Foreign licensing is when a business buys and sells products in many countries, either
in its own name, or as an agent for its buyer-seller clients.
The best purchase price is the lowest price at which the owner can obtain goods and
services of the best quality.
Once the letter of intent is signed, the next task is to prepare the registration statement.
The key factor in forecasting cash disbursements for a cash budget is to record them in
the month when they are incurred, not when they are paid.
As a company’s debt-to-net worth ratio approaches 1:1, its creditors’ interest in that
business approaches that of the owners’.
The price element of the marketing mix affects both sales volume and profits.
A job analysis describes what the job is, what its duties and responsibilities are, and
what working conditions are involved.
Most small companies meet the criteria for making a successful public stock offering.
Inventory-only deals are the easiest form of asset-based financing to obtain because
banks like to have “tangible” assets backing a loan.
The balance sheet technique of determining a business’s value uses the company’s net
worth or owner’s equity as the firm’s value, but it oversimplifies the valuation process.
The higher the debt-to-net worth ratio, the lower the degree of protection afforded
creditors should the business fail.
A corporation can sell its stock to a limited number of private investors in a private
placement.
One of the strategic management processes is to develop a clear vision and translate it
into a meaningful mission statement.
Pure franchising involves the right to use all the elements of a fully integrated business
operation.
The flurry of corporate “pink slips” has slowed down a new population of
entrepreneurs.
The average inventory turnover ratio tells the owner how fast merchandise is moving
through the business.
JIT II in the retail and service industries is more commonly called efficient customer
response.
The failure rate for franchises is well below that for other types of new businesses.
“C” items typically comprise a minor proportion of the small firm’s inventory value.
Most products sold in the United States require major modifications before they can be
sold in foreign markets.
Right-brain people have “helicopter skills,” the ability to rise above the daily routine to
see an issue from a broader perspective.
The primary goal of any business, according to Theodore Levitt, is to create and keep a
customer.
The level of customer service in most small companies is excellent.
Cash flowmeasures a company’s liquidity and its ability to pay its bills and other
financial obligations on time by tracking the flow of cash into and out of the business
over a period of time.
The Uniform Partnership Act covers three elements of a partnership; the common
ownership interest, sharing profits or losses, and management participation rights.
A bootstrap marketing plan should have four objectives: profit, profit, profit, and profit.
Specialty advertising gives small businesses an opportunity to fine tune or personalize
their advertising to a specific customer.
A foreign trade zone is a specially designed area that allows resident companies to
import from foreign countries what they need to do their business and ship finished
products out with minimal tariffs, etc.
For a contract to be enforceable, it must be legal.
Local laws, zoning regulations and building codes can affect the location to be chosen
depending on the type of business and its particular requirements.
Before purchasing an existing business, an entrepreneur should analyze closely both
direct and indirect competitors.
Going global tends to make companies more quality and customer conscious.
Invention is the ability to apply creative solutions to problems and opportunities.
Set-up costs are the expenses incurred in the actual ordering of materials and inventory,
or in setting up the manufacturing line.
Amanda and William run a retail clothing store together. Amanda is a CPA with great
financial analysis skills. William has the sense of style and strong negotiating skills.
Financial decisions are largely left to Amanda, while buying and display decisions are
left to William. This is an example of the essential quality of:
A) shared power.
B) a willingness to learn and grow.
C) tradition.
D) shared values and vision.
What are, if any, the possible defenses against a valid contract which may cause it to be
unenforceable?
A) Genuineness of assent and form
B) Control and offer
C) Agreement and legal
D) Agreement and offer
The most meaningful unique selling proposition:
A) identifies as many product features as possible.
B) stresses price.
C) counters the strengths of the competition.
D) describes the primary benefit of the product.
When developing a marketing approach to pricing, business owners must:
A) establish prices that are compatible with their customers’ expectations and what they
are willing to pay.
B) compete solely on price.
C) establish prices that are compatible with their customers’ expectations and add a
certain percentage to it.
D) establish prices that are compatible with their customers’ expectations and subtract a
certain percentage to it.
The ________ is the cost a company incurs to generate each purchase.
A) CTA
B) CPA
C) CSA
D) CMA
As a solution to a company’s quality problems, managers will find that TQM:
A) may be implemented without significant training of employees.
B) takes 3-4 years to bring about a significant change in quality.
C) techniques can be implemented piecemeal, one at a time.
D) creates little turmoil or change in the way a company does most of its business.
A small business’s “aggregation of factors that sets it apart from its competitors” is its:
A) strategic plan.
B) competitive advantage.
