to return an overall profit compared with the amount of assets that the firm has invested into the effort
The _____________ for a proposed business focuses on the business's ability to generate positive cash flow quickly
financial analysis
Besides sole proprietorships, what business forms requires the business debt to flow directly to the owner(s)?
general partnership
Women-owned businesses and Veterans are examples of groups typically targeted for...?
grants
A pro forma _________ projects the future income of an entrepreneurial firm
income statement
The debt to equity ratio provides...?
information on the portion of the business owned by the lenders and that portion owned by the founders
Evaluating a firm starts with its __________ and how the entrepreneur expects to build its ____________
mission, competitive advantage
Equity is an investment into the entrepreneurial business made by the _____________
owners of the firm
What is the initial value at which the firm's shares are offered?
par value
The details of the job offer should be developed __________ to the conversation with the candidate
prior
Once the candidate pool has been created, business owners should _________ the number of candidates to be interviewed
reduce
An individual who is unsure of his business idea, plans to keep his business very small, or have minimal amount of cost and risk is more likely to select a _________________ as a business form.
sole proprietorship
Inventory should be taken at scheduled times during the year and an exact match should be completed between _________
units sold, ending inventory, and starting inventory
What is the first step in the hiring process?
writing a job description
T/F An entrepreneurial firm's package of benefits has as much of an impact as the compensation it offers to a job candidate.
True
T/F Business owners should provide the interviewee with a realistic preview of the job and company to set appropriate expectations for the potential employee
True
T/F Cash flow statements for new businesses are not similar to the typical publicly traded corporate annual reports
True
LLC's
are very inexpensive to form as this type of organization is formed by simply submitting the paperwork to a state government and having a charter issued prior to beginning operations.
Sensitivity analysis
is a chart using financial statements to create a pro forma projection based on a dramatic increase or decrease in sales, or the complication of a major change in the business
What are typical issue grants?
o Government o Private foundations
Besides banks, finance companies, and friends and family, another source of nonequity loans comes from:
the founders
What are the the three key issues involved with starting a business?
the funding of the firm, the creation of an accounting system, and the flow of information in the new business
Double taxation
A corporation pays a tax on its profits; then those after tax profits are paid as dividends to the owners, who then have to pay personal income taxes on the dividend income.
The critical issues of personal liability and the desire to limit exposure to the original equity investment led to the development of corporations. A corporation addresses both drawbacks by .....?
Considering the business and the individual separate entities
T/F The most important role of human resources is to meet basic legal requirements
False
T/F Workers' compensation insurance is considered a minor expense for a business
False
A _________ statement projects all the costs that will be incurred by a business over some period of time and allocates those expenses evenly over that time.
budget
A separate accounts payable record should be maintained for __________
each creditor
What is an important goal when writing a job advertisement?
is to provide potential applicants with important information so that they can evaluate their qualifications for the position
A limited liability corporation (LLC) and a Subchapter S Corporation are similar in that they both have the _____________
limited liability feature
How is total/fixed asset turnover calculated?
net sales divided by fixed assets or net sales divided by total assets
Debt is a major source of _______________ and can come from banks, credit cards, or suppliers
nonequity financing
What statements regarding the Occupational Safety and Health Administration are correct?
o Fines are lower for businesses that have fewer than 25 employees o It has tried to be more lenient toward small businesses o Small firms with less than 10 employees do not have the record-keeping regulations that larger firms have
What statements are true of the Americans with Disabilities Act?
o It requires special accommodations to be made for employees who need physical adaptation to work at a business o The Act requires Braille signs to be provided in a business o It requires businesses to provide unfettered access to both employees and customers who are disabled
What are types of corporations developed by the US legal system?
o LLC o Subchapter C o Subchapter S
What statements about ratio analysis are true?
o One firms ratios should be compared to other similar firms, an industry average, or the previous months/years performance o Ratios by themselves are of little value o Ratios help the entrepreneurs examine the firms overall health
What are typically the targets of grants?
o Particular industries o Disadvantaged groups o Economic areas
What are the three basic types of legal business organizations?
o Sole proprietorship o Partnership o Corporation
What statements regarding drug testing employees are correct?
o Some states offer discounts on workers' compensation insurance for businesses that have a drug-free workplace program o Business owners have a right to insist on drug testing o The employees' privacy rights can come into conflict with a drug-free workplace policy
What are the typical advantages of having suppliers invest in a new business
o Suppliers refrain from trying to run the business o Suppliers do not aim to take the business over if it does particularly well
True statements about hypothesis driven analysis for new businesses
o The analysis uses the hypothesis that an entrepreneur has about what a customer really desires o The analysis is conducted in small batches
What are advantages of asset leasing for a new business?
o The business Is able to acquire the assets that it needs to begin operations with a minimal cash outlay o The company is not stuck with an aging asset as the entrepreneur is able to trade up
What statements about record keeping are correct?
