Exam
Name___________________________________
TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1)
A plan that relates to a specific area of a business, such as marketing, is known as a strategic plan.
1)
2)
A plan that relates to a specific area of a business, such as marketing, is known as a functional plan.
2)
3)
A goal is a measurable objective that can be reached in a specified time frame.
3)
4)
Public corporations have double taxation, unlimited liability for owners, and can raise large
amounts of cash by selling stocks or bonds.
4)
5)
Public corporations have double taxation, limited liability for owners, and can raise large amounts
of cash by selling stocks or bonds.
5)
6)
Limited partnerships have limited liability for all of the partners.
6)
7)
A Subchapter S corporation can sell its stock to any number of shareholders.
7)
8)
Franchisers purchase the right to sell products or services of the franchisee.
8)
9)
A franchiser sells the right to produce a product or service to the franchisee.
9)
10)
The Service Core of Retired Executives (SCORE) is a group of retired government bureaucrats who
provide help to small business owners.
10)
11)
The Service Core of Retired Executives (SCORE) is a group of retired business owners and
managers who provide help to small business owners.
11)
12)
Prior to applying for a loan through an approved Small Business Administration lender, you must
establish the form of business ownership.
12)
13)
Partnerships have the same basic tax requirements as the sole proprietorship and are, therefore, the
most popular form of business ownership.
13)
14)
The buy–sell agreement prevents a partner from selling a partnership interest without the consent
of the other partners.
14)
15)
If a partner dies, his share of the partnership must be sold to an outsider.
15)
16)
The buy–sell agreement preserves the continuity of ownership and insures that everyone is treated
fairly.
16)
17)
In a limited liability partnership, all of the partners have unlimited liability.
17)
18)
In a limited liability partnership, all of the partners can participate in day–to–day operations.
18)
19)
A limited liability partnership is legal in all states.
19)
20)
The SBA, SCORE, and the authors recommend that an executive summary be attached to the
beginning of the business plan.
20)
21)
When composing a business plan, the executive summary should be written first
21)
22)
The executive summary is the initial introduction to the business plan.
22)
23)
A mission statement is specific.
23)
24)
Company goals describe where you want your business to be at some future date.
24)
25)
A marketing mix is a marketing strategy.
25)
26)
Secondary data gathers information firsthand.
26)
27)
The Operational plan describes how a business will actually deliver your product or service to the
customer.
27)
28)
If your business has more than 10 people, you do not need an organizational chart.
28)
29)
Every succession plan must have a buy–sell agreement.
29)
30)
When borrowing funds for a business, lenders provide money in exchange for partial ownership of
the business.
30)
31)
When obtaining funds for a business, investors provide money in exchange for partial ownership of
the business.
31)
32)
A company in the Later Stage of development usually has negative cash flow.
32)
33)
The best place to get a loan for a business is the Small Business Administration because they loan
you government funds.
33)
34)
The SBA lends the funds for a business start–up but is not a guarantor of the loan.
34)
35)
The SBA has two major programs: 7(a) for general business purposes and 504 for the purchase of
buildings or major equipment.
35)
36)
Grants are moneys provided to businesses that don’t have to be repaid.
36)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
37)
The management function that takes us from some current state to a desired future state is
37)
A)
controlling.
B)
staffing.
C)
planning.
D)
directing.
E)
organizing.
38)
The basic five functions that every manager must perform include
38)
A)
planning, directing, organizing, staffing, controlling.
B)
planning, financing, bookkeeping, controlling, staffing.
C)
planning, organizing, controlling, directing, financing.
D)
planning, organizing, bookkeeping, directing, staffing.
E)
None of the above include all of the management functions.
39)
The time horizon for strategic plans is
39)
A)
five years.
B)
more than one year.
C)
ten or more years.
D)
fifteen or more years.
E)
There is no definite time horizon for strategic plans.
40)
Carla has just started a business and is asking herself the following question. Where do I want my
business to be in five years? Carla is in the process of
40)
A)
analyzing her financial requirements.
B)
establishing the basic control functions for her business.
C)
establishing basic parameters for her business.
D)
determining how to write a functional plan.
E)
developing a strategic plan.
41)
Converting functional plans into annual dollar requirements is the process of
41)
A)
monetary planning.
B)
budgeting.
