Role models are individuals who give psychological support to the entrepreneur
especially during the start-up phase.
Balance sheet items are carried at cost, a good indicator of fair market value in valuing
a company.
Even when cash flow problems are discovered, the pro forma budgeted amounts should
never be changed.
When projecting cash flows for the pro forma cash flow statement, it is important to be
conservative in the estimates.
Cash flow is one of the major causes for an entrepreneur to have to declare bankruptcy.
Owner equity is the excess of all assets over all liabilities.
Discussing an exit strategy in the executive summary is not a good idea under any
circumstances.
The Sarbanes-Oxley Act reduced the responsibilities of the board of directors.
Trust receipts are inventory loans used to finance floor plans of retailers such as
automobile dealers.
Transport mode selection can be important in inventory management.
Entrepreneurs that delay entry have the advantage of more information about market
demand.
Perceived desirability refers to the degree to which an individual has a favorable or
unfavorable evaluation of the potential entrepreneurial outcomes.
An effective succession plan should be communicated only to top management and not
all employees.
The bankruptcy type that is most common is Chapter 7 bankruptcy.
The inventory turnover ratio measures the efficiency of the venture in managing its
inventory.
An employee stock option plan establishes a new legal entity.
Ewing Kauffman took a risk when he started his company Marion Labs in 1950.
Break-even is that volume of sales at which there are neither profits nor losses.
Most venture capital deals have been made in California and Massachusetts.
One evaluation method successfully used in the concept stage is the systematic market
evaluation checklist.
In order for a corporation to be legally formed the owners have to register the name and
articles of incorporation and meet statutory requirements.
Entrepreneurs who possess both the necessary abilities to make the transition to a more
professional management approach and the aspiration to grow their businesses are the
most likely to achieve firm growth.
International joint ventures are decreasing in popularity.
Private venture capital firms use both state and federal grant money to invest in other
businesses.
For a company to go public, larger underwriting firms have more stringent criteria, such
as sales as high as $50 million to $100 million, and a 40 to 70 percent annual growth
rate.
When a firm classifies a new product the two key factors used are market and
technology newness.
A “me-too” strategy consists of copying products that already exist and attempting to
build an advantage through minor variations.
The business plan does not help an entrepreneur to obtain financing.
Traditionally managed firms typically punish failure.
Contract law varies significantly from country to country, in part reflecting the two
types of legal traditioncommercial law and civil law.
A “management buyout” is the same thing as an “ESOP.”
Entrepreneurially managed firm structure is usually flat with multiple informal
networks.
Neal Blumenthal is the founder of Warby Parker a company that sells prescription
eyeglasses over the internet.
Some acquisitions are motivated more by the CEO’s ego than by the return on
investment.
The current ratio is used to measure the long-term solvency of the venture and its ability
to meet short-term debts.
Dissatisfaction with various aspects of one’s job often motivates the launching of a new
venture.
Which for form of organization has time limits on writing off capital losses?
A.partnership
B.corporation
C.sole proprietorship
D.LLP
Which is the first step in preparing a marketing plan?
A.Identifying strengths and weaknesses
B.Defining the target market
C.Establishing goals and objectives
D.Defining the business situation
The most frequently used source of funds for start-ups is:
A.the entrepreneur’s personal funds.
B.bank loans.
C.credit cards.
D.SBA loans.
In the venture-capital process, ______ is(are) absolutely essential for preliminary
screening.
A.debt financing
B.a business plan
C.a sales-orientation
D.endowment funds
Which of the following statements is(are) true?
A.Knowledge is a valuable entrepreneurial resource that is gained through formal
education.
B.Knowledge can be gained through highly experienced managers and/or firms.
C.Knowledge based on experience is unlikely to be learned in a classroom.
D.Research, more than knowledge, leads to the generation of new entries in markets
and technologies.
The most common type of joint venture is:
A.international joint ventures.
B.created for cooperative research.
C.an industry-university agreement.
D.between two or more private sector companies.
