________ is a financial transaction whereby a business sells its accounts receivable to a
third party at a discount in exchange for cash.
A) Factoring
B) Vendor credit
C) Peer-to-peer lending
D) Crowdfunding
E) Leasing
Answer:
Which of the following statement is incorrect about business plans?
A) Writing a business plan forces a firm’s founders to systematically think through each
aspect of their new venture.
B) For most new ventures, the business plan is a dual-purpose document used both
inside and outside the firm.
C) A business plan is typically 25 to 35 pages long.
D) A large percentage of entrepreneurs do not write business plans for their new
ventures.
E) The business plan should be written while the feasibility analysis is being completed.
Answer:
Which of the following statements is incorrect regarding boards of directors?
A) If a new venture organizes as a corporation, it is not legally required to have a board
of directors, but it is strongly recommended.
B) A board is typically made up of both inside and outside directors.
C) The board is responsible for declaring dividends.
D) Most boards meet formally three or four times a year.
E) The boards for publicly traded companies are required by law to have audit and
compensation committees.
Answer:
If a firm determines it can use the percentage-of-sales method and it follows the
procedure described in the textbook, then the net result is that each expense item on its
income statement (with the exception of those items that can be individually forecast)
will grow at the same rate as sales. This approach is called the:
A) continuous percentage method of forecasting
B) stable fraction method of forecasting
C) regular proportion method of forecasting
D) constant ratio method of forecasting
E) steady percentage method of forecasting
Answer:
The ________ is the string of activities that moves a product from the raw material
stage, through manufacturing and distribution, and ultimately to the end user.
A) consequence sequence
B) business chain
C) meaning chain
D) value chain
E) worth procession
Answer:
A(n) ________ details the responsibilities and the ownership shares of the partners
involved with an organization.
A) partnership agreement
B) industry contract
C) business pledge
D) business agreement
E) partnership pledge
Answer:
A ________ is a partnership between two or more firms that is developed to achieve a
specific goal, and has no joint ownership involved.
A) joint alliances
B) joint venture
C) licensing agreement
D) merger
E) strategic alliance
Answer:
In the context of strategic alliances, ________ typically match a company with a
distribution system with a company that has a product to sell to increase sales of a
product or service.
A) promotion alliances
B) marketing alliances
C) organizational alliances
D) directional alliances
E) technological alliances
Answer:
Edward Andrews has decided to write a business plan that is intended to be read
primarily by his staff, which will present a blueprint for his company’s entire operation
and will provide guidance to operational managers. Edward should write a(n):
A) operational business plan
B) tactical business plan
C) strategic business plan
D) summary business plan
E) functional business plan
Answer:
________ is the process of generating a novel or useful idea.
A) Innovation
B) Imagining
C) Creativity
D) Visualization
E) Envisioning
Answer:
A(n) ________ industry is one that is characterized by a large number of firms of
approximately equal size.
A) fragmented
B) mature
C) declining
D) emerging
E) global
Answer:
According to the example provided in Chapter 5, www.1800contacts.com possesses a
nontraditional barrier to entry referred to as:
A) unique business model
B) strength of management team
C) access to distribution channels
D) Internet domain name
E) first-mover advantage
Answer:
According to the textbook, PharmaJet, in needleless injection systems, and d’light, in
solar-powered lanterns, are examples of entrepreneurial firms who are exploiting
opportunities in ________ industries.
A) global
B) declining
C) mature
D) emerging
E) fragmented
Answer:
According to the Global Entrepreneurship Monitor (GEM) 2010 survey, about
________ of adults in the United States are either starting a business or are running a
business that has been in existence for less than 3 1/2 years.
A) 3.8 percent
B) 5.5 percent
C) 7.6 percent
D) 9.0 percent
E) 12.5 percent
Answer:
According to the 2009 National Business Ethics Survey, a total of ________ of the
employees surveyed said they had observed misconduct or unethical behavior in the
past year.
A) 12 percent
B) 21 percent
C) 32 percent
D) 49 percent
E) 60 percent
Answer:
A(n) ________ is a physical or digital repository for storing ideas.
