The return on the owner’s investment (equity) is a better measure of performance than
a. the return on assets ratio.
b. the current ratio.
c. the quick ratio.
d. the absolute dollar amount of income.
The value of a depreciable asset
a. is constant over time.
b. increases with each use of the asset.
c. decreases over time.
d. increases over time.
Research has shown that a daughter’s role in a family-owned business can often be
described as
a. clearly defined.
b. a respected cheerleader for the enterprise.
c. playing the part of “daddy’s little girl”.
d. well developed, since their participation in the firm is usually anticipated years in
advance.
To protect the interests of both the family and the business in a family business, the
owner should
a. recognize a basic obligation to supply the family with jobs of some type.
b. refuse to hire family members but, instead, reward them with dividends.
c. keep management simple by personally making all personnel decisions affecting
family members.
d. identify the positions, if any, that are reserved for members of the family.
James Sandberg is investigating the advantages of employee leasing. It appears that the
greatest benefit will be to free him and his firm from
a. the need for extensive training.
b. fringe benefit costs.
c. concern about disciplinary action.
d. excessive paperwork.
Quality management is applicable to
a. manufacturing but not service businesses.
b. service but not manufacturing businesses.
c. both service and manufacturing businesses.
d. neither service nor manufacturing businesses.
Which of the following is one of the ways an online business can submit a Web site to
search engines?
a. Employing search engine submission hardware
b. By calling 1-800-ENGINES
c. Using a paid submission service
d. Requesting such services from the Small Business Administration
Dell Computer Corporation deals directly with corporate customers online and builds
computers to specifications after an order is placed, which reduces the firm’s storage
and carrying costs. This illustrates that B2B firms can create
a. greater efficiency in their selling.
b. greater efficiency it their buying.
c. synergies between buying and selling.
d. market reach through e-commerce.
Which of the following is classified as an entrepreneur?
a. A manager in a large corporation
b. A financial manager in a small firm
c. An owner-manager who bought out the founder of a firm
d. A salaried technician in a rapidly-growing high-tech firm
In a printing plant’s production process, a printed book constitutes
a. an input.
b. a throughput.
c. an output.
d. a process.
In a line-and-staff organization, which of the following is a staff activity?
a. Production
b. Warehousing
c. Receiving
d. Human resource management
In a very small business, the customer profiles maintained in the entrepreneur’s
_______ often constitute the firm’s CRM “database.”
a. computer
b. card file
c. head
d. shoe box
One glaring example of poor ethics practiced by small businesses in general is
a. lack of pollution controls.
b. untruthful labeling of products.
c. lack of loyalty to employees.
d. fraudulent reporting of income and expenses for income tax purposes.
B2B firms, in particular, use e-commerce to reduce costs associated with
a. sales force management.
b. inventory processing.
c. product distribution.
d. customer contact.
The executive summary part of a business plan should be written
a. first.
b. last.
c. before the finance plan.
d. before the legal plan.
_____________ is a section of the business plan that describes the user benefits of the
product or service and the type of market that exists.
a. Product and/or services plan
b. Marketing plan
c. Management plan
d. Operating plan
A nonfamily employee of a family business is concerned about competing with family
members for future career opportunities. To protect her personal interests, the
nonfamily employee should
a. align herself with the CEO.
b. ask that the manager clarify the extent of opportunities.
c. seek assurances that she will receive first consideration for promotion, ahead of
family members.
d. leave the firm and seek employment in a nonfamily business.
To retain control over his business, an entrepreneur should seek initially to secure
______ financing.
a. debt
b. equity
c. internal
d. asset
Technologies Limited, a small producer of closed-circuit, handheld radio
communication devices marketed to contractors (walkie-talkies), wants to expand.
Using its knowledge of communication technologies, it developed a cellular-based
phone system designed for contractors. Technologies Limited is employing a _____
product strategy.
a. multiple products/one market
b. multiple products/multiple markets
c. modified product/one market
d. modified product/multiple markets
The cost of fringe benefits ___________ the cost of salary and wage payments.
a. is less than half of
b. is double
c. is equal to
d. considerably exceeds
Any accounting system should accomplish all but which one of the following
objectives?
a. Yield an accurate picture of operating results
b. Provide financial statements
c. Facilitate filing of tax returns
d. Reveal employer compliance with OSHA
Most entrepreneurs do not realize the value of which of the following types of
insurance?
a. Fire insurance
b. Business interruption insurance
c. Property insurance
d. Theft insurance
Harry Hardwick is starting a job-order machine shop and is buying such used
equipment as lathes, planing mills, and drill presses. The equipment he plans to use is
a. special-purpose equipment.
b. automated equipment.
c. general-purpose equipment.
d. product-layout equipment.
