The nice thing about a family business is that there is always a guaranteed successor
within the family whenever the owner decides to step down.
Business ethics consist of 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.
Total profits minus total expenses gives the company’s net income.
A mission statement addresses the first question of any business venture: “Where do I
see myself to be?”
In most cases of sole proprietorship, an entrepreneur can complete all of the necessary
paperwork in a single day!
Most customers are ok with the number of steps required to complete the checkout
process.
A corporation formed and chartered in Kansas is considered a domestic corporation
when doing business in Kansas.
Typically, a commercial bank will lend a small business owner 100% of the value of
accounts receivable pledged as collateral.
The appropriate service level factor in the safety stock calculation is called the Z score.
The Internal Revenue Service requires partnerships to designate one person to be
responsible for handling the partnership’s tax matters.
Early involvement of the total work force in the strategic management process is a
luxury that larger businesses cannot achieve.
If a small firm’s profits are climbing, the owner can be sure its cash balance also is
rising.
The Apple iPod is an example of an evolutionary innovation.
The CPSC has the power to ban the production of any product it considers hazardous to
consumers.
The primary reasons employees usually don’t do what they are expected to do has a lot
to do with their motivation and desire to work.
All costs directly related to the manufacture and distribution of goods are covered under
general expenses.
Proper control techniques in receiving merchandise prevent the small business owner
from paying for suppliers’ and shippers’ mistakes.
Each partner is an agent for the business and can legally bind other partners to business
agreements.
Generally, the higher the small firm’s average collection period ratio, the lower the
chance of bad debt losses.
To add objectivity to the vendor selection process, many firms are establishing vendor
certification programs.
It may be valuable for family members to work outside of the business for the purpose
of learning how others conduct business.
The Code does not cover contracts for the sale of services.
When choosing a medium for an advertising message, a small business owner needs to
consider the absolute costs of the ad, the ad’s cost per potential customer reached.
Leasing is an effective way to reduce long-term capital requirements for a small
business.
In an IPO the purpose of the road show is to sell shares.
One of the goals of competitive analysis is to improve a firm’s reaction time to
competitor’s actions.
Two characteristics common to entrepreneurs are creativity and an eye for opportunity.
Lenders of fixed capital expect the assets purchased to increase the borrowing firm’s
efficiency, profitability, and cash flows.
In a franchise arrangement, the franchiser controls the distribution methods of the
business venture.
Territorial encroachment is becoming a hotly contested issue as franchisers have nearly
exhausted prime locations for franchises.
A common reason cited by banks which reject small business loan applications is
“undercapitalization or too much debt.”
The use of credit cards increases the probability, speed, and magnitude of customer
spending.
The most important role the entrepreneur can play in his/her company is that of
manager.
The reason Joe Falsetti couldn’t get investors interested in an IPO for his ROM Tech
was his unwillingness to disclose key financial information.
A firm’s initial markup is the average markup required on all merchandise to cover the
cost of items, incidental expenses, and a profit.
According to the National Association of Credit Management, receivables are only the
second most important item on the balance sheet.
The partnership, like the proprietorship, avoids the disadvantage of double taxation.
Ambiguity requires us to consider at least two different, often contradictory notions at
the same time, which can be a detriment to creativity.
Perpetual inventory systems keep a continuous tally of each item added to or subtracted
from the company’s stock of merchandise.
Owners who do not want to sell a business outright, but want to either stay around for a
while or surrender control gradually can use a restructuring strategy.
A small company following a ________ strategy seeks to build customer loyalty by
positioning its goods and services in a unique fashion.
A) differentiation
B) cost leadership
C) focus
D) niche
Cultural diversity in the small business brings several benefits to its owner, including:
A) less government scrutiny of his/her business practices.
B) local and state tax breaks.
C) a smaller but better educated and skilled labor force from which to hire new
employees.
D) a rich blend of perspectives, skills, and talents.
Partnerships have a number of advantages over other forms of ownership, such as:
A) a larger pool of capital and little government regulation.
B) very easy liquidation of owners’ investment.
C) limited liability for all partners.
D) they may be easily formed by an individual.
________ is a trend where people test products in retail stores but buy them online.
A) Showboating
B) Commoditizing
C) Onlining
D) Showrooming
An advantage of JIT is that it:
A) reduces costly inventories.
B) maintains minimum inventory.
C) helps the company’s cash flow.
D) All of the above
The plan of operation of the company within the business plan should detail:
A) the experience of the management team.
B) the production process for the product being sold.
C) the financial assets of each of the officers.
D) plans for keeping the important officers in place with the company.
Recommended techniques for having a killer Web site are:
A) avoiding clutter.
B) continuous sound play.
C) not to change the Web site.
D) All of the above
Critical to TQM is:
A) management competence.
B) understanding the product.
C) continual improvement.
D) knowing your competition.
The process of influencing and inspiring others to work to achieve a common goal and
then giving them the power and freedom to achieve it is called:
A) management.
B) goal or objective setting.
C) performance appraisal.
D) leadership.
