One of the best ways to evaluate the effectiveness of an ethics system is to perform
periodic audits.
By choosing a radio station with the appropriate listener profile, a small business owner
can reach almost any target market desired.
Because service firms have no quantitative pricing techniques available to them, they
must charge the “going rate” for their services.
A retail layout should push customers into the store.
A device cannot be patented if it has been publicized in print anywhere in the world.
Flexplace is an easy job design strategy for companies to use because of
telecommuting.
Locating “angels” to finance a business is essentially a matter of networkingfinding the
right contacts.
A Chapter 11 bankruptcy provides a second chance for success.
One way to avoid the failure of a joint venture is to not use any kind of an agreement
that details what to do if the business fails, as this just predestines the joint venture’s
failure.
A willingness to learn is not as important to a family business as a nonfamily business
because the variety of talents and personalities within the family minimize the
importance of new ideas and techniques from the outside.
Leadership is the process of influencing and inspiring others to work to achieve a
common goal and then giving them the power and the freedom to achieve it.
The least expensive way to enter international markets is by using a trade intermediary.
To determine sales revenue, the owner records sales revenue for the year and subtracts
liabilities.
Doing daily inspections of the cash register tape to check for employee theft are of little
value since the theft would have already taken place and it would be difficult to trace
and prove at that point.
Reorganization is covered by a Chapter 7 bankruptcy.
One disadvantage of newspaper ads is their long closing time.
A competent owner is a master of day-to-day operations of the business and can help a
buyer to make a smooth transition into business ownership.
Since even the best sales forecast can be wrong, the small business owner should
prepare three forecastsoptimistic, pessimistic, and most likely.
The best method for valuing a business is to use established rules of thumb.
If a small business owner obeys the law, he/she can be certain that his/her actions are
ethical.
Having an attorney review and evaluate a franchise contract really is unnecessary since
the FTC requires all franchisers to offer a “standard” franchise contract.
In the marketing strategy portion of the business plan, the entrepreneur should explain
the promotional strategy, pricing strategy and distribution strategy.
When it comes to carrying out its social responsibility, one of the most important
constituencies to the small business is its employees.
Fixed assets consist of cash and items to be converted into cash within one year or
within the normal operating cycle of the company, whichever is longer.
The biggest complaint heard about performance appraisals is that they only happen
periodically, generally once a year, and most employees don’t receive ongoing feedback
on the job.
According to the discounted future earnings technique, a dollar earned in the future is
worth more than a dollar earned today.
The most important ingredient in the recipe for a successful joint venture is choosing
the right country or region.
The majority of first-generation family businesses do not survive into the second
generation.
Angels provide some of the startup capital for small companies.
The net profit on sales ratio measures the owners’ rate of return on the investment in the
business.
Sales turnover ratio = Credit sales (or net sales)/Accounts receivable.
Once a small business goes for a public stock offering, information that the owner used
to keep private is now public information.
An irrevocable asset trust is designated to pass insurance proceeds on to the small
business owner’s heirs without them having to pass through probate or be subject to
estate taxes.
Ownership of a corporation can easily be transferred through the sale of stock.
In Spain, patience is a must for conducting business; Spaniards like to get to know
business associates before working with them.
To avoid cash crises, many owners add a “cushion” to each cash disbursement account
since many expenses run higher than expected.
Since front-line service workers are not able to predict the causes of customer
complaints, managers must be the ones to identify potential customer service problems.
One of the biggest mistakes business buyers can make is entering negotiations with
only a vague notion of the strategies they will employ.
The number of IPOs have dropped significantly since 2001.
Because they keep continuous track on each item added to or taken from inventory,
perpetual inventory control systems eliminate the need for a physical inventory count.
Ricardo disapproves of an advertising campaign featuring scantily clad models in
suggestive poses with his company’s product. Ricardo is practicing ________ ethical
management.
A) immoral
B) amoral
C) moral
D) socially irresponsible
In the ABC method of inventory, C refers to:
A) items that account for a moderate dollar usage volume.
B) items that account for low dollar usage volume
C) items that account for a high dollar usage volume.
D) None of the above
A business plan presentation should cover:
A) the company’s background and its products or services with a market analysis and a
description of the opportunities it presents.
B) the company’s competitive edge and the marketing strategies it will use to promote
that edge.
C) the management team and its members’ qualifications and experience.
D) All of the above
The manufacturing layout that groups workers and equipment according to the general
function performed, and that works best with short production runs or when there are
considerable variations in the finished product, is called:
A) process layout.
B) fixed-position layout.
C) function layout.
D) product layout.
A company “Code of Ethics” refers to:
A) the awareness of a company’s management of the social, environmental, political,
and human, as well as the financial, consequences that its actions produce.
B) the moral values and behavioral standards business people employ daily when
making decisions and solving problems.
C) a formal statement of the standards of behavior and ethical principles a company
expects its employees to abide by.
D) the process of bringing land, labor, and capital together, and of assuming the risks
involved in producing a good or service in the hope of making a profit.
Projecting financial statements helps the small business owner to:
A) track and monitor current expenses.
B) transform business goals into reality.
C) calculate his/her return on the amount invested in the company.
D) measure liquidity of the firm.
________ serves as a check on the parties’ agreement, verifying that it is genuine and
not subject to mistakes, misrepresentation, fraud, duress, or undue influence.
