Even though the owner has stepped aside, he/she should always jump back in to fix
problems as they occur.
Under FOB Factory terms, the customer pays all shipping costs.
Whenever a business has shared leadership, such as co-presidents, it is critical that the
board of advisers have members on it from outside the family.
Owners of traditional travel agencies are facing threats from many sides, including the
Internet.
The buyer must indicate acceptance of goods verbally or in writing for the acceptance
to be binding.
Trade accounts are the equivalent of a credit card that is issued by the business.
ETCs usually perform both import and export trades across many countries’ borders.
The formula for calculating the break-even is:
Break-even selling price =
Typically, a small firm should prepare a monthly cash budget for at least one year into
the future.
People who seldom fail are being creative.
Loans from stockbrokers carry higher interest rates since the collateralstocks and bonds
in the borrower’s portfolioinvolve a high level of risk.
It is not necessary for companies that collect information from their online customers to
safeguard their customers’ privacy.
A business owner who buys a company whose financial statements show a pattern of
short-term profitability is guaranteed of getting a good deal.
The first step in preparing a cash budget is to forecast cash receipts.
With an existing business, the new owner can depend on employees to help him/her
make money while he/she is learning the business.
When a firm’s ratios vary from the average ratios of similar firms in the industry, this
indicates that the small business is in financial jeopardy.
Retail layout is the arrangement of merchandise in a store.
Stockholders are the various groups and individuals who affect and are affected by a
business.
Listening is the entrepreneur’s most important communication skill.
Almost everyone agrees that the price of the product or service is a key factor in the
decision to buy.
One of the simplest ways to establish credibility with customers is to use brand names
they know and trust.
Concerning how much cash to have at start-up, a rule of thumb is to have enough to
cover operating expenses (less depreciation) for two inventory turnover periods.
The purpose for establishing incubators is enhancing economic development while
grouping similar types of businesses into a consolidated economy.
An entrepreneur may lose the exclusive right to a trademark if it loses its unique
character and becomes a generic name or if the company abandons its trademark by
failing to market the brand adequately.
If a company wants quick acceptance and extensive distribution, when introducing a
new product into a highly competitive market with a large number of similar products,
penetration pricing is the best strategy.
Although companies set standards for ethical behavior, the ultimate decision on whether
to abide by ethical principles rests with the individual.
A tax, or duty, that a government imposes on goods and services imported into that
country is considered to be a tariff.
The purpose of classifying items according to their value in ABC analysis is to establish
the proper degree of control over each inventory item.
People who once saw launching a business risky now see it as an ideal way to create
their own job security.
There is no universal answer for resolving ethical dilemmas.
It is critical for all retail and service businesses to be located as far from competitors as
possible.
An entrepreneur should not include an exit strategy as a way to “cash out” for investors
in the initial plan.
A sweep account automatically “sweeps” all funds in a company’s checking accounts
above a predetermined minimum into an interest-bearing account.
In a factoring arrangement, the risk of uncollected accounts receivable falls on the small
business owner.
A poor image for the entire franchise could result from some franchisees using inferior
products to cut costs.
To be effective, a mission statement must become a natural part of the organization,
embodied in the minds, habits, attitudes, and decisions of everyone in the company
every day.
The preparation of a successor is a two-way process, showing the direction of the
business and what led to its success, but also learning and listening.
The franchise contract defines the rights and the obligations of both parties and sets the
guidelines which govern the franchise relationship.
A POS system can be set up for less than ________.
A) $1,000
B) $10,000
C) $5,000
D) $15,000
The biggest source for the best companies to buy is:
A) business brokers.
B) commercial bankers.
C) trade associations.
D) the hidden market.
Outdoor advertising has the highest cost per thousand (CPM) of all advertising media.
The break-even point occurs where:
A) the firm’s fixed expenses equal its variable expenses.
B) the creditors’ interest equals the owner’s interest in the business.
C) total revenue equals total expenses.
D) assets and liabilities are equal on the balance sheet.
The final step in creating a knowledge management program is:
A) to organize the essential knowledge and disseminate it throughout the company to
those who need it.
B) to take an inventory of the special knowledge a company possesses that gives it a
competitive advantage.
C) to continue to add to the knowledge base the company has assembled.
D) to create company goals and objectives.
The heart of the cash budget is the ________ forecast.
A) cash receipts
B) cash disbursements
C) sales
D) receivables
The primary objective of the purchasing function is to:
A) ensure an adequate turnover of merchandise.
