Entrepreneurship Ch.9-Ch.15 Final study set
How many months of the year should be illustrated in the first pro forma income statement?
12
Patents that are not design patents have _____ years of protection.
20
The average life expectancy of a privately held business is _____ years.
24
According to the U.S. Patent and Trademark Office, the process of obtaining a patent takes about _____ years.
3
Works created after January 1, 1978, have a copyright for the life of the author plus
70 years
When considering financial difficulties, which of the following statements constitutes a forcing event?
A lender demands the removal of an owner/manager before lending the necessary funds
Which of the following is a useful rule used to avoid pitfalls in selecting a trademark?
Never choose a trademark without first conducting a trademark search.
Which of the following is an indicator that an entrepreneur's business is failing?
Obligations are greater than assets.
Under U.S. law, which of the following is the first step in the initial public offering (IPO) process?
Present the proposal to the board
Which of the following management principles emanated from Steve Jobs?
Put a dent in the universe
An S corporation takes its name from
Subchapter S.
Which of the following falls under Chapter 7 bankruptcy?
The debtor is relieved of obligations.
What is meant by product life cycle pricing?
The pricing needs to be adjusted at each stage in a product's life cycle.
Which of the following is a decision rule for handling questionable costs?
The product should not be profitable if expected sales do not exceed the lower break-even point.
A SWOT analysis refers to analyzing strengths, weaknesses, opportunities, and threats.
True
A common mistake in business planning is using acronyms and technical jargon without clearly explaining them early in the business plan.
True
Because corporate law makes it difficult for businesses to consider employee, community, and environmental interests in their decision making, the B corporation has been introduced.
True
Break-even analysis is used to tell how many units must be sold in order to break even at a particular selling price.
True
Buyers and sellers assign different values to a business.
True
Every business plan should provide information about future harvest strategies.
True
Marketing planning is the process of determining a clear, comprehensive approach to the creation of customers.
True
Misunderstanding industry attractiveness can be a fatal flaw in strategic planning.
True
One of the most common reasons for acquiring a business is developing more growth-phase products.
True
The basic rule for privately held businesses is this: The owner should develop a succession plan.
True
The object of a patent is to provide the holder with a temporary monopoly on his or her innovation.
True
The prospectus for an initial public offering (IPO) must disclose fully all pertinent information about a company and must present a fair representation of the firm's true prospects.
True
Which of the following is not a step in developing a succession strategy?
Undertaking forcing events
Closely held ventures usually suffer from which of the following shortcomings?
a lack of management depth
The recommended length of a business plan is
about 25 pages
Which of the following is not one of the most common methods used in capital budgeting?
anticipated change in net income method
Investments in which returns are expected to extend beyond one year are referred to as
capital investments
Which of the following statements may be the most important in new venture creation?
cash-flow statement
The managerial successor typically is not interested in
creativity
Which of the following balance sheet ratios measures solvency?
current
Which of the following are the two major variables needed to identify specific market segments?
demographic and benefit
Small business owners are often guarded about their businesses, which leads to
distrust of others when formulating a strategic plan
A fixed cost
does not change in response to changes in activity for a given period of time.
New ventures are important to the economy in terms of innovation and
employment
A key aspect to be considered in an effective succession is the
entrepreneur's vision
The most common viewpoint in business plans is viewpoint of the
entrepreneur.
Secondary data consist of
existing information
Chapter 13 bankruptcy involves a reorganization of the enterprise.
false
The first source for succession often is
family and in-house personnel
Which of the following is not perceived as a difficulty in long-range planning?
favorable market conditions
Happenings that cause the replacement of the owner/manager of a family business are called
forcing events.
The reason many small business managers lack expertise is that they are
generalists
The cash flow does not come from
goods purchased on account
All of the following factors affect pricing strategies except
government mandates
A market is a
group of consumers who have purchasing power and unsatisfied needs.