A) suggestion bank
B) idea depository
C) suggestion pool
D) idea bank
E) proposition pool
Answer:
A(n) ________ is an early user of a firm’s product who is willing to give a testimonial
regarding his or her experience with the product.
A) tribute account
B) reference account
C) approval report
D) appreciation account
E) acknowledgment report
Answer:
Which of the following statements is incorrect regarding business plans?
A) A firm’s business plan is typically the first aspect of a proposed venture that will be
seen by an investor.
B) To make the best impression, a business plan should follow an unconventional
structure, so it will stand out.
C) A business plan has both an external and an internal audience.
D) A company’s business plan is typically written by its founders.
E) Potential investors are typically keenly interested in a company’s business plan.
Answer:
An arrangement between two or more firms that establishes an exchange relationship
but has no joint ownership involved is called a:
A) network
B) trade association
C) consortia
D) joint venture
E) strategic alliance
Answer:
A(n) ________ agreement binds an employee or another party to not disclose a
company’s trade secret. A ________ agreement prevents an individual from competing
against a former employer for a specific period of time.
A) nondisclosure, noncompete
B) non breach-of-trust, nonchallenge
C) voluntary truth, nonparticipate
D) binding confidentiality, noncompete
E) ethics, nonparticipate
Answer:
Which of the following is an example of a long-term liability?
A) accounts payable
B) real estate mortgage
C) accrued expenses
D) current portion of real estate mortgage
E) owners’ equity
Answer:
While franchise agreements vary, each agreement typically contains two sections:
A) the statutory agreement and the purchase agreement
B) the franchise agreement and the buy agreement
C) the buy agreement and the membership agreement
D) the procurement agreement and the statutory agreement
E) the purchase agreement and the franchise agreement
Answer:
The ________ is the company that owns the intellectual property. The ________ is the
company purchasing the right to use it.
A) endorsee, endorser
B) licensor, licensee
C) licensor, endorsee
D) endorser, endorsee
E) licensee, licensor
Answer:
Equity financing (or funding) means:
A) exchanging partial ownership in a firm, usually in the form of stock, for funding
B) getting a grant or outright gift
C) getting a loan
D) getting a lease
E) getting a loan guarantee
Answer:
In 2000, Tish Cirovolo realized that there were no guitars on the market made
specifically for women. As a result, she started Daisy Rock Guitars, a company that
makes guitars just for women. Daisy Rock Guitars are stylish and come in feminine
colors, and incorporate design features that accommodate a woman’s smaller hand and
build. The best way to describe how Cirovolo’s business idea was recognized is:
A) brainstorming
B) talking to consumers
C) reading industry reports
D) observing trends
E) finding a gap in the marketplace
Answer:
________ patents are the most common type of patent and cover what we generally
think of as new inventions.
A) Value
B) Product
C) Method
D) Utility
E) Design
Answer:
Which of the following statements is incorrect regarding sole proprietorships?
A) There is one owner.
B) Sole proprietor is in full control.
C) Business ends at the owner’s death or loss of interest in the business.
D) Liquidity of the investment is high.
E) Money must be raised by the sole proprietor.
Answer:
According to the textbook, a business plan is best described as a(n):
A) narrative description of a new business
B) contract
C) budget
D) agreement
E) marketing initiative
Answer:
The sole entity responsible for granting patents in the United States is the:
A) U.S. Patent and Trademark Office
B) Federal Patent, Copyright and Trademark Office
C) Securities and Exchange Commission
D) U.S. Departments of Patents
E) U.S. Treasury Department
Answer:
The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on three business model
innovators: Warby Parker, Shopkick, and SunRun. What is Shopkick’s business model
innovation?
A) rewarding shoppers by the number of times they visit a Web site
B) rewarding shoppers by simply walking into a retail store
C) rewarding shoppers by the amount of time they spend in a particular store
D) rewarding shoppers by the number of times they visit a particular store
E) rewarding shoppers by the number of times they “tweet” about a particular store on
Twitter
Answer: