The majority of loans provided by the SBA are direct.
A well-prepared business plan helps determine the risks facing the venture.
In the basic EOQ model, the higher the economic order quantity, the greater the number
of orders placed.
Leaders recognize that helping workers see the company’s overarching goal is just one
part of effective communication.
There are no expenses once the Web site is set up.
The executive summary should summarize all of the relevant points of the proposed
venture and should be conciseno more than two pages.
In many franchises, strict uniformity is the rule rather than the exception.
The successor to the business owner needs to have both technical abilityknowledge of
the business and financial abilityand understanding of the financial aspects of the
business for the transition to succeed.
Participants in a study on fraud losses estimate that they lose about 6% of their annual
revenues to employee theft and fraud.
Magazines have a wide audience reach in that nearly 9 out of 10 adults read an average
of seven different magazines a month.
During an interview, an employer may not ask job candidates if they are a U.S. citizen
or if they have any physical or mental infirmities that would interfere with performing
the job.
Ambiguity can be a powerful creative stimulus.
The industry analysis should cover existing profitability and anticipated profitability of
firms in the targeted market segment, and any significant entry or exit of firms.
Marketing experts recommend introducing a new product only when the existing one is
in the maturity stage of the product life cycle.
The focus of the “competitor analysis” section of the business plan should be
demonstrating how the company has an advantage over its competitors.
An LLP does pay taxes as a corporation and its income is not passed through to the
limited partners.
Juveniles account for approximately one-fifth of all shoplifters.
The vendor certification program is an effort by the SBA to protect small businesses
from unscrupulous vendors.
The first step in creating a knowledge management program is to take an inventory of
the special knowledge a company possesses that gives it a competitive advantage.
The best purchase price is the lowest price at which one can obtain goods and services.
There are four steps to creating a cash budget: Determining an adequate minimum cash
balance; Forecasting sales; Forecasting cash receipts; and Estimating the end-of-month
cash balance.
Going global is risk-free.
An adequate profit in a small business must include a reasonable return on the owner’s
total investment in the business.
The Small Business Innovation Research Program was started by the National Science
Foundation and spread to 10 other federal agencies with an annual budget in excess of
$100 million.
Merchant status permits a small business to accept credit card payments and enhances
the reputation of the small business.
If a partnership agreement does not exist, the partnership will be governed by the
Uniform Partnership Act.
A boat retailer would most likely use a line of credit to finance the purchase of his
inventory.
Traditionally, social enterprises were always established as for-profit corporations.
When a sexual harassment complaint is made, the company should not inform the
accused until the complaint has been thoroughly investigated.
TheCAPLine Program offers short-term capital to growing companies needing to
finance seasonal buildups in inventory or accounts receivable.
If employees are committed to quality, management’s commitment becomes
unimportant.
Credit cards are a ready source of temporary financing that can carry a company
through the start-up phase until it begins generating positive cash flow.
Research indicates that for online merchants, customer service is not as important on
the Web as it is in traditional brick-and-mortar stores.
Successful bartering is easier than countertrade but requires finding a business with
complementary needs.
Since ethical decisions are based on absolute standards of conduct, it is unimportant to
identify the stakeholders in any specific decision when determining the ethical thing to
do.
Calculating ratios is not enough to insure proper financial control.
The underlying forces that dictate price are generally the same across industries, so that
all businesses in that industry have the same underlying cost factors.
The ________ shows the change in the firm’s working capital since the beginning of the
year.
A) balance sheet
B) income statement
C) pro forma
D) statement of cash flows
For entrepreneurs, a business plan is:
A) a systematic, realistic evaluation of a venture’s chances for success in the market.
B) a way to determine the principal risks facing the venture.
C) a game plan for managing the business successfully.
D) All the above
________ discounts are normally set up on a graduated scale and are based on a firm’s
position in the channel of distribution and on the functions it performs in that channel.
A) Trade
B) Quantity
C) Cash
D) Cumulative
________ have shares that are controlled by a relatively small number of people, often
family members, relatives, or friends.
A) International partnerships
B) Publicly traded corporations
C) Closely held corporations
D) Privately held corporations
________ is designed to provide working capital to small exporters by providing loan
guarantees of 90 percent of the loan amount up to $1.5 million.
A) A CAPLine program
B) A Section 504 loan
C) An LDC loan
D) An export working capital program
A ________ system performs all the functions of a traditional cash register and
maintains an up-to-the minute inventory count.
A) POS
B) PCS
C) SPC
D) PCC
A significant benefit of starting your own company is:
A) more leisure time because there is less of a need to punch a time clock.
B) contributing to society and being recognized for your efforts.
C) to be able to choose who you work with or don’t work with.
D) more job security than working for a large corporation.
Small businesses can compete with larger rivals with bigger budgets by employing
unconventional, low-cost creative techniques known as:
A) market research.