C) vision.
D) competitive strategy.
What is Albemarle’s Economic Order Quantity (EOQ) for the upcoming six months?
A) 292 heads
B) 358 heads
C) 396 heads
D) 584 heads
To avoid a stalled deal, both seller and buyer should go into the negotiation process
with:
A) income tax returns of past three to five years.
B) records of accounts payable.
C) list of objectives ranked in order of priority.
D) an optimistic attitude.
The most common and popular estate planning tool for small business owners is the:
A) buy/sell agreement.
B) irrevocable trust.
C) family limited partnership.
D) estate freeze.
The valuation approach that considers the value of goodwill is the:
A) balance sheet technique.
B) excess-earnings method.
C) discounted future earnings approach.
D) market approach.
The ________ expresses the entrepreneur’s vision for the company and what he/she
hopes it will become.
A) executive summary
B) mission statement
C) industry analysis
D) marketing strategy
Joan is seeking to answer a series of questions such as: How do competitor’s cost
structures compare to ours, what new competitors are entering the industry, what do our
customers say about competitors, etc. By asking these questions, Joan is:
A) conducting a SWOT analysis.
B) identifying her company’s key success factors.
C) formulating strategic options for her company.
D) performing a competitive analysis.
The limited liability company is most like a(n):
A) general partnership.
B) master partnership.
C) sole proprietorship.
D) S-corporation.
________ publishes Annual Statement Studies, showing ratios and other financial data
for over 750 different industrial, retail, and wholesale categories.
A) Robert Morris Associates
B) Boston Consulting Group
C) Bank of America
D) Dun and Bradstreet, Inc.
One “natural” advantage small businesses have over large businesses, which can be a
significant competitive advantage, is:
A) relationship marketing.
B) their ability to conduct market research.
C) their lower costs.
D) their ability to serve many highly diverse target markets.
Potential investors tend to believe that if an entrepreneur can’t develop a good plan:
A) he/she is probably the action-oriented sort of person they need running a business.
B) he/she needs to hire a consultant to write the plan for him/her.
C) he/she probably lacks the discipline to run a business.
D) then the entrepreneur is just like the majority of entrepreneurs and will probably do
quite well.
The document that governs the relationship between a franchisor and the franchise is
the:
A) FTC.
B) FDD.
C) UFOC.
D) FOC.
Which of the following retailers may use floor planning financing?
A) Car dealer
B) Shoe store
C) Carpet dealer and cleaning service
D) All of the above
A ratio greater than ________ days would indicate poor collection procedures.
A) 29
B) 40
C) 60
D) 90
When creating the cash budget, keep in mind that:
A) it should be a monthly plan, projected out for 3 years.
B) the more variable the sales pattern, the shorter the planning horizon should be.
C) it should be quarterly estimates for a period of 1 year.
D) it is a verbal or mental “document” in order to permit maximum flexibility.
The ________ shows what assets the business owns and what claims creditors and
owners have against those assets.
A) balance sheet
B) income statement
C) sources and uses of funds statement
D) pro forma
“Just-in-time” inventory control techniques are most successful in what type of
environment?
A) Repetitive manufacturing operations where inventory levels are significant at the
outset
B) Where product requirements are customized for each customer
C) Where a company changes suppliers regularly and those suppliers are independent of
the manufacturer
D) Where inventory levels have been reduced to safety stock levels
Which of the following phrases is sufficient to disclaim an implied sales warranty?
A) “No warranties”
B) “Seller makes no warranties on this product whatsoever”
C) “As is”
D) None of the above. A merchant cannot disclaim sales warranties.
The most important item on the balance sheet is:
A) cash.
B) disbursements.
C) expenses.
D) receivables.
Sometimes effective communication is blocked between leaders and followers by:
A) information overload or ambiguity in the communication.
B) the followers’ use of the grapevine.
C) the lack of nonverbal signals in an e-mail message.
D) the leader being too empathetic when talking with followers.
The ________ inventory control system relies on the validity of the 80/20 rule.
A) partial
B) perpetual
C) visual
D) ABC
“Everybody does it.” is an example of:
A) moral blindness.
B) justice.
C) consequences and outcomes.
D) public justification.
A small fireworks manufacturer that shuts its plant down permanently because the risk
of fire and the resulting losses are too great is relying on a risk ________ strategy.
A) avoidance
B) reduction
C) anticipation
D) transfer
Which of the following characteristics for selecting a city would be of greatest interest
to a retail store selling fine china and collectibles?
A) Public services
B) Transportation
C) Zoning
D) Population trends