Capital budgets project expenditures on new equipment, vehicles, computers, or new
facilities.
Investors often spend a lot of time conducting background checks.
Culture encompasses a wide variety of elements, including language, social structure,
religion, political philosophy, economic philosophy, education, and manners and
customs.
Brokers for acquisitions represent the buyer, not the seller.
In a factoring arrangement, the bank lends the business money using inventory as
collateral.
If employees are spread too thin because of growth, the firm will face problems of
employee morale and increased employee turn over.
Sole proprietors can access two sources of capitalpersonal contributions from the
entrepreneur and sale of stock.
Entrepreneurial endeavors consist of new business venturing, innovativeness,
self-renewal, and reactiveness.
Even though some entrepreneurs may way to grow they lack the ability to do so.
In an S Corporation, ownership can be freely transferred as long as the buyer is an
individual.
Since 2010 the number of business filings for bankruptcy has steadily increased each
year.
Bricolage is entrepreneurs making do by applying combinations of the resources at
hand to new problems and opportunities.
Newness of a new entry is always an advantage.
To prevent others from copying his or her ideas, the entrepreneur should not send
drawings with the patent application.
In selecting a foreign market the selection decision should be based on both past sales
and competitive positioning as well as an assessment of each foreign market alternative.
It is a good idea to have several marketing goals, since it provides better clarity to the
entrepreneur.
The debt ratio is calculated by dividing total liabilities by total inventory.
Product development strategies use customers’ experiences to develop new products for
existing customers.
Regulation D regulates private placements.
The limited partners in a venture share control of day-to-day operations with the general
partners.
In an LLP, the transfer of interest of one limited partner is typically not allowed.
While dealing with leaking of trade secrets, legal action can be taken only after the
secret has been revealed.
Installment loans are typically given for a period of 30-40 days.
One study found that new ventures started within a corporation performed better than
those started independently by entrepreneurs.
Unrealistic goals are a common reason for failure of the marketing plan.
SBA guaranteed loans are guaranteed for 100 percent of the loan amount.
When gathering financial information, the entrepreneur should develop a budget that
includes expected sales and expense figures for the first year.
A venture capitalist would rather invest in a first-rate product and a second-rate
management team than the reverse.
In a limited liability company, every member has limited liability.
Most new ventures need a human resource department from the first day of operations.
In most leveraged buyouts, the equity usually exceeds the debt capital equity by 5:1.
The key to successful entrepreneurship is to develop an idea that has a market with a
need for the product or service idea conceived.
The present value of future cash flow method of valuation considers the firm’s cash
flow in relation to the time value of money.
Creating a positive organization culture involves:
A.not communicating all matters to key employees.
B.being more involved in every aspect of the task, and avoiding delegation.
C.establishing a “we” spirit, not a “me” spirit in meetings and memorandum.
D.being conservative in the training process.
Discuss the major factors that should be considered in setting a product/service price.
This occurs when two or more of the largest creditors agree to postpone any claims,
acting as stimulus for smaller creditors to also agree to the plan.
A.Extension.
B.Evolution.
C.Substitution.
D.Composition settlement.
The pro forma cash flow, like the _________, is based on best estimates.
A.business cash flow at a certain point of time
B.expense statement
C.income statement
D.actual cash flow statement
When using equity financing from family and friends:
A.business arrangements should be in good faith.
B.details such as terms of the investment and rights of the investor need not be in
writing.
C.they can be more patient than other investors in when they expect a return on
investment.
D.since the amount of money is usually small, they do have an ownership position in
the venture.
A patent attorney hired as a specialist to help the entrepreneur obtain a patent would
most likely be hire on a:
A.retainer fee
B.success fee
C.out-of-pocket reimbursement
D.one-time fee
_________ is(are) added back to the pro forma sources and applications of funds
statement because it does not represent and out-of-pocket expense.
A.Inventory
B.Depreciation
C.Dividends
D.Equipment purchases
A broad-scope strategy:
A.is vulnerable to the risk that market demand does not materialize as expected and/or
changes over time.
B.opens the firm up to many different “fronts” of competition.
C.focuses the firm on producing customized products, localized business operations,
and high levels of craftsmanship.
D.offers a way of reducing some competition-related risks.
Bonds can be used to raise capital in which form of ownership?