A) An attorney
B) Notary public
C) Genuineness of assent
D) None of the above
The key to effective financial management in a start-up is:
A) excellent controls.
B) the use of ABC accounting processes.
C) sufficient start-up capital.
D) an adequate inventory on hand.
A significant disadvantage of a partnership is:
A) the unlimited personal liability for all partners.
B) the inability to attract either additional capital or new partners due to the complexity
of rewriting the agreement.
C) the difficulty of disposing a partnership interest without dissolving the partnership.
D) the regulatory complexity under which a partnership must be formed and operated.
When it comes to purchasing products, equipment, etc., the franchiser:
A) cannot require the franchisees buy from the franchise company.
B) can set prices paid for the products, etc., but cannot set the retail price the franchisee
charges.
C) is permitted to set the retail price for the franchisee.
D) cannot require franchisees to buy from an “approved” supplier.
A relatively easy way of getting into international marketing is through ________ who
act as distributors in foreign countries for domestic companies of all sizes.
A) foreign licensees
B) international franchises
C) joint ventures
D) export trading companies
________ are those things that a business owes; they represent creditors’ claims against
the business.
A) Assets
B) Liabilities
C) Owners’ equities
D) Liquidities
Franchising is currently dominated by:
A) auto dealers.
B) service-oriented franchises.
C) retail outlets.
D) fast food restaurants.
Information needed for a perpetual inventory system is an item’s:
A) name.
B) stock number.
C) description.
D) All of the above
The basic objective of a penetration pricing policy is to:
A) recover start-up costs as quickly as possible.
B) transform the small firm into a discount outlet.
C) gain quick access into a market to realize high sales volume quickly.
D) discourage competition and gradually become a high volume producer.
In the creative process, ________ occurs while the individual is away from the
problem, often engaging in some totally unrelated activity.
A) investigation
B) incubation
C) transformation
D) verification
Entrepreneurs who recognize demographic, social, and cultural trends as they emerge
have the opportunity to ________ their companies from the competition in meaningful
ways.
A) integrate
B) differentiate
C) placate
D) mediate
For a pay-for-performance system to work, it should:
A) be exclusive; only the best performers may be part of the plan.
B) make sure that pay and performance are clearly and closely linked.
C) be complex enough to include all elements that affect performance.
D) be administered by an outside agency on a contract basis to avoid bias.
The price that business owners set depends on the desired image they want to create for
their products or services. These images are:
A) discount.
B) value.
C) upscale.
D) All of the above
Another term for cobranding franchising is:
A) master franchising.
B) conversion franchising.
C) multiple-unit franchising.
D) piggybacking.
The implementation of TQM cannot succeed unless:
A) the company is willing to undergo immediate radical transformation of all of its
processes.
B) the company has extensive market research on its markets, competitors, and
customers.
C) it is fully supported by upper management and has the involvement of the CEO.
D) the lowest level of employees is willing to implement the program from the very
beginning.
After launching the Web site, the companies must follow-up by:
A) redesigning the Web site and buying more hardware to support the Web site.
B) automating or expanding the warehouse to meet customer demand.
C) integrating the Web site into the inventory control system.
D) All of the above
________ is the process of creating and delivering desired goods and services to
customers and involves all of the activities associated with winning and retaining loyal
customers.
A) Retailing
B) Selling
C) Marketing
D) None of the above
Shopping malls typically average ________ parking spaces per ________ square feet of
shopping space.
A) 10; 1,000
B) 5; 1,000
C) 15; 5,000
D) 3; 1,000
Which of the following functions will the typical point-of-sale system perform?
A) Computing the annual dollar usage value of every item in the inventory
B) Allowing the owner to check on the inventory level of any item listed in the database
C) Reconciling actual inventory levels with inventory levels reported by the system
D) Calculating the EOQ on any item in inventory
________ is the process of influencing and inspiring others to work to achieve a
common goal and then giving them the power and the freedom to achieve it.
A) Leadership
B) Meditation
C) Training
D) Management
A partnership agreement sets how the partners will be compensated. Normally:
A) partners are not entitled to salaries or wages, but are compensated by a share of the
profits of the business.
B) the general partner’s salary is set at 2 times the salaries of the limited partners.
C) both general and limited partners are permitted salaries, but all silent or dormant
partners are compensated only by sharing in the profits.
D) while the agreement establishes payout schedules, it does not spell out what
constitutes profit.
The ________ is the proportion of people who see a company’s online ad and actually
click on it to reach the company’s Web site.
A) AVPV
B) CPA
C) CTR
D) None of the above
Martha has heard that Iranian caviar is in demand and is planning to start an importing
business. After further research, she found that she is not able to import such product
from Iran to the United States. This is an example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.
The Fair Debt Collection Practices Act prohibits business owners from:
A) harassing people who are past due.
B) sending invoices the same day the product is shipped.
C) hiring debt collection attorneys.
D) referring past-due bills to collection agencies.
The most common method used by commercial finance companies to provide credit to
small businesses is:
A) asset-based.
B) insurance-based.
C) unsecured lines of credit or “character loans.”
D) balance-sheet based.
Which of the following would most likely use a perpetual inventory system?
A) A hardware store
B) A department store
C) A landscaping/greenhouse operation
D) A retailer of large appliances
Which of the following statements is correct?
A) Do not count on sponsorships for your entire advertising campaign.
B) It is not necessary to be a dominant sponsor of the event.
C) Most sponsorships are free and do not cost the company anything.
D) All of the above