C)
financial planning.
D)
accounting.
E)
controlling.
42)
Timothy is in the process of establishing goals for his company. Which of the following is a goal?
42)
A)
Our business should market to all customers.
B)
Our business should increase sales by 10 percent every year for the next five years.
C)
Our marketing area should include the entire United States.
D)
Our business should increase sales by 10 percent.
E)
Our business should increase sales every year.
43)
Gathering all of the monetary requirements that a firm will need in order to support each
functional plan is the process of
43)
A)
controlling.
B)
accounting.
C)
monetary planning.
D)
budgeting.
E)
financial planning.
44)
Geoffrey is in the process of determining how many people he will require to operate his restaurant
during each business day. He is performing the management function of
44)
A)
planning.
B)
controlling.
C)
staffing.
D)
directing.
E)
organizing.
45)
Jennifer is the manager of a credit card processing department. She has determined that each
processor should be able to input information on 75 credit purchases per hour. She has established
a range of plus or minus 5 purchases and an error rate of no more than 2 per hour. Jennifer is
performing the management function of
45)
A)
planning.
B)
directing.
C)
staffing.
D)
controlling.
E)
organizing.
46)
Carl is a construction supervisor. He has to make sure that the inside rooms of the house are
painted by this evening because the carpeting company is scheduled to bring in the carpeting first
thing tomorrow morning. He told Tim to paint the hall and told Anne to paint the master bedroom.
Because he is short–handed, he will paint the kitchen. Carl is performing the management function
of
46)
A)
organizing.
B)
staffing.
C)
directing.
D)
controlling.
E)
planning
47)
Tom is establishing some basic plans for his business. He is in the process of writing down some
basic questions that he believes the plans should answer. Which of the following questions does not
relate to establishing a functional plan?
47)
A)
When will it be accomplished?
B)
Where will they perform their duties?
C)
Who will carry out this plan?
D)
What skills do they need?
E)
Where do I want my business to be in five years?
48)
The majority of businesses in the United States today are organized as
48)
A)
corporations.
B)
limited partnerships.
C)
sole proprietorships.
D)
Subchapter S corporations.
E)
partnerships.
49)
Which of the following is NOT a disadvantage of the sole proprietorship?
49)
A)
limited lifetime of the business
B)
limited liability for the owner
C)
limited management expertise
D)
limited access to capital
50)
The sole proprietor has all of the following advantages, EXCEPT
50)
A)
choice of location for the business.
B)
choice of how to pay federal and local taxes.
C)
choice of product to be sold.
D)
choice of retirement plan.
E)
choice of services to be offered.
51)
One drawback to a partnership is that it
51)
A)
generally has more management expertise than the sole proprietorship.
B)
generally has more access to capital than the sole proprietor.
C)
has unlimited liability for each of the partners.
D)
is subject to double taxation.
52)
The form of business ownership that gives the owner total control of how the business is run is the
52)
A)
Subchapter S corporation.
B)
partnership.
C)
corporation.
D)
limited partnership.
E)
sole proprietorship.
53)
The form of business ownership that involves double taxation and limited liability for the owners is
the
53)
A)
corporation.
B)
sole proprietorship.
C)
limited partnership.
D)
Subchapter S corporation.
E)
partnership.
54)
Jane is the president of a business. She runs the business on a daily basis and makes all of the
decisions because she has ten years of experience in this business. There are ten other owners in this
business, but they have no say in how this business is being run. Jane’s business is probably
organized as a
54)
A)
partnership.
B)
sole proprietorship.
C)
Subchapter S corporation.
D)
corporation.
E)
limited partnership.
55)
Carl, Anne, and Al were friends in college. After graduation they decided to open a computer
consulting business. They each have $20,000 to put into the business, and want equal shares of the
business. However, they are worried about liability because they had heard of a consultant who
crashed a client’s computer and was sued for $1,000,000. They also want to avoid double taxation.
The most likely form of business organization for them would be a
55)
A)
Subchapter S corporation.
B)
corporation.
C)
partnership.
D)
sole proprietorship.
E)
limited partnership.
