A minor can void a contract at the minor’s option but the adult cannot void a contract
simply because it is with a minor.
With cooperative advertising, a manufacturing company shares the cost of advertising
with a retailer.
Point of sale (POS) systems do not perform any of the functions of a traditional cash
register but they do maintain an up-to-the minute inventory count.
The balance sheet represents: Assets = Liabilities + Depreciation + Equity.
Entrepreneurs are people who connect their creative ideas with the purposeful action
and structure of a business.
The typical letter of intent prevents an underwriter from withdrawing a company’s stock
offering before it is executed.
The advantages of developing close, cooperative relationships with a single supplier
outweigh the risks of sole sourcing in most cases.
Private investors, or “angels,” seek 60-75% annual return-on-investment and tend to
take a 51%+ share of the business.
Typically, because the franchisor’s attorney prepares franchise contracts, the provision
favors the franchisee.
In general, entrepreneurs should avoid head-to-head price competition with other firms
that can more easily achieve lower prices through lower cost structures.
A recent survey of small companies with lines of credit found that only 25% actually
use them.
Understanding cultural differences is one of the most important keys to international
business success.
A more meaningful way to track activity on a Web site is through pop-ups, which have
the goal of helping entrepreneurs understand visitors’ online behavior.
The business owner (called the consignor) may return any unsold merchandise to the
supplier without obligation.
Stakeholders are the individuals and groups affected by a decision.
Commercial banks are lenders of last resort for small businesses.
To effectively recognize good performance in a way that motivates employees, the
small business owner is forced to use financial rewards.
Risk anticipation strategies promote self-insurance.
Neither the balance sheet method nor the adjusted balance sheet method of valuing a
business considers the future earning power of the business.
Generally speaking, it is not the “workaholic” employee but the one who seems to be
hanging around a lot who is a risk factor for employee theft.
The most common problem with online credit card transaction is chargebacks, online
transactions that customers dispute.
The idea behind strategic planning is to give the business owner a way to match his/her
company’s strengths and weaknesses to the opportunities and threats in the business
environment.
Entrepreneurship has become mainstream.
Right-brain people realize that there may be more than one “right answer.”
Most loans banks make to start-up businesses are not secured by collateral but by the
character of the entrepreneur.
Polls show that increasingly the public is only holding companies accountable for the
economic impact of their decisions, not the ethical implications.
Ideally, the average payable period should match or exceed the time it takes to convert
inventory into sales and sales into cash.
In cases in which development costs are extremely high, as in new high technology
products, the skimming technique helps the firm recoup its research and development
costs in a shorter time span.
Generally, training employees is more expensive than the losses to shoplifting but if
employees are trained shoplifters will eventually leave your store alone.
Risk management is deciding what type of insurance or other precautions need to be
implemented to decrease a business’s exposure to loss.
An S-corporation maintains the advantages of the corporate form of ownership while
having the ability to be taxed as a partnership.
In most cases, a franchisee does not have to get the franchisor’s approval to sell the
franchise to a third party.
Venture capital companies reject 90% of the proposals they receive because they don’t
meet the firms’ standards.
Promotion involves both advertising and lengthy warranties.
The increasing cultural diversity in the United States is hindering the entrepreneurial
effort in the economy.
The primary general goal of market research is to identify and profile the target market
and most profitable customer in it.
An agency remains valid until the principal and the agent mutually agree to dissolve it.
Sales and profits peak in the growth stage of the product life cycle.
Entrepreneurs are noted for their ability to bounce back after a business failure.
A specific design tip is to include a menu bar at the bottom of each page.
Employee theft can be caused or encouraged by a number of factors including:
A) physical breakdowns of security.
B) improper cash controls.
C) organizational atmosphere.
D) All of these
To ensure that a building will accommodate expansion plans, a new business should:
A) plan space requirements for one to two years into the future and update the plans
every six months.
B) build, buy, or lease facilities that are 50″100% too big for their current operations.
C) buy or lease facilities that had the same type of business in them previously.
D) always build a new facility.
Proving that a profitable market exists involves:
A) showing customer interest.
B) documenting market claims.
C) Both A and B
D) Neither A nor B
KHA.com started selling sporting goods designed for senior citizens who live in
retirement homes and apartments. KHA.com is selling its products using a:
A) niche strategy.
B) community strategy.
C) mass strategy.
D) senior citizens strategy.
Which of the following should make a potential franchisee suspicious about a
franchiser’s honesty?
A) Claims that the franchise contract is a standard one and that there’s no need to read it
B) An offer of direct financing of a specific element of the franchise package
C) Not providing detailed operational information until 10 days before signing the
contract
D) Requiring franchisees to spend a certain percentage of profits on advertising
A(n) ________ is a statement explaining the nature of the information a company
collects online, what it does with that information, and the recourse customers have if
they believe the company is misusing the information.
A) employment manual
B) online manual
C) privacy policy
D) online policy
The form of ownership in your company should be explained in the ________ portion
of the business plan.
