BUS 220 Final

In the context of determining pricing models, which of the following best defines cost-plus pricing?

A model in which a desired profit margin is added to the cost of a product as deemed appropriate

_____ is a metric that examines how fast a company turns credit sales into cash.

Account receivable turnover

_____ have traditionally been a major source of funds for established firms but are quite restrictive in their lending to start-up firms, as the risk is perceived to be too high.

Banks

In the context of cash flow analysis, why is a period of rapid growth considered to be one of the most dangerous times for an entrepreneurial business?

Because it can result in the business ordering and paying for additional orders while there is no cash coming into the firm

Why can a small business owner make decisions quicker than a big business?

Because the decision maker is both the owner and the manager of the business

In the context of non-equity funding, identify a true statement about loans.

Debt holders have a right to a firm's assets if the firm fails to pay off their loans.

Which one of the following is a huge advantage for small business owners to start a business?

Desire to be one's own boss

_____ funds are received by a business in exchange for a percentage ownership of the company.

Equity

_____ is the difference between when the money goes out and when it comes in.

Float

_____ are special funds that are neither equity nor debt, that do not require repayment, and are designed to aid businesses in specific areas.

Grants

Which of the following statements is true of the commission compensation system?

It creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm.

Which of the following is a document that describes a job that is to be filled?

Job description

_____ are used to measure the level of indebtedness of a small business.

Leverage ratios

Which of the following personality tests is based on the philosophy of Carl Jung?

Myers-Briggs

Which of the following is NOT a factor in a small business's success?

Other people's needs and wants are not as important as the small business owner's.

Which of the following laws prohibits discrimination in hiring, dismissal, or promotion on the basis of race, color, gender, religious beliefs, or national origins?

The Civil Rights Act

In the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships?

The possibility of bringing in new equity partners

Identify a long-term benefit of developing accurate cash flow statements.

They provide a significant float that allows a company great financial flexibility.

In the context of equity funding, identify a characteristic of venture capital funds.

They tend to invest in high-growth business that can cash out by being bought out by a larger company within a set period of time.

In the context of measuring the performance of a business, identify a true statement about deviation analysis.

To gain the greatest possible insight on a business, deviation analysis must be performed on its performance at frequent intervals.

In the context of good accounting practices, the organizational fund used for expenses too small to write a check for is known as

a petty cash fund.

Several successful businesspeople establish a partnership with each other. They combine their financial resources and use the resultant pool of resources to make equity investments in various high-growth new ventures. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as

a venture capital fund.

The quick ratio is sometimes referred to as the _____.

acid test

Rosa, an entrepreneur, wants to measure the overall health of her small business by using a form of ratio analysis. Her chosen method requires her to measure how often she must restock her firm's inventory, examine how quickly her firm can turn credit sales into cash, and measure the productivity of her firm's fixed assets. In this scenario, the ratio analysis method chosen by Rosa requires the measurement of her firm's _____.

activity ratios

A marketing plan should include a. identifying a potential market. b. establishing a pricing policy. c. developing promotions. d. all of these

all of these

A bank provides John money for the necessary hamburger maker for his business. This is called _____.

asset-based lending

A _____ is a summary of the assets and liabilities of a small business.

balance sheet

Job advertisements written for a new hire should

be kept concise and should communicate the culture of the firm.

Years ago, economists mistakenly predicted that small businesses would

be replaced by a smaller number of big businesses.

A _____ projects all the expenses incurred by a business over a specified period of time.

budget

A job offer is finalized by _____.

candidate signing the offer

A firm's financial liquidity can be measured by its

current ratio.

The _____ ratio provides information on the portion of a business owned by the lenders and the portion owned by the founders.

debt-to-equit

Covore Inc., a start-up firm, receives the majority of the funds it requires to begin its operations from five individuals. In exchange for these funds, each individual receives a share of ownership in the firm. The funds provided to Covore Inc. by the individuals are an example of _____.

equity investment

Credit cards have all the following EXCEPT

equity investment.

In the context of financial tools, a business can quickly generate cash in the short run by selling accounts receivable at a discount to another company. This is a technique known as _____.

factoring

Any company analysis should proceed from the _____ and move toward the _____.

general; specific

In the context of legal forms of business, a general partner in a limited liability partnership

has unlimited liability for any debts or judgments against the firm.

A company seeks to have inventory present only shortly before it is used. This method of inventory control is called

just-in-time inventory.

A _____ is a contractual agreement where a business receives money that must be repaid over a period of time.

loan

_____ are owed by a business and are ultimately due more than a year from the current date.

long term liability

In the context of pricing models, a _____ is a product or service that is sold at a nonoperating loss to simply get customers in the store.

loss leader

Promoting a product or service is considered to be a part of

marketing

Debt is a form of _____ funding.

non-equity

Compared to large corporations, entrepreneurial businesses

play just as important a part in our economy.

Until the mid-1880s, almost all U.S. businesses were _____.

small

Accepting _____ ties a firm to the supplier and usually stops the firm from shopping around for a lower price.

supplier credit

The Small Business Administration was organized as a part of

the Small Business Act of July 30, 1953.