56)
Carl, Anne, and Al were friends in college. After graduation they decided to open a company that
sells computer printer ribbons and cartridges. They each have $20,000 to put into the business, and
want equal shares of the business. They are not worried about liability because they are not actually
going to work on printers or going to work in their customer’s place of business. They also want to
avoid double taxation. The most likely form of business organization for them would be a
56)
A)
limited partnership.
B)
corporation.
C)
partnership.
D)
sole proprietorship.
E)
Subchapter S corporation.
57)
Unlimited liability for the owner is a problem for which of the following?
57)
A)
limited partnership
B)
corporation
C)
partnership
D)
sole proprietorship
E)
both C and D
58)
Which of the following is true for a Limited Liability Company (LLC)?
58)
A)
Business income is taxed at the corporate rate.
B)
The owners have unlimited liability.
C)
The company is limited in its liability.
D)
Business income is taxed at the individual’s personal rate.
E)
None of the above.
59)
You have always wanted to own your own McDonald‘s restaurant. You contacted this corporation
and received the details of purchasing one of these restaurants. If you are granted permission, you
will become a ________ and the McDonald’s corporation is the ________.
59)
A)
franchiser; franchisee
B)
franchisee; franchiser
C)
franchisee; franchisee
D)
franchiser; franchiser
60)
Which of the following is NOT an advantage of obtaining a franchise?
60)
A)
marketing strategy and advertising
B)
training of employees and managers
C)
name recognition
D)
having a predetermined location that guarantees a profit
E)
standardization of products and services
61)
Which of the following pertain to the internal workings of a company?
61)
A)
strengths and threats
B)
opportunities and threats
C)
opportunities and weaknesses
D)
strengths and opportunities
E)
strengths and weaknesses
62)
Which of the following pertain to the external factors that are outside the control of a company?
62)
A)
strengths and threats
B)
opportunities and weaknesses
C)
opportunities and threats
D)
strengths and opportunities
E)
strengths and weaknesses
63)
SWOT is an acronym which stands for
63)
A)
Strengths, Working capital, Opportunities, and Threats.
B)
Strengths, Weaknesses, Obligations, and Threats.
C)
Strengths, Working capital, Obligations, and Threats.
D)
Strengths, Weaknesses, Opportunities, and Threats.
E)
Strengths, Weaknesses, Opportunities, and Troubles.
64)
George is analyzing the market for his bagel business. He noticed that there are no bagel shops in
the northeast section of his city. For George’s bagel business, this represents a(n)
64)
A)
weakness.
B)
obligation.
C)
strength.
D)
opportunity.
E)
threat.
65)
George is analyzing the market for his bagel business. He saw an advertisement for a new bagel
shop that has just opened one mile from his bagel shop. For George’s bagel business, this represents
a(n)
65)
A)
strength.
B)
obligation.
C)
threat.
D)
weakness.
E)
opportunity.
66)
George is analyzing the market for his bagel business. He knows that his shop has the highest
quality bagel in the city. He has picked up several customers who previously shopped at a
competitor but told him they switched because of his consistent quality. For George’s bagel
business, this represents a(n)
66)
A)
weakness.
B)
threat.
C)
opportunity.
D)
strength.
E)
obligation.
67)
Environmental factors can lead the business owner to evaluate and change his or her business
plans. An industry that recently underwent a major shift in marketing due to technological change
and new competition, according to the textbook, is
67)
A)
the fast food industry.
B)
the automobile industry.
C)
the cereal industry.
D)
the convenience store industry.
E)
the oil industry.
68)
When applying for a loan with the Small Business Administration, you will have to provide tax
returns for a period of
68)
A)
five years.
B)
two years.
C)
one year.
D)
four years.
E)
three years.
69)
SCORE is a source of information and training for the small business owner. The acronym SCORE
stands for
69)
A)
Service Core of Retired Executives.
B)
Special College for Retraining Employees.
C)
Special Core of Retired Entrepreneurs.
D)
Service College for Retaining Employees.
E)
none of the above.
70)
Location is probably the single most important factor affecting the success of the ________ business
establishment.
70)
A)
manufacturing
B)
retailing
C)
wholesale
D)
both A and B above
E)
both B and C above
71)
When running a SWOT analysis, one should also consider personal strengths and weaknesses
because
71)
A)
business owners should evaluate those items where they are weak.
B)
business owners should list those items that they really dislike doing.
C)
business success requires that owners have no weaknesses.