Which of the following stages of venture development requires major changes in entrepreneurial strategy?
growth
Which of the following pricing models is not indicative of pricing in the social media age?
growth stage model
Sometimes consumers associate a higher price with
higher product quality
Items that can qualify for patent protection include all of the following except
ideas
Emotional bias is likely to have which of the following effects on a seller's valuation of a business?
increase the valuation
In the entrepreneurial strategy matrix, the creation of something new and different is categorized as a(n)
innovation
Return on investment
is net profit divided by investment
Most privately held firms
lack a succession plan
Specific forms of partnership include _____ and _____.
limited partnerships; limited liability partnerships
Which of the following survey methods typically has the lowest respondent cooperation?
mail surveys
A business plan
may help an entrepreneur avoid a project that is "doomed" from the start
A patent gives the holder a temporary
monopoly.
A trademark is a distinctive _____ that is identified with a company's product.
name
Which of the following works on the premise that a dollar today is worth more than a dollar in the future?
net present value
To establish a sole proprietorship, a person needs to
obtain whatever local and state licenses are necessary.
A budget that is a statement of estimated income and expenses over a specified period of time is referred to as a(n) _____ budget.
operating
When considering management, the entrepreneur should be concerned about
ownership positions
The first step in constructing an operating budget is
preparation of the sales forecast
When comparing and contrasting major competitors along core competitive dimensions, you should include
product, technology, and distribution.
Comparing financial numbers in order to make decisions is referred to as
ratio analysis.
Loan proceeds are not directly tied to
sales revenue.
The text of a patent application is known as the
specification
Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid
start-up costs
Analysis of a firm's external and internal environments provides the firm with the information to develop
strategic intent and strategic mission
Goodwill, patents, deferred financing costs, and other intangible assets are considered when computing
the adjusted tangible book value
The second section of a business plan is
the business description
In the simple linear regression analysis equation, Y = a + bx, Y represents
the dependent variable
Which of the following is needed to prepare a pro forma balance sheet?
the last balance sheet prepared before the budget period began
Market segmentation is
the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest
A financial source that reads a business plan derives which of the following beneficial information?
the venture's ability to service debt or provide an adequate return on equity
Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need
to formalize planning because there is a great deal of complexity.
The completed business plan provides the entrepreneur with a
tool for communicating with financial sources
Which of the following does a post-money valuation include that a pre-money valuation does not?
venture capital investment
Which of the following are the three types of leadership of consequence to new ventures described by the text?
visionary, strategic, and managerial
After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.
False
Effective marketing is based on three key elements: marketing philosophy, market segmentation, and consumer philosophy.
False
Emotional bias is not an underlying issue in valuing a business.
False
Only 10 percent of all privately held enterprises make it to a third generation.
False
Pro forma statements show the firm's present financial position.
False
Small firm owners/managers are usually very open and trusting about their businesses and the decisions that affect them.
False
The pro forma balance sheet is used in the critical risk segment of the business plan.
False
Vesting on founders' stock refers to holders of preferred stock having the right to purchase additional shares when issued by the company.
False
Which of the following questions should an entrepreneur ask when a business plan is turned down?
If you were in my position, how would you proceed?
Which of the following is not a suggestion a tax accountant or lawyer might make concerning tax reduction?
Increase management's salaries and fringe benefits
Which of the following statements about a business plan is true?
It is the minimum document required by any financial source.
Which of the following statements about seeking legal advice with respect to succession planning is true?
Legal advice is not critical, but beneficial.
In the context of buying a business, a known commodity may command a higher price for which of the following reasons?
Avoiding start-up costs has value
Which of the following should be done to avoid the pitfall of "no market niche" (segment)?
Clearly target a niche
Which of the following statements regarding communication after the sale is true?
Communication is a key step between the seller and the buyer and between the buyer and the current management personnel
Which of the following is the first step in the traditional pricing formula?
Determine the adjusted tangible net worth
_____ refers to conducting a thorough analysis of every facet of an existing business.
Due dilligence