o The company should maintain a record of who responded and the job's criteria o The company should keep track of all advertisements that have been run whether a physical publication or on the Internet o The company should keep track of records in case someone alleges that the company discriminates in its hiring practices
Why should business owners retain employees who add value?
o The hiring process consumes a lot of time and money o It takes time to bring each new employee to an acceptable level of performance
What are likely to affect a small business when an employee becomes a problem?
o The organization does not fully benefit from the unhappy employee o The problem may cause other employees to have problems o The owner loses time dealing with the situation
What statements regarding unemployment compensation are correct?
o The tax is paid by the employer based in part on the company's history of unemployment o It pays a set amount of money directly to the former employee o People are expected to look for employment while they are receiving unemployment compensation
What are low or no cost means of advertising a job opening?
o Trade association o Word of mouth o College placement office
In new corporations, the shareholders and board of directors are often the _______ individuals
same
Grants are....?
special funds that are neither equity or debt funds that are designed to aid businesses in specific areas
What does activity ratios measure?
the efficiency with which the entrepreneur is handling the business's resources
When does the hiring process ends?
when the candidate returns a signed original offer letter
The government closely regulates children who work under the age of ___
16
If a corporation suffers substantial losses, the founder will lose only his or her investment in the business.
True
T/F A company's compensation system is of the highest importance for employees
True
T/F A hybrid compensation system pays a salary along with a commission
True
T/F Details of the social responsibility policy is NOT required when forming a Subchapter C or Subchapter S Corporation?
True
T/F Hiring a family member does not eliminate discrimination issues for larger family businesses.
True
T/F Promoting a drug-free workplace may be made more difficult in states like CO or WA where marijuana laws and drug-free workplace programs may conflict.
True
T/F • Entrepreneurs should always ask candidates to fill out an application for employment.
True
T/F• Venture capital is NOT a common form of debt for a new business
True
General and limited are two broad categories of _________
partnership
Under the Affordable Care Act....?
businesses with more than 50 employees must provide insurance for their employees.
How do you calculate current ratio?
by dividing current assets by current liabilities
Short surveys analyze the business, its activities, and its performance without focusing on _____________
financial data
Pro forma _________ help entrepreneurs estimate what the business's financial position will look like in the future
financial statements
What are two aspects of sensitivity analysis?
o Helps examine the responsiveness of the potential cash flow to dramatic changes in either revenue or cost stream o Is should be conducted during the due diligence phase of studying a business idea
Describe the roles that human resources management plays in business?
o Hiring new employees o Inspiring employees o Managing employees o Retaining employees o Dealing with difficult employees
What steps are included in a systematic employee review?
o How employees perform related to their objectives o Defined objectives for the next year o Plans for future employee growth through experience and training
What are true statements regarding net profit margin?
o Net profit is the bottom line calculation from the income statement o It provides entrepreneurs with an understanding of the margin earned after all obligations and expenses are considered o It is calculated by dividing net profit by net sales
What are common examples of licenses and permits?
o Occupancy permits o OSHA food-handling permits o Business licenses
What questions are examples of questions that employers may not ask?
o Religion o Age o Gender
What is an example of a hybrid compensation system where the employee is paid a small salary but earns a percentage of the profits at the end of the year?
profit sharing
What is a budget?
projects all the costs that will be incurred by the organization over some period of time and allocates that expense evenly over the relevant time period
Issues surrounding succession are never a problem in a family run business.
False
Which form of intellectual property protection is the most complex and expensive and covers a specific innovation?
Patent
What are examples of a current asset?
o Accounts receivable o Cash o Notes receivable
A sole proprietorship is very popular among individuals who....?
o Are unsure about their business idea o Have a business where the costs and risks are low o Have a very small business
True statements about deviation analysis
o Tracks various performance measures from one time period to the next o Uses a deviation chart that should be maintained for all important metrics
Float is the difference between....?
when cash leaves the business and when it comes in
_________ and ___________ provide necessary information to calculate the times interest earned
Income statement and balance
____________ are those assets that can be easily converted to cash
Current assets
When calculating the times interest earned ratio, a business owner wants a _________ number, which shows the business is capable of servicing its debt load
higher
The effective application of ___________ is one means to limit liability concerns of the new venture
insurance
contract
is an agreement between two parties to perform certain activities for some consideration
An employee who earns a salary...?
is paid a set amount of money that is paid without regard to how many hours worked in a given time period
What is a grant?
is simply money designed to help the new business begin operations with no expectation of repayment
hourly wage
is the amount that a business pays an employee per hour of work performed
Deviation analysis
is the analysis of the differences between the predicted and the actual performance
Human resources
is the quantity and quality of human effort directed toward producing goods and services
What is a sensitivity analysis?