A.Sole proprietorship
B.Limited partnership
C.General partnership
D.Corporation
An unproven franchise:
A.requires the franchisee to make a larger investment than a proven one.
B.is riskier than a proven one.
C.offers more excitement and challenge than a proven one.
D.could see constant reorganization that could result in confusion and mismanagement.
Having an entrepreneurial orientation towards the control of resources means:
A.that one focuses on accessing others’ resources.
B.that one focuses on purchasing resources.
C.that one has a belief that resources are unlimited and therefore easy to obtain.
D.that one focuses on using a hierarchy management structure in allocating resources.
Which principle requires the entrepreneur to focus on the most important issues, even
when under pressure?
A.Principle of desire
B.Principle of reanalysis
C.Principle of effectiveness
D.Principle of prioritized planning
The informal risk-capital market is made up of:
A.angels.
B.stockbrokers.
C.venture capitalists.
D.commercial banks.
In reverse brainstorming the focus is on all the things that are right about an idea.
In a ________ capital losses can be carried forward indefinitely.
A.sole proprietorship
B.partnership
C.corporation
D.LLP
In this method, instead of generating new ideas themselves, consumers are provided
with a list of problems in a general product category. What method is the author
referring to here?
A.Reverse brainstorming
B.Problem inventory analysis
C.Brainstorming
D.Focus groups
Which of the following statements is(are) not true?
A.Primary focus of an industry analysis is to provide sufficient knowledge of the
environment that can affect marketing strategy decision-making.
B.Industry analysis needs to be conducted using only primary research data.
C.Industry analysis begins with the broadest-based assessment of environmental and
industry trends.
D.The information-seeking process of industry analysis is known as an upside-down
pyramid.
Priceline.com’s service where a buyer can submit a price bid for a particular service is
an example of a:
A.utility patent.
B.design patent.
C.business method patent.
D.license.
Which of the following is not an example of internal financing?
A.Profits
B.Accounts receivable
C.Credit from suppliers
D.Equity financing
Under the ____________ program, federal agencies with budgets over $1 billion are
required to set aside 0.3 percent for small businesses.
A.Small Business Technology Transfer
B.Small Business Innovation Research
C.SBA Microloan
D.Regulation D
Which of the following is not an important part of a succession plan?
A.estimate the firm’s value
B.evaluate potential successors based on how similar they are to you
C.provide a transition period so the successor can learn the business
D.set a date for completion of the transition and stick to it
Conducting a(n) ____ on cash flow involves assigning a + or – probability to the
estimated value.
A.break even analysis
B.audit
C.distribution analysis
D.sensitivity analysis
Reviewing meetings to make sure they are being run effectively illustrates which of the
following principles?
A.Principle of desire
B.Principle of reanalysis
C.Principle of effectiveness
D.Principle of prioritized planning
In a limited partnership, the limited partners:
A.are liable only for the amount of their capital contributions.
B.share the amount of personal liabilities equally.
C.have only insurance as protection against liability suits.
D.are allowed to decide on the amount of individual liabilities.
The SBA’s primary business loan program is:
A.the Microloan.
B.the SBIR.
C.the 7(a) loan.
D.the 504.
______________ knowledge refers to the entrepreneur’s possession of information,
technology, know-how, and skills that provide insight into the industry and customers.
A.Technological
B.Resource
C.Opportunity
D.Market
An entrepreneur is trying to conduct a break-even analysis. Each product will sell for a
price of $19.95. The entrepreneur has estimated the following costs:
A. Rent $1000 per month
B. Direct labor per unit will be $3 per unit
C. Salaries will be $500 per week
D. Raw materials will cost $1 per unit
Entrepreneurs in the _____________ quadrant of firm growth aspire to grow their
businesses and possess the ability to do so.
A.Constrained growth
B.Unused potential for growth
C.Actual growth
D.Little potential
Which principle states that the most important issues should be attended to during the
time of day that an entrepreneur is most efficient?
A.Principle of desire
B.Principle of reanalysis
C.Principle of effectiveness
D.Principle of prioritized planning
The entire trademark registration process takes approximately:
A.7 months
B.13 months
C.18 months
D.2 years
The most common approach to gathering primary information is:
A.observation.
B.focus groups.
C.experimentation.
D.interviewing.
All of the following are questions an opportunity assessment plan might answer except:
A.How much capital do I need?
B.What market need does it fill?
C.What business skills do I have?
D.Can a patent be obtained?