In a small family business, management succession planning can start late.
In a well-managed small business, the balance sheet is not as important to the owner as
the income statement.
Specialty goods are bought infrequently, often at exclusive outlets, after special effort
by the customer to drive to the store.
Proprietorship is the most popular form of business in the United States.
Effective control systems should be generally acceptable to those involved with
implementing them.
Online training is not being adopted by many companies because of the long-term costs
associated with this learning method.
Short-term securities have a maturity period of one to five years.
A person’s age must determine the lines of authority in a family-owned business.
Taxes are not levied on the transfer of ownership of businesses.
The Small Business Administration is a group of retired managers who help people
develop their business ideas.
Small business investment companies tend to make very small investments.
The borrowing power of a family-owned business is limited by the amount of family
assets.
A disadvantage of importing is that some domestic producers suffer a lack of customers.
A small retailer provides an allowance to a customer upon purchase of a washing
machine. This is called a(n) _____.
a) subsidy
b) trade-in
c) discount
d) rebate
A partnership is a business that is:
a) formed for civic, educational, charitable, and religious purposes.
b) organized to provide a professional service for which each shareholder is licensed.
c) owned by two persons who have unlimited liability for its debts and obligations.
d) organized to protect individual partners from personal liability.
_____ is a form of debt security with a standard denomination, method of interest
payment, and method of principal repayment.
a) Lease
b) Bond
c) Chattel
d) Mortgage
In the context of small businesses, _____ is the first step in profit planning.
a) establishing a profit goal
b) estimating the volume of sales revenue
c) estimating the amount of expenses
d) preparing a balance sheet
A business plan can be successfully prepared by:
a) adding overestimated values of expected revenues to attract investors.
b) establishing a long-term operational plan only for the current production process.
c) developing short-term detailed plans for everybody involved with the business.
d) removing the operational planning part and retaining only the strategic planning part.
Cost of goods sold is:
a) the targeted cost for all phases of design, development, and production of a product
for each accounting period.
b) the percent of profit over expenditures.
c) the total cost in terms of raw materials, labor, and overhead of the business that can
be allocated to production.
d) the difference between revenue earned and expenses incurred.
_____ involves adding products that are unrelated to the present product line.
a) Penetration
b) Acquisition
c) Specialization
d) Diversification
A _____ allows the employer to provide all employees with the legally required
benefits, plus an extra dollar amount that each employee can choose how to use.
a) 401(k) retirement plan
b) flexcomp
c) defined-benefit plan
d) defined-contribution plan
A _____ is formed for civic, educational, charitable, and religious purposes.
a) limited-liability company
b) joint venture
c) family limited partnership
d) nonprofit corporation
Which of the following is a characteristic of a nonprofit corporation?
a) The trustees have unlimited liability status.
b) It enjoys tax-exempt status.
c) It is formed to provide a professional service.
d) It is owned by and operated for the benefit of patrons using its services.
_____ advertising tries to get potential customers to buy a product within a short period
of time so that the reaction can be easily measured.
a) Subliminal
b) Covert
c) Surrogate
d) Immediate-response
Which of the following is a problem faced by small businesses today?
a) Lack of magazines focusing on issues related to small businesses
b) Lack of risk takers
c) No training at colleges and universities
d) Unexpected growth and financing issues
In which stage of the product life cycle does competition become more aggressive, with
declining prices and profits?
a) Introduction
b) Growth
c) Maturity
d) Decline
_____ is the management function of getting employees to do the things one wants
them to do, by means of communicating with, motivating, and disciplining them.
a) Recruiting
b) Leading
c) Selecting
d) Counseling
Which of the following is true about a franchise fee?
a) It is a fee paid to the franchiser at regular intervals of time.
b) It is based on a percentage of the franchisee’s gross revenue.
c) It is a one-time fee paid to the franchiser.
d) It is a continuous fees paid by the franchiser to the franchisee.
Insurance is an example of _____.
a) risk avoidance
b) risk prevention
c) risk transfer
d) loss control
A(n) _____ budget forecasts sales and allocates expenses for achieving them.
a) capital
b) operating
c) revenue
d) cash flow
Which of the following statements regarding a business plan of a company is true?
a) It emphasizes operational planning more than strategic planning.
b) It is a money-raising tool to attract venture capitalists when the owner wants to
assume more control over the company.
c) It usually provides big entrepreneurs a greater chance of success than the small
business owners.
d) It provides a detailed design of activities to be carried to finance the business and
market products.
Which of the following measures can be used to enhance document security?
a) Maintaining backups for records
b) Allowing only senior executives to take home confidential business records
c) Instituting flexible security policies
d) Discouraging employees to work from remote destinations
Which of the following is true of casualty insurance?
a) It does not provide protection against burglary, theft, and robbery.
b) It excludes health and accident insurance.
c) It refers to the setting aside funds to meet losses that are uncertain in size and
frequency.
d) It consists of automobile insurance.