D)
both A and B above.
E)
both B and C above.
72)
Which of the following is a weakness?
72)
A)
inexperienced workers
B)
an area of your business that you perform well in
C)
you perform better than your competitors
D)
none of the above
73)
An executive summary should be attached to
73)
A)
the end of the completed business plan.
B)
the beginning of the business plan.
C)
the middle of the business plan.
D)
none of the above.
74)
Which of the following should NOT be in the executive summary?
74)
A)
a brief description of the product or service
B)
a summary of quarterly revenue
C)
an estimate of how much money you will need
D)
tour business strategy for success
75)
A mission statement
75)
A)
helps the organization reach its goals.
B)
is a brief statement explaining the purpose of the company and its guiding principles.
C)
is very specific.
D)
none of the above.
76)
In identifying your form of business ownership, which of the following should be included?
76)
A)
advantages of your choice
B)
your ownership structure
C)
reasons for your selection
D)
all of the above
77)
Which of the following is an example of primary data?
77)
A)
gathering your own data firsthand
B)
gathering information about your competition
C)
public information in libraries
D)
reading the newspaper
78)
Which of the following variables in the marketing mix is the easiest to change rapidly?
78)
A)
place
B)
price
C)
promotion
D)
product
79)
The financial plan consists of
79)
A)
breakeven analysis.
B)
a 4–year profit projection.
C)
a 12–month projection.
D)
all of the above.
80)
Bankers differ from investors in that
80)
A)
bankers are looking for a return on equity.
B)
bankers are looking for assurances of interest payments and repayment of the principal of the
loan.
C)
bankers are looking for company growth.
D)
all of the above.
81)
Which of the following stages has a concept and is less than 18 months old?
81)
A)
seed/start–up stage
B)
early stage
C)
expansion stage
D)
later stage
82)
Which of the following stages has high revenue growth but does not show a profit?
82)
A)
seed/start–up stage
B)
early stage
C)
expansion stage
D)
later stage
83)
Which of the following stages is when a company is less than 3 years old and the product or service
is commercially available?
83)
A)
seed/start–up stage
B)
early stage
C)
expansion stage
D)
later stage
84)
Which of the following stages has a positive cash flow?
84)
A)
seed/start–up stage
B)
early stage
C)
expansion stage
D)
later stage
85)
Which of the following does NOT hold true for angel investors?
85)
A)
They take an active position and provide mentoring.
B)
They have an intolerance for loss.
C)
They normally are wealthy individuals.
D)
They provide the seed money for the startup and early stages of company growth.
86)
Which of the following does hold true for venture capitalists?
86)
A)
They invest several million dollars.
B)
They provide financing at the later stages of business development.
C)
Invest in companies with proven track records.
D)
All of the above.
87)
Which of the following forms of business ownership is the most prevalent for a buy–sell
agreement?
87)
A)
corporation
B)
LLC
C)
Subchapter S Corporation
D)
partnership
88)
When formulating a Business Succession Plan, the owner should determine several things. Which
of the following is NOT considered?
88)
A)
Should ownership be held by family members only?
B)
Does the owner want the business ownership to pass directly to the heirs or in trust?
C)
Are the owner and the spouse on the same page with respect to continuing the business?
D)
Should the business be sold to pay inheritance taxes?
89)
Which of the following are NOT included in the financial section of a business proposal when
seeking a bank loan?
89)
A)
How many years it will take to repay the loan.
B)
The interest rate that will be paid for the loan.
C)
What collateral you are offering for the loan.
D)
The amount of the loan.
90)
Which of the following holds true for the Small Business Administration?
90)
A)
The SBA requires that you create your business plan or loan proposal prior to applying for an
SBA guaranteed loan.
B)
A 504 Loan Program requires a 25% minimum down payment.
C)
The SBA does not guarantee small business loans.
D)
The SBA actually loans money to small business and is a bank.
91)
Which of the following hold true with regard to grants?
I. Grants are moneys provided to business and other entities that don‘t have to be repaid.
II. Grantee must perform the service for which the grant was approved.
III. Government grants exceed $400 billion per year.
IV. Size standards for all businesses to qualify for grants are the same for all industries.
91)
A)
I & II
B)
I & IV
C)
I, II, & IV
D)
I, II, & III