An established customer base is an example of structural capital.
Web-based entrepreneurs often discover that the greatest challenge their businesses face
is not necessarily attracting customers on the Web but creating a workable order
fulfillment strategy.
Because of advances in technology, entrepreneurs can outsource many of the operations
of their companies.
S-corporation status usually benefits start-up companies anticipating losses, and highly
profitable firms with substantial dividends to pay out to shareholders.
The tag system of inventory management is the equivalent of the two-bin system but is
used by retail, wholesale, and service businesses.
Objectivesare short-term, specific performance targets that are attainable, measurable,
and controllable.
The first step in establishing a feedback or performance appraisal process is to decide
what performance to measure.
In a public stock offering, the underwriter’s primary role is in selling stock through an
underwriting syndicate it assembles.
Technology has little impact on the quality of customer service a small company offers.
A lock-up agreement prevents sale of insider shares for 12 to 36 months.
By the 1920s, franchising was rife with fraudulent practitioners.
Employers should not keep employees’ medical records strictly confidential.
A business plan should always have a cash flow projection.
The more terms that are specified in a proposed offer, the more likely it is that an offer
exists.
The only fee that franchisers can collect from franchisees is a one-time franchise fee
paid at the outset of the relationship.
Selling on consignment means that the small business owner does not purchase the
merchandise carried from the supplier (called the consignor).
An important question for the small business owner to ask before entering global
markets is, “If we go global, can we get back out?”
Entrepreneurs who apply for loans without having prepared business plans are less
likely to get the money they need.
Performing financial ratio analyses enables a business owner to identify problems
earlybefore they become crises.
It really is not necessary to put the company’s Web address on everything a company
publishes since the company’s name is listed on all search engines.
Captive-product pricingis when the base product is not functional without the
appropriate accessory.
The right brain processes information in a step-by-step fashion.
As with most franchises, the key to H&R Block’s success is the standardization of their
product, processes, etc.
A firm commitment agreement outlines the details of the IPO deal.
Some experts suggest that a small business should maintain a supply of cash on hand
equal to one-fourth its current debts.
Ethics are the fundamental moral values and behavioral standards that form the
foundation for the people of an organization as they make decisions and interact with
stakeholders.
In an IPO candidate, investment bankers look for scalability.
The cash budget is based on the residual method of accounting.
The Supreme Court has defined a partnership as “an artificial being, invisible,
intangible, and existing only in contemplation of the law.”
Since ethical standards are constant from one culture to another, ethical decisions pose
no special problems for companies engaged in international business.
The initial markup on a product is the total markup on all merchandise to cover the cost
of the items and a reasonable profit.
Small businesses with high leverage ratios are less vulnerable to economic downturns,
but they have a lower potential for large profits.
The best way for a small business to ensure quality products is to use quality
inspections.
The first place entrepreneurs should look for startup money is from their family and
friends.
The FTC verifies the accuracy of the franchise disclosure information required by the
Trade Regulation Rule.
Stealth advertising does not necessarily look like traditional ads, and it is often located
in unexpected places.
In a(n) ________ managers and/or employees borrow money from a financial
institution and pay the owner the total agreed-upon price at closing; then they use the
cash generated from the company’s operations to pay off the debt.
A) family loan
B) employee stock ownership plan (ESOP)
C) leveraged buyout (LBO)
D) sale for cash plus a note
To be effective, core competencies should be ________ for competitors to duplicate,
and they must provide customers with a valuable perceived benefit.
A) easy
B) moderate
C) difficult
D) None of the above
The first step in managing cash more effectively is:
A) having an adequate cash reserve for emergency expenditures.
B) rapid payment of accounts payable.
C) speeding up payment of accounts receivable.
D) understanding the company’s cash flow cycle.
________ participating companies get antitrust immunity, allowing them to cooperate
freely.
A) Foreign joint venture
B) Trade intermediary
C) Export venture
D) Export management company
Nonbank sources of debt financing could be based on:
A) asset-based lenders.
B) inventory financing.
C) Both A and B
D) None of the above
Juan is starting a software writing company. He is the owner and has only 3 employees.
He wants a simple inexpensive form of ownership that leaves him in control and that he
can quickly dissolve if he decides to change to another business. His best choice of
form of ownership would be:
A) S-corporation.
B) partnership.
C) corporation.
D) sole proprietorship.
U.S. economic structure is moving:
A) away from an agricultural economy to an industrial economy.
B) away from an industrial economy to a knowledge-based one.