B) acquire enough stock to ensure uninterrupted sales or production.
C) determine the “best” possible price for both supplies and finished products.
D) maximize carrying and set-up costs for the firm.
“Copreneurs” are:
A) personality traits of entrepreneurs.
B) entrepreneurial couples who work together as co-owners of their business.
C) business magazines targeted towards entrepreneurs.
D) None of the above
Robin works hard at acting on principle and conviction and striving to do the honorable
thing. Robin is guided by the ethical principle of:
A) honesty.
B) integrity.
C) fidelity.
D) fairness.
A niche can be defined in many ways, including:
A) by geography.
B) by customer profile.
C) by product.
D) All of the above
The ________ brain processes information in a step-by-step fashion.
A) left
B) right
C) front
D) back
The product life cycle concept means that small businesses must:
A) constantly be involved in product innovation.
B) track demographic and psychographic trends carefully.
C) create both place and time utility if they are to survive.
D) use a market penetration strategy if they are to be successful.
A description of the key factors that will dictate the success of your business quality,
price competitiveness, etc. should be contained in the ________ section of the business
plan.
A) market analysis
B) executive summary
C) description of the business
D) competitor analysis
When looking for an angel, the key is:
A) networking.
B) using the SBA as a contact point.
C) searching the web.
D) using business incubators’ computer matching services.
Which of the following sets of city factors does an entrepreneur need to consider when
choosing a location for his/her new business?
A) The business growth potential
B) Business climate and labor market
C) Proximity to the target market and raw materials
D) The availability of transportation, public services, and police and fire protection
The most common method of liquidating slow-moving merchandise is:
A) a markdown.
B) the one-day only sale.
C) quantity discounts for volume purchases.
D) an advertising blitz.
When it comes to transferring goodwill in a business valuation, goodwill:
A) is considered an intangible asset and therefore not taxed.
B) can be used as a deduction by the seller.
C) is taxed for the seller as capital gains.
D) cannot be used as a deduction by the buyer because it is a capital asset.
________ are those items of value the business owns; ________ are those things the
business owes.
A) Assets; liabilities
B) Liabilities; assets
C) Ratios; equities
D) Equities; liabilities
Lockbox refers to:
A) customers send payments to a post office box the bank maintains.
B) customers send payments to company’s mail box that has a lock.
C) customers send payments to collection company’s mail box.
D) None of the above
To have a valid offer, there must be:
A) an intention to be bound by the offer.
B) a simple lack of disagreement by the offeree.
C) a written communication of the offer.
D) significant and substantial consideration.
What franchisee turnover rate is probably sound?
A) Less than 5 percent
B) Less than 15 percent
C) Less than 25 percent
D) Less than 35 percent
The moral values and behavioral standards business people employ daily when making
decisions and solving problems are known as:
A) social responsibility.
B) business ethics.
C) the corporate culture.
D) the company policies and procedures.
________ puts the customer at the center of a company’s thinking, planning, and action
and shifts the focus from a product or service to customers and their needs and wants.
A) Pull strategy
B) Entertailing
C) Customer relationship management (CRM)
D) Interactivity
________ is the exchange of goods and services for other goods and services.
A) Countertrade
B) Export
C) Import
D) Bartering
Which of the following is a part of the “just-in-time” inventory control philosophy?
A) Job tasks should be highly specialized.
B) Machinery must produce a large number of items to justify long set-up times and
high costs.
C) The lower the level of inventory a manufacturer maintains, the more efficient is the
production system.
D) Long production runs of standard items are ideal.
A(n) ________ is a total ban on imports of certain products or all products from a
particular nation.
A) tariff
B) quota
C) embargo
D) dumping
A physical inventory count should be taken at least:
A) once a week.
B) once a year.
C) every six months.
D) daily.
The Omega Company introduces products with a higher-than-normal price in an effort
to quickly recover the initial developmental and promotional costs of the product. The
Omega Company is pursuing a ________ pricing strategy.
A) fixed-price
B) skimming
C) penetration
D) loss leader
Perhaps the best way to deal with the environmental challenges we face would be to:
A) create redesigned, “clean” manufacturing systems.
B) conduct corporate education programs on the issues for employees.
C) revert society to a simpler, more environmentally friendly economy.
D) enhance efforts at recycling existing waste.
A key to effective innovation by the entrepreneur is:
A) dedicating at least 20% of pre-tax revenues to R & D.
B) always looking for new product and service ideas.
C) hiring managers with a track record for innovation.
D) None of these