“Double taxation” refers to the fact that the corporation itself must pay taxes on its net
profits, and the stockholders must also pay taxes on the portion of those same profits
distributed to them as dividends.
Research shows that for “Copreneurship” to work, responsibilities must be divided by
gender.
A limited partner does not have the right to manage the business in any way and still
maintain limited status.
The average microloan is for $25,500 with a maturity of 37 months (the maximum term
is six years).
How the store is laid out has little impact on shoplifting unless video cameras are
installed as well.
Trade credit, while more difficult to obtain than bank financing, is a somewhat
important source of financing to most established companies.
Research shows that the nature of the business contributes to its vulnerability to crime.
In so many cases where teams prove to be ineffective the answer can be found in an
entrepreneur that did not structure and create teams that could be expected to succeed.
The owner of a small retail shoe store and the owner of a small furniture manufacturer
would likely have very different capital requirements.
Taking a company public is a simple process.
Generally, business owners should not be lured into taking cash discounts vendors
offer; that cash could be put to better use elsewhere.
A total assets turnover ratio below the industry average may indicate that the small firm
is not generating an adequate sales volume for its asset size.
The small business manager should employ the same advertising media as competitors
to increase the likelihood of advertising success.
Seed capital for the entrepreneur is risk capital for investors.
The two common pitfalls of poor financial control are undercapitalization and lax
customer credit policies.
Companies that have used teams successfully still pay members individually, but they
make successful team work a major part of an individual’s performance review.
Price is the safest criterion upon which to build a competitive edge.
Filing for a patent is a simple process the small business owner can handle himself.
One significant disadvantage of trade shows is inability to bring in new customers or
international customers.
Export merchants represent a limited number of non-competing domestic companies.
It is important to have fancy typefaces and large fonts on a web page.
Do not heed any information gathered from past franchisees, because they will distort
the reasons why they left the franchise.
Despite their magnitude, family businesses face a major threata threat from within:
management succession.
The reliability of the discounted future earnings approach to valuing a business depends
on making realistic forecasts of future earnings and on choosing the proper present
value rate.
An entrepreneur should not take advantage of offers from family and friends to lend or
invest money for the business venture.
Outline and briefly explain the key behaviors that an effective leader of a small business
should demonstrate.
A focus strategy is ideally suited to many small businesses, which often lack the
resources to reach a national market.
Generally, the absence of consideration does not affect the obligation, i.e., the contract
is still binding, even if there’s no apparent consideration.
The IPO process requires maximum disclosure.
The form of ownership can impact an entrepreneur’s ability to raise start-up capital.
When investing surplus cash, the small business owner should seek the highest returns
possible on the money.
Idealists make up the largest group amongst different entrepreneurial personalities.
By signing the franchise contract, a franchisee typically surrenders some freedom and
autonomy in operating his/her business.
In today’s financial climate, more banks are becoming the primary and often only
source of capital for new ventures.
Because of their relatively inexpensive nature, perpetual inventory systems are used
most frequently and successfully in controlling low-dollar, high-volume items.
When thinking about inventory holding costs, remember that the greater the quantity
ordered, the greater the inventory carrying costs.
Keeping internal records current is a simple but effective deterrent to employee theft.
Small businesses are able to maintain a leadership role in innovation by:
A) using their size, flexibility, and speed to their advantage.
B) spending much more money on R & D than large companies do.
C) foreseeing trends better and far enough in advance that they can spread innovation
costs over several years.
D) making better use of technology than large companies.
When manufacturing large, bulky products, it is sometimes necessary to bring the
materials to a specific spot and do the assembly in one place. This type of layout is
know as a:
A) process layout.
B) fixed-position layout.
C) function layout.
D) product layout.
When considering the competition in price setting, the small business owner should:
A) consider the competitors’ location.
B) consider the competitors’ motives for their prices.
C) consider the nature of the goods being sold.
D) consider all of these.
________ protects against damage a business causes clients due to a mistake on their
part.
A) Worker’s compensation
B) Professional liability insurance
C) Surety insurance
D) Employment practices liability insurance
In a closely held corporation, one of the steps that should be taken to avoid legal
difficulties is:
A) hold annual meetings to elect officers and directors.
B) make sure that the stockholders make all the major decisions.
C) mingle corporate assets and the personal assets.
D) None of the above
When Marshall Paisner decided to pass his Scrub-A-Dub car wash chain on to his
children, he violated one of the cardinal rules of the transfer of power, but it worked.
What he did was:
A) made a quick transition in about 30 days and walked away.
B) made both of his sons co-presidents and had them share power and the company.
C) named his youngest son to the presidency of the company but retained all final
decision control.
D) sold the company to an outsider through a cash payment of 10% and a note for 90%
of the value of the business.
When investing surplus cash, the small business owner’s key objectives should be:
A) high yields.
B) current income.
C) liquidity and safety.
D) long-term yield.
________ are relationships between a controllable variableplant size, quality,
packagingand a critical factor influencing the firm’s ability to compete in the
marketplace.
A) Core competencies
B) Competitive advantages
C) Key success factors
D) Goals and objectives
Surveys, questionnaires, and focus groups are considered to be:
A) primary research.
B) secondary research.
C) data collation.