C) back to an agricultural economy.
D) away from an agricultural economy to a knowledge-based one.
The form of ownership with the greatest ability to accumulate capital is the:
A) sole proprietorship.
B) partnership.
C) joint venture.
D) corporation.
________ is one indication that a small business may be undercapitalized.
A) A current ratio below 1:1
B) A quick ratio above 2:1
C) A debt-to-net worth ratio above 1:1
D) A net-sales-to-working capital ratio equal to 3:1
Many small business owners use a ________ strategy to move stale, damaged, or slow
moving goods or to encourage shoppers to purchase merchandise before an upcoming
season.
A) multiple pricing
B) opportunistic pricing
C) discount pricing
D) price lining
Under the ________ method of establishing an advertising budget, the owner sees
advertising as a luxury.
A) what-is-affordable
B) matching competitors
C) percentage of sales
D) objective-and-task
Defining the target market’s potential and describing its characteristics is part of the:
A) description of the product line.
B) marketing strategy portion of the business plan.
C) competitive analysis.
D) business strategy section of the business plan.
Which inventory control system is designed to maintain a running count of the items in
inventory?
A) Visual control system
B) Perpetual inventory system
C) ABC system
D) JIT system
A ________ is an agreement with a bank that allows a small business to borrow up to a
predetermined specified amount during the year without making an application each
time.
A) term loan
B) factor
C) line of credit
D) floor plan
A popular form of debt financing with large companies, a sort of corporate “IOU,”
which is becoming more accessible to a growing number of small companies is:
A) stockbroker-based loans.
B) bonds.
C) commercial bank loans.
D) SBICs.
Which form of financing works especially well for manufacturers, wholesalers,
distributors, and other companies with significant stocks of inventory, accounts
receivable, equipment, real estate, or other assets?
A) Asset-based lenders
B) Corporate investors
C) Government funding
D) None of the above
Private investors, or “angels,” are often:
A) wealthy individuals.
B) entrepreneurs.
C) persons who invest in business startups in exchange for equity stakes in the
companies.
D) All of the above
Shares the corporation itself owns are called:
A) preferred stock.
B) bonds.
C) treasury stock.
D) common stock.
JIT II differs from other production improvement methods in that:
A) it requires the close cooperation of companies and their suppliers.
B) it uses teams.
C) it empowers through extensive training of employees.
D) it makes heavy use of computer technology.
An entrepreneur wants to move into international markets but can’t quite figure out how
to do it. He’s not clear on his target market or how to approach it but he knows he needs
to “go global.” This entrepreneur is experiencing which barrier to international trade?
A) Financing
B) Information
C) Cultural
D) Attitude
Which of the following is correct?
A) Make it easy for customers to change the contents of their shopping carts.
B) Give customers the option of calling to resolve problems they encounter during
checkout.
C) Make it easy for customers to pay for their online purchases.
D) All of the above
If your ethical conduct is based on treating other people the way you expect them to
treat you, you are using:
A) the family test.
B) the professional ethic.
C) the Golden Rule.
D) Kant’s categorical imperative.
Jasmine is cross-training employees so they can move among several different jobs in
order to provide more challenging work for them and to make better use of their skills
for the company. Jasmine is involved in:
A) job simplification.
B) job enlargement.
C) job enrichment.
D) job rotation.
Which of the following is an intangible asset?
A) Building
B) Machinery
C) Vehicles
D) Trademark
A telemarketing customer service unit for the credit card business of an interstate bank
would be most concerned about ________ in the choice of state.
A) proximity to markets
B) wage rates and labor supply
C) competition and business climate
D) population trends and competition
Which of the following is not a common characteristic of entrepreneurs?
A) Desire for responsibility
B) Business plan expertise
C) Preference for moderate risk
D) High energy level
This program was started to encourage small businesses that wanted to expand their
research and development efforts. It has made over 36,000 awards in excess of $10
billion.
A) Small Business Technology Transfer Act
B) Local development companies
C) The SBA CAPLine program
D) Small Business Innovation Research Program
The ________ approach to valuing a business uses the price-earnings ratios of similar
businesses to establish the value of a company.
A) balance sheet
B) capitalized earnings
C) discounted future earnings
D) market
Which of the following items appear on a cash budget?
A) Depreciation
B) Bad debt expenses
C) Noncash items not involving cash transfers
D) Cash receipts and disbursements
In which statement are the account balances reversed to zero on a monthly basis?
A) Balance sheet
B) Cash flow statement
C) Income statement
D) All of the above