is used by entrepreneurs to judge whether their businesses can survive the worst case or successfully implement the best case cash flow scenarios
Gross profit margin ratio
is used to determine the overall profit that is obtained from all sales during the period
ROE
is used to provide investors with an evaluation of how much each dollar of their investment is generating in profit
Which class of partner in a limited partnership is considered to be a passive investor and his or her liability is limited to his or her investment in the firm?
limited
Its not advisable for entrepreneurial businesses to use ___________ based on Fortune 500 firms for comparison purposes
liquidity ratios
Activity ratios
measure the efficiency with which the entrepreneur handles the business's resources
Liquidity ratios
measure the short term ability of the firm to meet its obligations
A firms key
measures should focus on the important aspects with which the firm hopes to build its competitive advantage
An inventory record will include:
o A description of the item o An item number o A unit and total cost o The quantity of the item
What are examples of current liabilities?
o Accounts payable o Accrued payroll o Bank notes
What are part of the hiring process?
o Advertising for a job position o Writing a job description
Potential outcomes of a poorly managed credit card are what?
o An increase in the interest rate o Possible bankruptcy of a firm
Which of the following must be formally addressed by both Subchapter C and S Corporations?
o Authorization of more shares of stock o Holding annual board meetings o Reporting standards to local, state, and federal authorities
What items should be included on the payroll record?
o Base pay and overtime pay rate o Number of hours worked o Taxes o Benefit deductions
What are the results of violating a trademark?
o Be required to change the name o Be required to pay monetary damages
Two related entities that can help the new business owner foresee potential legal liabilities are.....?
o Board of directors o Board of advisors
What statements regarding changing the commission system as the company grows are correct?
o Business owners need to think about the sales commission long term when creating it o Existing salespeople do not like changes to compensation systems that decrease commissions o New hires do not think it is fair to be paid a lower commission than older sales staff
What are 3 things trademarked by most large companies?
o Company symbols o Company name o Company tag lines
What are common forms of debt for a new business?
o Credit cards o Loans o Supplier credit
What is true with regards to managing the flow of data?
o Data are tied to the strategic needs of the business o Data are obtained in timely manner
What are the 4 class analysis techniques?
o Deviation o Ratio o Sensitivity o Short surveys
What statements regarding equity theory are correct?
o Employees need a clear understanding of how their compensation compares to peers' o Employees will accept that someone who has been with the company longer may earn more o Employees judge the fairness of their compensation based on another's in a similar situation
What statements regarding a company's compensation system are correct?
o Employees often compare their salary with others at their company o Salary and benefits play an important role in maintaining employee morale o It needs to be fair and equitable for all employees
What statements regarding performance reviews are correct?
o Employees should be given praise as well as details of areas of improvement o They review an employee's performance against a set of goals o They are for a specific time frame, often one year
What are characteristics of a good employment advertisement?
o Express excitement about the firm o Make the advertisement stand apart to draw potential applicants' attention o Communicate the firm's culture
What activities may be included when a candidate spends a full day at the company?
o Having the applicant work with other employees o Allowing the applicant to see the day to day company environment o Allowing the applicant to have lunch with other workers
A chart of accounts is simply a listing of each type of activity and each type of asset within the company. Ex. _________
o Income category o Expense category o Asset category
What following industries would be highly regulated by the government?
o Industries involving alcohol o Military-related businesses o Medical-related industries
What is true about deviation analysis?
o It assists entrepreneurs in developing realistic forecasts o It helps to maximize flexibility in making changes as the business grows o It should be done each month
What statements are true regarding liability insurance?
o It helps protect against lawsuit judgements o It covers product negligence o It covers the business for accidents
What are two purposes of a cash flow statement for a business that helps owners?
o It helps the owners accurately keep track of the business's overall cash position o It helps the owners display the ability of the company to meet its obligations
3 aspects that are true about a float
o It is the period of time between a business's bank deposits and when the bank gives access to the funds o Banks typically have free use of the funds during the float period o Banks usually hold state checks and wire transfers for a period of time
Identify the typical requirements for a new business to obtain a city or county business license
o It should pay a set fee, which is usually less than $100 o It should agree to report basic information about its performance on a set schedule
What is required when forming a Subchapter C or Subchapter S Corporation?
o Location of the corporate headquarters o By-laws of the organization o Name of the corporation
What are disadvantages associated with Subchapter S Corporations?
o May require a lawyer to process paperwork o Expensive, complex formation compared with sole proprietorships o Limitation on the number of shareholders
What questions should be included on a job application?
o Name, address, and phone numbers o Social security number o Work history
An entrepreneur of a retail store looks to hire billing executives. The job requires the executives to greet and interact with a large number of customers every day. In this scenario, what are perfectly acceptable to test the job candidates?