D) All of the above
________ encourages us to “think something different.”
A) Ambiguity
B) Reciprocity
C) Animosity
D) All of the above
Ethical lapses happen for a number of reasons. Joan made an unethical decision. When
confronted with it by her boss, she couldn’t understand why he was upset because
“Everyone does it.” This is an example of an ethical lapse due to:
A) a “bad apple.”
B) a “bad barrel.”
C) opportunity pressures.
D) competitive pressures.
Rather than attempting to serve the total market, the small firm pursuing a ________
strategy specializes in serving a specific target segment.
A) cost leadership
B) differentiation
C) focus
D) head-to-head
To break into international markets the entrepreneur needs to take several steps
including:
A) analyzing his/her commitment to the effort.
B) researching the markets and picking a target market.
C) developing a distribution strategy.
D) All of these
A motivational tool that also helps to guide performance and lets the owner know that
his/her company is accomplishing its operational goals is:
A) benchmarking.
B) feedback.
C) job redesign.
D) a human resource audit.
A tip for effective advertising is:
A) set long-term advertising objectives.
B) advertise in all media.
C) include many texts in your ads.
D) All of the above
The EOQ formula simply balances the ordering cost and the carrying cost of the small
business owner’s inventory so that total costs are ________.
A) optimized
B) minimized
C) maximized
D) calculated
What is an EAP?
A) It is a drug testing program for small businesses.
B) It is a program to help employees with substance abuse and other types of personal
and family problems.
C) It is an HIV screening process used in the recruiting process.
D) It is a type of diversity management program.
An S-corporation form of ownership overcomes which disadvantage of the regular or
“C” corporation form of ownership?
A) The double taxation issue
B) The expense and difficulty of formation
C) The amount of regulation and red tape involved in its operation
D) The potential loss of control by the founder
Cost leadership has several inherent dangers such as:
A) choosing to distinguish the product that does not boost its performance.
B) an overfocus on the physical characteristics of the product.
C) the identified niche is not large enough to be profitable.
D) an overfocus on costs to the elimination of other strategies.
________ is the most common type of bankruptcy, accounting for nearly 70% of all
bankruptcies.
A) Chapter 7
B) Chapter 11
C) Chapter 13
D) Chapter 21
An alternative to a two-bin system, wherever space or the type of item doesn’t fit the
system, would be a:
A) tag system.
B) punch card system.
C) physical inventory system.
D) POS system.
A ________ is one in which continuing unwelcome sexual conduct in the workplace
interferes with an employee’s work performance.
A) hostile environment
B) illegal environment
C) sexual environment
D) None of the above
A ________ is used by the owner of a small business to determine wage and salary
increases, need for training, overall job progress, etc., among other things.
A) human resource plan
B) job redesign
C) compensation plan
D) performance appraisal
The time span between stages in the product life cycle:
A) generally runs about six months to one year per stage.
B) is highly influenced by the amount of promotion that is done.
C) depends entirely on the type of products involved.
D) depends on the types of market strategy the small business owner is pursuing.
One disadvantage of radio as an advertising medium is:
A) lack of prominence.
B) cost.
C) lack of friendliness.
D) the need for repetition.
A company’s competitive edge is:
A) dependent on the availability of its products.
B) largely a function of its pricing strategies.
C) the superiority of its market research.
D) based on customers’ perception of its products and services.
Which of the following statements is true for improving a company’s search placement
results?
A) Visit competitors’ sites for key word ideas, but avoid using the exact phrases.
B) Consider using less obvious key words and brand names.
C) Ask customers which words and phrases they use when searching for the products
and services the company sells.
D) All of the above
________ is a technique which greatly simplifies the pricing function by setting the
same price for items with similar characteristics.
A) Odd pricing
B) Leader pricing
C) Price lining
D) Geographical pricing
An important advantage of specialty advertising is its:
A) ability to significantly lower the cost of sales calls.
B) low specific costs.
C) versatility.
D) potentially broad reach.
Which of the following are credit reporting services a small business owner could use
to check a customer’s credit?
A) National Association of Credit Management
B) TRW
C) Dun & Bradstreet
D) All of these
Define and describe the importance of the following types of capital.
∙ fixed capital
∙ working capital
∙ growth capital
What should be included in the section on the firm’s product/service? How should the
product or service be described?
When is innovation revolutionary and when is it evolutionary?
Describe a pro forma statement, identifying the types of pro forma statements a small
business owner could use, and how the small business owner would create each.
Define the key terms: stakeholders and business ethics.
Why is external appearance an important consideration?
Discuss the five basic steps to establishing a cash budget for a business.
What are the barriers to effective communication that the small business owner needs to
be aware of and to overcome?
What is e-commerce and why is it important?
Discuss the advantages and disadvantages of using radio and television advertising.
How and why would you choose one over the other?
What does the small business owner give up if he/she doesn’t take advantage of a
vendor’s discount? Demonstrate by calculating the interest rate on a $12,000 invoice
that is 3/10 net 30.
Describe the key features of bankruptcy proceedings under Chapter 7 and Chapter 11.
Identify and explain the advantages and the disadvantages of small business ownership.
What questions should an entrepreneur ask before venturing into the global
marketplace?
What is the value of outdoor and transit advertising to the small business?
What is JIT II? How does it differ from JIT? What is the importance of those
differences?
What are liquidity ratios and how are they used by the small business owner? Name and
briefly explain the current and quick ratios.
What is a “road show” and what is its purpose?
Discuss the ABC method of inventory control.