The owner of an automotive service center wishes to improve the business through
reengineering. To do so, the owner should concentrate on the
a. basic processes of the business.
b. laws of motion economy.
c. use of time and motion study.
d. application of statistical process control.
Cumulative depreciation expense is shown on the
a. balance sheet.
b. cash-flow statement.
c. income statement.
d. all of these.
Internet advertising is already facing an obstacle because
a. viewers are reluctant to respond to banner ad images that pass by so quickly.
b. a viewer can install ad-blocking software on his or her computer.
c. it lacks scale efficiencies, given that few companies are choosing to advertise on this
medium.
d. of legislation that is intended to restrict use of the Internet.
Sally Forthright, a single mother, opened a florist shop to support her family after losing
her job in a corporate layoff. She is _________.
a. a woman without a portfolio.
b. a parental refugee.
c. a reluctant entrepreneur.
d. an independent refugee.
If a student copies his favorite record album and gives it away to a friend to use, the
student is engaged in the theft of _________ property.
a. collective
b. intangible
c. intellectual
d. real
Regional free trade areas have been formed in order to
a. duplicate government regulatory systems.
b. reduce tariffs to increase trade.
c. coordinate the currencies of included countries.
d. accommodate the demands of organized labor.
Kwan’s desire for the spicy food of his homeland is the result of which sociological
influence?
a. culture
b. opinion leaders
c. reference groups
d. social class
Most small firms generate a balance sheet at least
a. weekly.
b. monthly.
c. quarterly.
d. annually.
The owner of a sole proprietorship
a. owns the business.
b. bears no risks.
c. is an employee of the business.
d. shares profits.
Following a cost-based strategy can give a small firm a competitive advantage.
Business risks can be classified into two broad categoriesasset risk and pure risk.
Both wholesalers and retailers can utilize sales promotion tools to increase sales.
Though the distinctive values that motivate and guide an entrepreneur in the founding
of a firm are important, these cannot serve as a foundation for competitive advantage in
the firm.
As part of the valuation process, a buyer should scrutinize the seller’s balance sheet to
see whether asset book values are realistic.
You Make the CallSituation 4
Bill and Simone Taylor have been married for almost thirty years. Their three grown
children are independent and successful in their chosen careers. Three years ago, Bill
had the opportunity to retire early from his job managing an automotive parts
distribution warehouse. He used his retirement bonus to purchase his family’s
cabinet-making business. Simone was concerned that Bill, who had never worked in the
family business, lacked the proper experience to manage the business and that he was
making a mistake.
The Taylors mortgaged their home and signed a personal loan from Bill’s parents to
finance the purchase of the business from Bill’s parents, both of whom died shortly
thereafter. The personal loan is part of his parents’ estate and is to be repaid to the heirs
(Bill and his two siblings) within five years. The business began to lose money almost
immediately after Bill took over from his father. Worst yet, the Taylors are having
difficulty making their mortgage payments and have no present hope of repaying the
note left in the estate.
As time has gone by, Bill has come to focus entirely on the business and largely ignores
Simone’s questions when she expresses her concerns about their increasingly dire
financial condition. Bill feels that Simone should be second-guessing him about how to
operate the business.
Question 1 What are the major causes of strain in the marriage?
Question 2 Is Simone entitled to a voice in decision making in the business? Explain.
Question 3 What steps would you recommend to improve the marriage and give the
business a better chance to succeed?
International business will never be as easy as doing business at home.
A sole proprietorship is a business owned by one person.
Most franchisors are involved only with the outlets they have franchised.
A corporation’s life span is equal to that of its owners.
It is important for potential franchisees to remember that many financial figures
provided by franchisors are only estimates.
A business plan may be prepared for a major expansion of an existing business, as well
as for a proposed new business.
One study cited in the textbook found entrepreneurs tend to be more narrowly focused
on profits and thus less socially responsible than CEOs of large businesses.
A limited partnership must have at least two general partners and one or more limited
partners.
The cash conversion period is the time period between ordering inventory and receiving
cash for its sale.
Time and money are factors that affect the extent of business plan preparation.