A) business strategy
B) plan of operation
C) executive summary
D) market analysis
Studies show that customers want ________ from businesses almost more than
anything else.
A) quality
B) low cost
C) cutting edge technology
D) convenience
Probably the most important consideration a manufacturer has when setting the final
price of its new exclusive perfume is:
A) the perfume’s production cost.
B) competitor’s prices.
C) the image the company wants to create for the scent in the customer’s mind.
D) choosing between odd pricing and price lining.
If a manager is made aware of a sexual harassment problem, he/she should:
A) immediately fire the person accused of the harassment.
B) ask the complainant to approach the harasser and try to work it out.
C) listen carefully and investigate quickly and thoroughly.
D) make all and any findings public to protect all parties.
The purpose of ABC inventory analysis is:
A) to help retail stores control their inventories to prevent shoplifting and employee
theft.
B) to save time by only inventorying those items that produce the majority of a firm’s
sales.
C) to focus inventory control efforts on items that account for the majority of sales.
D) a system to facilitate the computerization of a firm’s perpetual inventory system.
The first step to becoming a truly global company is to:
A) establish an export program.
B) find a joint venture partner.
C) begin to think globally, taking on a global attitude toward a business.
D) hire motivated, multilingual managers.
In the market approach, the technique to calculate the value of a company is:
A) ROI.
B) P/E.
C) ROA.
D) P/A.
________ was passed to strengthen the Clayton Act, specifically to address price
discrimination because many businesses were circumventing the original rules.
A) The Federal Trade Commission Act
B) The Sherman Act
C) The Robinson-Patman Act
D) The Miller-Tydings Act
A job specification:
A) determines when certain people will be needed by the company due to growth.
B) evaluates employee work habits.
C) translates the duties of the position into qualifications.
D) identifies the skill, experience, and education necessary to perform the job.
One of the first steps in building a marketing plan is identifying a small company’s
________, the group of customers at whom the company aims its products and services.
A) target market
B) competitors
C) customers
D) Both A and C
One advantage of the excess-earnings method is that it:
A) offers an estimate of goodwill.
B) increases the profit.
C) increases the cash.
D) All of the above
A business plan:
A) reduces the risk and uncertainty involved in starting a new company.
B) is a guarantee of success for the small company.
C) should be done by professional writers in consultation with the owner.
D) should be kept in outline form to avoid over structuring the company.
Any assets pledged to the bank as security for repayment of the loan are the ________
of the five Cs.
A) collateral
B) capacity
C) capital
D) conditions
Total Quality Management (TQM):
A) defines world-class quality as 95% defect-free products and services.
B) has been implemented by about 90% of all American manufacturers and is now
moving into the service industry.
C) relies on an army of quality inspectors to ensure that products and services meet
quality targets.
D) is a lifelong process of continuous improvement that focuses on doing the job right
the first time.
More often, innovations are ________.
A) evolutionary
B) revolutionary
C) proactive
D) All of the above
The first objective of a job analysis is to develop a job description. The second
objective is to create a:
A) job interview outline.
B) advertisement in the newspaper.
C) job specification.
D) None of the above
On October 1, Althea writes Katherine a letter offering her a job at her travel agency.
Katherine mails Althea a letter on October 2 accepting the offer. On October 3, before
she receives Katherine’s acceptance, Althea calls Katherine to rescind the offer. In terms
of contract law:
A) there is no contract since Althea calls to rescind the offer before she receives
Katherine’s acceptance.
B) a contract is formed on October 2 when Katherine mails the letter of acceptance to
Althea.
C) no contract is formed since Katherine does not respond by the fastest means
availabletelephone.
D) None of these are correct.
Effective ads are built on:
A) a clear picture of the competition’s products.
B) a multimedia approach.
C) a unique selling proposition.
D) clearly defined features of the product.
Most gasoline products are sold through the ________ system of franchising.
A) product distribution
B) trade name
C) pure
D) conversion
The total quality management (TQM) concept:
A) strives to achieve quality not just in the product or service itself, but in every aspect
of the business and its relationship with the customer.
B) relies on quality inspections through an army of quality control inspectors.
C) focuses on reducing the time it takes to fulfill a customer’s request for a product.
D) is built on market research.
In an ABC system of inventory control, ________ is (are) the measure of the relative
importance of an item in the company’s inventory.
A) dollar usage value
B) carrying costs
C) set-up costs
D) optimum inventory level
Understanding the customer needs and desires is a component of:
A) demographic/physical environment.
B) social/cultural environment.
C) product potential.
D) market access.
A ________ is a descriptive fact about a product or service.
A) feature
B) product summary
C) benefit
D) None of the above
The most efficient method of franchising, from the franchiser’s point-of-view, which
has become popular in the 1990s and permits one franchisee to hold several franchises
from the same franchise company, is called:
A) multiple-unit franchising.
B) master franchising.
C) conversion franchising.
D) piggybacking.
Which type of international entry requires “prenuptial agreement”?
A) Foreign licensing
B) Foreign direct investment
C) Import/export
D) None of the above