________ represent(s) money that is owed to creditors.
A.Assets
B.Cash flow
C.Owner equity
D.Liabilities
Explain and define the four types of asset backed loans.
The drawback with problem inventory analysis is that it cannot be used to test a new
product idea.
The legal form of business with the most alternatives for raising capital is the:
A.proprietorship.
B.corporation.
C.limited partnership.
D.full partnership.
Typically, debt financing requires:
A.an asset as collateral.
B.a degree of ownership in the firm.
C.reduction of short-term assets.
D.reduction of working capital.
_____ has the main disadvantages of high transportation costs, trade barriers, and
problems with local marketing agents.
A.Exporting
B.Turn-key projects
C.Licensing
D.Franchising
Which survey method results in the worst response rate?
A.Telephone
B.Mail
C.Personal
D.Internet
In a limited liability company:
A.laws governing its formation differ from state to state.
B.members may transfer their interests at any time.
C.members are not allowed to share income, profit, expense, deduction, loss and credit
among themselves.
D.owners are called shareholders.
When the bank advances a large percentage of the invoice price of goods and is paid on
a pro-rata basis when inventory is sold this is called:
A.a trust receipt.
B.a factoring arrangement.
C.an accounts payable loan.
D.a sale-leaseback arrangement.
Which item is not part of the new entry generation stage in the entrepreneurial strategy
process?
A.Technical knowledge
B.Risk reduction strategies
C.Rare resources
D.Market Knowledge
Which of the following would not be a current asset?
A.Certificates of deposit that mature in six months
B.Customer receivables
C.Cash
D.Supplier bills payable in thirty days
The _______ requires that the entrepreneur recognize that he or she is a time waster,
that time is an important resource, and that there is a need to change personal attitudes
and habits regarding the allocation of time.
A.principle of desire
B.principle of effectiveness
C.principle of analysis
D.principle of prioritized planning
Business-to-business marketing involves:
A.sales to households for personal consumption.
B.a more direct channel of distribution than consumer markets.
C.selling products such as household furniture.
D.selling products and services through certified representatives.
Focus groups:
A.should be led by the entrepreneur.
B.consist of 20 to 30 potential customers.
C.discuss information in a formal and standardized procedure.
D.are an informal method of gathering market information.
Capital budgets project expenditures on:
A.new equipment.
B.future production costs.
C.advertising.
D.costs of goods sold.
A sufficient time for top management to be committed to corporate entrepreneurship is:
A.at least one year.
B.at least two years.
C.at least three years.
D.at least ten years.
Liability is one of the most critical reasons for establishing a:
A.limited liability company.
B.corporation.
C.partnership.
D.sole proprietorship.
Investors often place more emphasis on the entrepreneur’s _________ than lenders do.
A.character
B.experience
C.financial records
D.personal viewpoint
During Phase II of an SBIR grant up to _______ can be awarded.
A.$100,000
B.$500,000
C.$750,000
D.$1,000,000
Once accepted, the trademark is published in the Trademark Official Gazette for ____
days to allow any party to oppose or request an extension to oppose the use of the mark.
A.10
B.30
C.90
D.180
In which form of organization does the owner have greatest control?
A.Sole proprietorship
B.Limited partnership
C.General partnership
D.Corporation
In the loss-orientation process of grief recovery, when are painful memories likely to
dominate most?
A.In the early phase of grief.
B.In the medial stage of grief.
C.In the later stage of grief.
D.Each time a related negative thought comes to mind.
Why does restoration-orientation have adverse effects on an individual’s health?
A.Since it involves suppression by mental effort.
B.Since it prescribes physical diversions like a hobby.
C.Since it involves regular physical exertion via exercise.
D.Since it involves mental catharsis to bring out the grief.
________ were authorized in 1958 to marry private capital and government funds for
investment in small companies.
A.Research and development limited partnerships
B.State-sponsored venture-capital funds
C.Small business investment companies (SBICs)
D.Computerized entrepreneur-investor matching systems