Earnings before taxes are computed by deducting the firm’s financing costs from its
______ income.
a. total
b. projected
c. net
d. operating
A business plan is
a. a legal document for raising capital.
b. a prospectus.
c. a selling document.
d. an offering memorandum.
For small businesses, the most likely form of organizational structure is
a. functional.
b. line.
c. line-and-staff.
d. committee.
Which of the following entities is liable for a corporation’s debts?
a. Stockholders
b. Board of directors
c. The corporation itself
d. The corporation’s president
For a corporate charter to be obtained,
a. one or more persons must apply to the secretary of state for permission to
incorporate.
b. the owner(s) must agree to be interviewed by a state department official.
c. the owner(s) must negotiate an incorporation fee.
d. the partners involved must outline a division of assets.
The rights conveyed by a franchising agreement are referred to as
a. franchising rights.
b. franchise claims.
c. franchise interests.
d. the franchise.
Steve Evans started a Web-based business offering a mechanism for buying and selling
antiques. Evans has set up his company using the _____________ model.
a. transaction-based
b. content-based
c. information-based
d. premium-based
Which approach can be used to handle a customer’s objections?
a. Showing what a delay might cost
b. Hearing the prospect out
c. Using the boomerang technique
d. Using the “Yes, but” response
A professor of entrepreneurship is trying to identify students who are the best prospects
for entrepreneurial careers. Based on prior research and especially the work of J. B.
Rotter, she is looking for students having a
a. high external locus of control.
b. low external locus of control.
c. high internal locus of control.
d. low internal locus of control.
The seller’s measure of what he or she is willing to receive in exchange for transferring
ownership or use of a product or service is known as
a. credit.
b. average pricing.
c. demand.
d. price.
Telephone calls and mail surveys are examples of
a. impersonal referrals.
b. marketer-initiated contacts.
c. personal referrals.
d. customer-initiated contacts.
Bait advertising attempts to
a. conceal product defects.
b. lure customers with the intention of selling them a different product.
c. use customer service as an incentive to buy a product.
d. persuade users to purchase products that may be injurious to their health or welfare.
Mac McConnell, owner of the Artful Framer Gallery in Plantation, Florida. reworked
his business based on the results of a survey showed that price was a top priority and
quality was last. He added a low end line and made inexpensive framing his specialty.
Operating profit margins of expanding businesses tend to suffer in the short run because
a. variable operating costs increase.
b. fixed operating costs increase.
c. economies of scale increase costs.
d. additional investment capital costs are always higher
The close relationship of business factors and family concerns in a family business has
been described as
a. separation of domains.
b. a generational gap.
c. an example of blood being thicker than water.
d. overlapping.
A partner can purchase a new copier for the partnership without consulting the other
partners because each partner has _____ power.
a. agency
b. purchasing
c. separability
d. fiduciary
Costs incurred by a firm in actually producing a product (e.g., materials, machinery,
etc.) are considered to be a part of
a. general overhead expenses.
b. costs of manufacturing.
c. cost of goods sold.
d. manufacturing overhead expenses.
Which of the following is an excellent source of information about franchisors?
a. Any state funded university
b. Friends and neighbors.
c. Advertisements in theWall Street Journal
d. FranchiseAmerica.com
In-laws create complications in a family business
a. rarely, since they only married into the family.
b. only if they are employed in the firm.
c. only if they are directly competing against another family member for a promotion.
d. because the more family members become involved in the firm (even indirectly), the
more difficult the fairness issue becomes.
Most small firms need to have financial statements generated at least
a. weekly.
b. monthly.
c. quarterly.
d. annually.
A legal term indicating the exclusive right of a firm to use a brand to identify a product
is a
a. copy mark.
b. trademark.
c. service mark.
d. trade dress.
A woman wants to start a construction company. She should realize that
a. women have never successfully started construction businesses having more than two
or three employees.
b. people (for example, some male loan officers) may not take her seriously simply
because she is a woman.
c. it will be impossible for her to break into the “good old boy network”.
d. gender differences are a fact of life (for example, construction is a male industry,
beauty shops are usually female owned, and so on), and therefore she should stay with
the pattern.