In the context of creating a marketing plan, a new firm's marketing efforts need to focus on

the firm's mission statement.

The break-even point is defined as

the level where revenue coming into the firm is sufficient to cover expenses.

The evaluation of a firm starts with

the mission of the firm.

When forming a sole proprietorship or a partnership, the business debts are

the responsibility of the owners.

The largest group of new business owners is _____.

women

In a limited liability corporation, a firm can have more than _____ investors.

100

Carla and John enter into a partnership and form a business. Under the partnership agreement, Carla is directly responsible for the management of the firm and its liabilities. John has a minor financial stake in the firm and works there, but he is not held responsible for the taxes and debts owed by the firm. In the context of the legal forms of business, Carla and John have formed a _____,

limited liability partnership

The success of entrepreneurial businesses occurs partially because they are _____.

more focused than their large corporate counterparts

Zeus Cisterns is a large manufacturing firm with several employees. Many of the firm's employees are knowledgeable about the firm's various operations and requirements. Accordingly, the organization's functioning is barely affected when an experienced employee quits. Further, in an emergency, various employees can fulfill any critical role that needs to be handled immediately. Given these characteristics, Zeus Cisterns can be said to have _____.

organizational slack

A _____ statement is a financial statement that summarizes the revenue, costs, and expenses incurred during a specific period of time.

profit and loss

In the context of cash flow analysis, _____ are a useful measure as a means to evaluate performance when there is a separation between managers and owners.

profits

In the Kosher Home case study, the cash flow statement reflected receipts from

projected expenses.

Mark, a new business owner, creates two cash flow statements for his firm. The first increases the monthly revenue of his firm by 40 percent, while the other reduces the monthly revenue by 40 percent. He compares the effect of each scenario on his firm's business to understand its financial situation. In this scenario, Mark is developing a _____.

sensitivity analysis

Identify a true statement about ratio analysis.

A ratio analysis only provides insight into a firm's health when compared over time or to the ratios of other firms.

_____ states that individuals make decisions that maximize their own individual benefits.

Agency theory

_____ examine the performance of a business and its ability to make economic returns over and above its costs.

Profitability ratios

In the context of ratio analysis, identify the scenario that best illustrates a leverage ratio analysis.

The owner of Aurvive Inc. measures the firm's finances to make sure that it can generate sufficient funds to repay loans.

_____ is a fund that is organized as a limited partnership.

Venture Capital

_____ is a fund that is organized as a limited partnership.

Venture capital

What is the difference between venture capital funds and business angels?

Venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses.

Which of the following is an advantage that small firms have over large businesses?

they are able to respond quickly to changes

Small companies have flourished for all the following reasons EXCEPT:

they often expand easily in mature industries.

Borealis Computing is a small start-up firm that needs to purchase essential equipment and supplies to begin operations. Gencent LLC, a larger firm, offers to finance Borealis Computing's purchases. Under their agreement, Borealis Computing will repay Gencent LLC overtime at a specified interest rate. In the context of non-equity funding, Gencent LLC's financing of Borealis Computing's purchases is an example of _____.

Supplier Credit

For a new business owner, what are the benefits of using a deviation analysis? a. It identifies the differences between actual performances and predicted performances. b. It allows the maximum flexibility in making changes to a new business. c. It helps develop realistic forecasts. d. all of these

d. all of these

When evaluating the financial foundation of a business, the owner should consider a. comparing current activities with the firm's mission statement. b. whether the firm is exploiting its key competitive advantages. c. comparing current activities with industry standards. d. all of these

d. all of these

Which of the following activities is directly related to the establishment of the financial structure and record keeping of a new company? a. Maintenance of accounting records b. The funds and the level of funding required for the new business c. Management of the paper/data flow of the new company d. all of these

d. all of these

Which of the following information should be obtained in the application/interview process? a. Social Security Number b. Work history c. Education and training d. all of these

d. all of these

Which of the following represents the impact of a poor employee on the functioning of a small business? a. The owner's time is lost. b. The organization does not fully benefit from the employee. c. The problems may bleed over to other employees. d. all of these

d. all of these

In the Numi Organic Tea case study, Numi Organic Tea was founded based on the principles of

fair trade.

Which one of these large companies started out as a small business? a. Facebook b. Apple c. Hewlett-Packard d. All of these

d. All of these

A _____ is an organizational form that treats a firm as a unique entity and is responsible for its own taxes.

Subchapter C Corporation

Sonor Designs is a small business that makes greeting cards. Because of the small scale of the firm's operations, it cannot afford to purchase the expensive printers it needs to make greeting cards. Instead, it rents the printers from another organization. In the context of business financing, Sonor Designs renting essential business equipment from another company is an example of

asset leasing.

A common form of debt for a small business can be classified as _____. a. supplier credit b. loans c. credit cards d. All of these

d. all of these

Investors can be______. a. active b. minority c. passive d. all of these

d. all of these

Promotion is the means by which businesses make their product or service known to potential customers. Which of the following is the most commonly used form of promotion? a. The Internet b. Television advertisements c. Radio advertisements d. all of these

d. all of these

Human resources is defined in economics terms as the _____ and _____ of human effort directed toward producing goods and services.

quantity; quality