If a company is to succeed, a leader must perform four vital tasks which include:
A) knowing what to do.
B) motivate workers to higher levels of performance.
C) knowing how to do.
D) wanting to do something.
A company’s suppliers are:
A) stockholders.
B) bondholders.
C) stakeholders.
D) None of the above
Small business owners get into trouble when determining their price floor when they:
A) focus on what the customer will pay.
B) assume their costs are the same as their competitors’.
C) begin to track financial ratios to determine what they are doing.
D) use the price floor as the minimum price in their acceptable price range.
The statute of limitations for a breach of contract suit is ________ years from the time
the breach occurred.
A) 2
B) 3
C) 4
D) 7
For advertising to work it should:
A) fit into your company’s overall market strategy.
B) use as much financial resources as possible.
C) be part of the firm’s operating strategy.
D) None of the above
________ percent of all small businesses are home based.
A) 53
B) 20
C) 70
D) 80
A differentiation strategy:
A) seeks to find and defend an identifiable market niche.
B) is built on a company’s distinctive competence.
C) must create the perception of value in the customer’s eyes through the lowest
possible price.
D) focuses solely on making the physical characteristics of the product as unique as
possible.
In contrast to traditional lenders, finance companies offer small business borrowers:
A) faster turnaround times.
B) longer repayment schedules.
C) more flexible payment plans.
D) All of the above
The loan ceiling for the International Trade Loan Program is
A) $500,000.
B) $2 million.
C) $1 million.
D) $100,000.
A key element to Deming’s 14 Points is:
A) ordering on the basis of price.
B) changing suppliers frequently.
C) conducting frequent quality inspections.
D) developing long-term relationships with vendors.
________ is any sales presentation that is nonpersonal in nature and is paid for by an
identified sponsor.
A) Personal selling
B) Press release
C) Advertising
D) Marketing
In a public offering, the underwriter:
A) advises the owner as to the best structure of the business going into the sale.
B) serves as an adviser and consultant to the small business in preparing the registration
statement for the SEC.
C) is bound to the offering until it is executed.
D) is listed as one of the officers of the company.
To cope successfully with the many ethical decisions they face, entrepreneurs must
develop a ________ ethical framework to guide themselves and the organization.
A) loose
B) workable
C) tight
D) flexible
Most employee theft:
A) involves values in excess of $1,000.
B) is expensive merchandise.
C) is small amounts of cash.
D) is the equivalent of nickel and dime items.
While a large percentage of business founders plan to pass on their businesses, few
create management succession plans because:
A) they don’t know how to do it.
B) they are reluctant to let go of the business.
C) they can’t afford the attorneys’ and accountants’ fees.
D) they don’t feel they need one because they know which child will assume
management of the business.
An arrangement in which customers mail their payments on account to a post office box
which the company’s bank monitors, from which it collects the payments, and then
immediately deposits the payments into the firm’s interest-bearing account is called a:
A) zero balance account.
B) lockbox.
C) sweep account.
D) credit reference.
The strategic management procedure for a small business should include the following
features.
A) Use a relatively short planning horizon
B) Encourage the participation of employees
C) Be informal and not overly structured
D) All of the above
The index of retail saturation is:
A) retail expenditures times retail facilities divided by the number of customers.
B) the ratio of a trading area’s sales potential to its sales capacity.
C) a buying power index.
D) retail facilities times the number of customers divided by the retail expenditures.
Once the vision and mission are established, the entrepreneur needs to:
A) select the target market.
B) conduct market research.
C) choose a competitive strategy.
D) assess the firm’s strengths and weaknesses.
The most commonly used method of establishing an advertising budget for a small
business is:
A) a percentage of sales.
B) spending what competitors spend.
C) objective-and-task method.
D) what is affordable.
Business plans need to pass three tests:
A) the financial test, the market test, and the management test.
B) the appearance test, the substance test, and the concept test.
C) the reality test, the competitive test, and the value test.
D) the presentation test, the content test, and the application test.
The ________ ratio is a measure of a company’s ability to make the interest payments
on its debt.
A) debt-to-net worth
B) times-interest-earned
C) net sales-to-working capital
D) net profit-to-equity
Store owners and employees may apprehend and charge a shoplifter:
A) merely on the suspicion that they have stolen something.
B) if the individual puts something in their bag or pocket without paying for it but
hasn’t left the store.
C) only if the theft amounts to more than $25.
D) only if they see the theft and can prove the merchandise belongs to the store and
wasn’t paid for.
The ________ is a document that states in writing all of the terms of operating the
partnership for the protection of each partner involved.
A) Certificate of Incorporation
B) Partnership Agreement
C) Certificate for Conducting Business as Partners
D) Partnership Document
SBICs:
A) were chartered by the SBA to help start-up companies find private financing from
commercial banks and finance companies.
B) provide short-term debt-based capital to small businesses through the sale of the debt
to private investors.
C) cannot invest in or lend money to a business for more than five years.
D) were created by the Small Business Investment Act to use a combination of private
and federal guaranteed debt to provide long-term capital to small businesses.