B) astonishing customer service.
C) bootstrap marketing techniques.
D) psychographics.
What is the difference between price per unit and variable cost per unit?
A) Contribution margin
B) Contribution margin ratio
C) Net operating income
D) Contribution cost
________ insurance is protection from loss, theft, or destruction applied to vehicles,
buildings, etc. It can be written with a broad coverage or to cover a specific item or
items.
A) Life and health
B) Pensions and annuities
C) Workers’ compensation
D) Property
Primary cause of business failure is:
A) improper managerial attitude.
B) poor financial controls.
C) incompetent management.
D) location.
________ inventory systems are designed to maintain a running count of the items in
inventory.
A) Partial
B) Physical
C) Perpetual
D) ABC
When conducting the job interview, the small business owner should:
A) begin by explaining the job and the company and asking low key questions.
B) talk as much as he/she listens.
C) never use hypothetical questions.
D) focus on the candidate’s verbal responses, largely ignoring the nonverbals.
The author of a hit song could apply for a ________ to protect that work from
unauthorized use by others.
A) patent
B) trademark
C) servicemark
D) copyright
In an asset sale, the seller keeps all:
A) liabilities.
B) cash.
C) current assets.
D) inventories.
A(n) ________ is a government- or privately-owned company established in a foreign
country for the purpose of buying goods made there.
A) export trading company
B) resident buying office
C) foreign distributor
D) export merchants
Which form of ownership generally has the least ability to accumulate capital?
A) Partnership
B) Sole proprietorship
C) Corporation
D) S-corporation
To be enforceable, a covenant not to compete must be:
A) for the life of the business.
B) approved by a court of law.
C) for both direct and indirect competitive businesses.
D) reasonable in scope.
A small business owner needs to consider several questions before launching an
international venture, such as:
A) Do we have the correct multinational management in place?
B) Can we find an appropriate international partner for this venture?
C) What non-tariff barriers do we have to be prepared to overcome?
D) Are we sensitive to the cultural differences of conducting international business?
Price wars usually begin when:
A) the economy is in turmoil.
B) when there are more than 4 competitors.
C) when one competitor believes that they can achieve a higher volume through lower
price.
D) small businesses enter the market dominated by bigger giants.
Tom is counseling an employee who is facing corrective discipline for a serious error in
judgment on the job. The employee is very upset. Tom is trying to understand how the
employee feels and strives to tell the employee he knows that this is a tough time and
that the employee is upset. Tom is using ________ to improve his communication with
the employee.
A) feedback
B) empathy
C) clear organization in his thoughts
D) ambiguity
________ are private, for-profit organizations that purchase equity positions in young
businesses they believe have high-growth and high-profit potential, producing annual
returns of 300 to 500 percent over five to seven years.
A) Angel investors
B) Venture capital companies
C) Government bonding investors
D) Corporate venture investors
Business ethics consist of:
A) the legal state that is embodied in the employment manual and policy and
procedures.
B) the fundamental moral values and behavioral standards that form the foundation for
the people of an organization as they make decisions and interact with stakeholders.
C) the fundamental moral values and behaviors specifically for employees only.
D) None of the above
________ capital is the pool of temporary funds of the business used to support the
normal operation of the business on a short-term basis.
A) Growth
B) Fixed
C) Equity
D) Working
The secret to selecting the ideal location for a business is:
A) the available labor pool for the business.
B) knowing the customer and what is convenient to them.
C) the tax rate of the local and state governments.
D) the security of the area and the services provided by the site to the business owner.
If the firm owns any trademarks, patents, or copyrights, or has built up a positive
reputation with customers and suppliers, the business has what is/are called:
A) capital.
B) goodwill.
C) intangible assets.
D) market potential.
How is the strategic planning process for small companies different from that for large
companies?
A) The planning horizon should cover at least five years into the future.
B) The process should begin with setting objectives and conclude with competitive
analysis.
C) The process should be informal and not overly structured”a shirtsleeve approach.”
D) It should be conducted by top management and provided to lower management.
E. F. Hutton and Co. was convicted of the violation of kiting laws. Check kiting is an
illegal practice involving the writing checks against money that has not arrived at the
bank on which the check is drawn. Doing this violated their business responsibility in
terms of:
A) product quality.
B) the consumer’s right to know.
C) their investors.
D) the community.
Which of the following is a disadvantage of magazine ads?
A) The long closing times
B) Poor ad quality
C) An inability to target a market
D) Lack of flexibility
When a retailer routinely prices goods at $9.97 and $7.36 rather than $10.00 and $7.50,
the retailer is using:
A) variable pricing.
B) penetration pricing.
C) odd pricing.
D) price skimming.
The payment the franchisee makes to the franchiser based on gross sales is:
A) a royalty.
B) the start-up fee.
C) a technical assistance fee.
D) a national advertising fee.