For small businesses, professional management is an issue of education, titles, and
credentials.
One disadvantage of purchasing an existing business is that it requires more cash outlay
than creating a start-up.
In a C corporation and S corporation, the IRS expects the owner to pay himself or
herself a salary that is roughly at market rates.
The feasibility of an idea is the extent to which it is viable and realistic.
Increasing market share usually means pricing toward the low end of the competition in
order to take market share from the competition.
Expendables are necessarily fixed costs.
Customers generally view a new company negatively if it imitates established
companies and practices in the industry.
All products invariably survive the introduction phase of the product life cycle.
The proof of a customer relationship management effort is seen in higher levels of
customer loyalty in existing customers.
In the U.S., government programs are the number one source for financing small
businesses.
A company’s goodwill is its best collateral.
The difference between revenue and expense is called sales.
It is much easier to compare groups and to statistically analyze data with close-ended
questions than it is with open-ended questions.
The U.S. government agency that helps people start small businesses is the U.S.
Department of Commerce.
The total liability issue in general partnerships is similar to that of sole proprietorships.
Which of the following deals with the actual process of exploiting an opportunity for
profit?
A. Resource
B. Exchange
C. Intention
D. Boundary
Wholesalers and retailers who connect manufacturers to consumers are referred to as
_____.
A. traffic generators
B. manufacturing agents
C. distribution channels
D. business franchisors
_____ are an important source of information for start-ups. They compile legal
information for their members, including laws particularly applicable to certain types of
businesses in various jurisdictions and proposals for changing the laws that affect an
industry.
A. Academic journals
B. Magazines
C. News channels
D. Trade associations
Which of the following helps limit risk from violation of tax regulations?
A. The owner should make payments to creditors by borrowing from tax money.
B. The owner should understate revenues and overstate deductible expenses.
C. The owner should take cash from the businesses before it is recorded as revenue.
D. The owner should hire an accountant and a lawyer who are expert in tax issues.
Potential buyers and investors are most interested in the _____ value of a business’s
assets.
A. book
B. replacement
C. charge back
D. disposal
The most common mandatory insurance coverage includes:
A. liability for damages caused by vehicle accidents.
B. liability for loss of sales during recession.
C. travel cancellation liability.
D. damage at workplace caused by disgruntled employees.
Breakeven point is the point at which:
A. total costs equal gross revenue.
B. fixed costs equal variable costs.
C. total costs equal profit.
D. variable costs equal gross revenue.
The popular name for a Chapter 7 bankruptcy in which a bankrupt firm’s assets are sold
by the bankruptcy trustee and the proceeds used to pay the firm’s debts is _____.
A. liquidation
B. amortization
C. reorganization
D. depreciation
_____ is a method of borrowing against receivables.
A. Factoring
B. Trading
C. Discounting
D. Reconciling
Consider a product that costs $5 to make, and is sold for $15. What is the productivity
ratio?
A. 2:1
B. 1:1
C. 1:3
D. 3:1
Universities have _____ that encourage companies to post openings to their job bank to
recruit at both the undergraduate and the graduate levels.
A. editorials
B. career service offices
C. newsletters
D. professional groups
Undercapitalization refers to:
A. not having enough money available to the business to cover shortfalls in sales or
profits.
B. not having enough money to capitalize on new business ventures.
C. finding a low-cost or no-cost way to do something.
D. not having enough money available to start a part-time business.
_____ are considered as a part of the internal environment of a firm.
A. Employees
B. Suppliers
C. Competitors
D. Unions