o Personality test o Test on basic mathematics
What should an advertisement ask an applicant to submit?
o Resume o List of references
What are compensation options that a small business owner may employ to pay employees?
o Salary o Commission o Hourly wage
What are three ways to manage the business's cash flow?
o Seek the longest time to pay for expenses without hurting the business's reputation o Use a business credit card to pay some expenses to take advantage of up to a 25-day delay in paying expenses o Ensure that products and services are priced high enough
What are excellent sources of information regarding regulatory requirements?
o Small Business Assistance Centers o Chamber of Commerce o Small Business Administration o Local department of economic development
In what business forms do the business debts flow directly to the owners
o Sole proprietorship o General partnership
What statements regarding negotiating the deal with a job candidate are correct?
o The business owner should finalize the agreed offer in writing o The business owner should decide the points for which he or she is willing to negotiate o The offer should require a fairly prompt response from the candidate
What statements regarding bonus systems are correct?
o They are not as well defined as profit sharing o They are based on the employee's performance o They are similar to profit sharing
What are the characteristics of loans as a source of funding for new businesses
o They are secured by assets or a personal guarantee o They are often repaid monthly from cash flow
True statements about short surveys
o They can be given to any party to a transaction with the business o They give entrepreneurs the opportunity to evaluate their firms performance on dimensions that may lead to financial success
What is true about liquidity ratios?
o They measure a business's short term ability to meet its obligations o They take into account debt or accounts payable that must be paid in the short term o They are used by banks to measure the credit worthiness of the business
What should entrepreneurs do to have a proper justification for firing employees?
o They must be diligent in their efforts to assist poorly performing employees o They must develop a paper trail regarding all employees
A business's __________ often come from a variety of sources that may not automatically be recognized
revenues
For _____ purposes, all businesses must have an employer identification number
tax
What is an advantage of the Subchapter S Corporation?
that it allows the owners to report their income or losses on their personal income tax returns, thus avoiding double taxation
What does the debt to assets ratio measures?
the percentage of the firms assets that are owned by creditors
Petty cash register account should be used when.....?
there is an expense too small to write a check for or when a check is simply inappropriate
Business owners are guilty of discrimination when.....?
they base the hiring, dismissing, determining the level of pay, or promoting of an employee based on his or her race, color, gender, religious belief, or national origin.
What is NOT a common example of a license or a permit?
trademark permit
A poorly performing employee is said to have a _______ impact on the entrepreneurial firm
triple
Employers may ask job candidates about their prior convictions but not their _________
arrest record
It is important to record and balance the company account on......?
at least a monthly basis
In the US, a ___________ is assumed to apply to anything that is your own original work (whether that original work itself is filed with the US government or not)
copyright
A Subchapter C Corporation has a ___________ that is equal to the par value times the number of shares distributed
floor value
Profitability
a result of effectively managing the assets and cash flow of a firm
Title VII of the Civil Rights Act applies to firms with more than ______ employees
25
The average business spends over ________ per employee on health care each year
4,000
Many regulations enacted by the federal government do not apply to businesses with fewer than _____ employees.
50
T/F• The founder should avoid personally lending money to the new business because it is an unsecured investment
False
Subchapter S and Subchapter C Corporations take their names from subchapters in the _____________ Code
Internal Revenue
What statements regarding commission compensation systems are correct?
o They sometimes cause employees to focus on commission instead of the overall good for the firm o Sometimes, employees figure out how to abuse the system o Employees may make sales to customers who are financially weak and do not pay their bills.
What statements about recruiting companies are correct?
o They typically charge the company a fee o Fees can be a significant portion of the employee's first year's salary o They generally provide employers with highly qualified employees
A copyright can be claimed on creative materials generated, such as.....?
o Unpublished music o Books o Advertising copy o Artwork
True statements about gross profit margin
o Used to determine the overall profit obtained from all sales during the period o Calculated by dividing gross profit by net sales o It is the most basic of the profitability measures
True statements about leverage ratios
o Used to evaluate the relative level of indebtedness of a business o Creditors use them to ensure that the business has the ability to repay loans o There are 3 leverage ratios
Under which of the following conditions are examples of when a business owner should conduct a more comprehensive reference check?
o When the position requires the employee too visit customers' homes o When the employee will be driving a company or personal car for business reasons o When the employee might be in a position to put the business or its customers at risk
What questions should be considered by a new business owner before entering into a lease contract?
o Who would be responsible for making improvements to the facility? o Can the business owner renew the lease after the term expires? o Who is responsible for maintenance and other facilities issues? o Who has to carry the liability insurance and at what level?
In the context of the financial tools used by entrepreneurs, the time value of money
o is calculated as the value of an entrepreneur's investment in time and money if he or she did not do the proposed venture o refers to value of money over time at a given rate of inflation or other type of return