Tom Clancy is experiencing difficulty in recruiting competent technicians for his
business. One way to increase the attractiveness of his small business is by using
a. flexible work schedules.
b. job descriptions.
c. performance testing.
d. private employment agencies.
Roger Hemingway is analyzing regional differences in seeking a location for a new
firm. He just read a Wall Street Journal article that ranked states according to the
favorability of tax laws. Based on this information, he has decided to give further
attention to one of the best states, which is
a. Wyoming.
b. Massachusetts.
c. Ohio.
d. New York.
The fact that the daily “brush fires” of doing business tend to push aside planning until
it is forgotten is the message of
a. Parkinson’s law of planning.
b. the Peter principle.
c. the tyranny of the urgent.
d. Murphy’s law of strategic action.
Retained profits represent
a. spontaneous financing.
b. external equity.
c. internal equity.
d. sweat equity.
When a small business forges an agreement with a bank that consents to honor a draft
or other demand for payment after goods are delivered internationally, the firm receives
a
a. international invoice.
b. bill of lading.
c. letter of confirmation.
d. letter of credit.
Which of the following is one of the emerging motivations driving global expansion?
a. Expanding the market
b. Creating a satisfying way of life
c. Making the most of experience
d. Reducing costs
Operating expenses include
a. marketing-related expenses.
b. the cost for independent dealers to prepare for the distribution of the product.
c. interest on all loans.
d. income taxes.
The initial step in the marketing research process is to
a. select a data collection method.
b. identify consumer/business segments of interest.
c. identify informational needs.
d. conduct a preliminary information search.
A family retreat is designed to
a. bring family members together to openly discuss business matters.
b. focus on business matters while avoiding extensive communication.
c. control the lines of communication.
d. announce the latest policy decisions.
The first step in planning and improving one’s use of time should be
a. listing long-run objectives.
b. recording time spent on various activities during the day.
c. listing projects that need attention.
d. assigning priorities to unfinished tasks.
A poorly conceived business concept
a. is likely to be accepted if the business plan is well written.
b. will not be recognized if the business plan is well written.
c. cannot be rescued by a well written business plan.
d. can still be justified, as long as the entrepreneur can prove that strong market demand
exists.
The IPO process may be one of the most _____________ experiences of an
entrepreneur’s life.
a. exhilarating, frustrating, and exhausting
b. frustrating, tempting, and exhausting
c. tempting, exhausting, and exhilarating
d. encouraging and nerve-wrecking
Sole proprietors often benefit from fringe benefits such as tax-free insurance plans.
Between 1976 and 2000, women’s share of total self-employment remained fairly
constant.
Identify the stages of the life cycle of receivables. Why is it so important to recognize
these stages?
What is the ideal age for starting a business, and what are the principal factors
involved? Discuss.
Either a new product or a superior location can serve as a foundation for a successful
new venture.
An informal group can help or hinder the proper functioning of a business organization,
even in a small firm.
In his study of the origin and evolution of new businesses, Amar V. Bhide found that
entrepreneurs play different roles in starting businesses than they play in building what
he calls long-lived firms.
What are some of the guidelines that should be followed in developing a questionnaire?
Small businesses that practice skimming of income are acting unethically and illegally.
Innovative packaging is frequently a deciding factor for consumers.
A chattel mortgage is a loan for which real property, such as land or a building, serves
as collateral.
You Make the CallSituation 4
Gwen Malaski has called you for advice about what to she can do to increase the cash
flow in her business. Later that day, you drop by her office and begin a review of her
accounts. You find accounts receivable that have gone uncollected for several months.
When you ask Gwen about the accounts, she responds that she tries to maintain a
positive customer relationship so that she will not lose her larger customers.
Question 1 What credit management practices would you recommend that Gwen
institute immediately to get her business out of its cash crunch?
The world of e-commerce tends to conform around a few basic business models.
A computer may properly be used in a new business operation but not in preparation of
the business plan.
Liquidity has very little significance to small firms.