Archives: Quiz

Online marketing is not a realistic option for small businesses because customers hesitate to use credit cards over the Internet. Commissions are given to employees as a reward on special occasions. Answer: False Small firms generate most new private employment. […]

A disadvantage of locating a small business in a shopping center is the possibility of policy changes due to change in the center’s owners. Common stockholders have a legally enforceable claim to dividends. Answer: False Working for another company to […]

If a business is to be organized and run by more than one person, preparing the business plan should be a team effort. People who start a small business usually seek outside funding before using their own funds. Answer: False […]

Professional venture capital firms provide more investment capital for small businesses than angel capitalists. Venture capitalists insist on looking at the business plan rather than the executive summary to help them make investment decisions. Answer: False Ordinary bankruptcy occurs when […]

If a company turns its inventory over too slowly, it is most likely to be keeping obsolete or deteriorating goods. Objectives are the goals that give shorter-term direction to the business and serve as benchmarks for measuring performance. Answer: True […]

A uniform marketing strategy is beneficial for people of all age groups. Since the financial position of a small business is constantly changing, these changes need not be recorded for further analysis. Answer: False When a business owner buys insurance, […]

A target market is a part of the total market toward which promotional efforts are concentrated. Criminal acts have forced not only small but even large businesses into insolvency. Answer: True It is a misconception among small business owners that […]

Leading is an important part of managing, but not the whole of it. Receiving the ordered goods and placing them in inventory are the last steps in the purchasing procedure. Answer: True “Off-the-shelf” programs rarely provide cost-effective solutions to small […]

Bankruptcy is the inability to get funds to start a small business. A franchisee owns the franchise’s name and distinctive elements and licenses others to sell its products. Answer: False Preferred stockholders give up their right to receive profits in […]

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. Answer: False Specialty goods are bought infrequently, often at exclusive […]

The Small Business Administration provides direct and guaranteed loans for small firms. Small Business Development Centers provide counseling, training, and technical assistance in small business management. Answer: True Staffing involves compensating employees and providing for their health and safety. Answer: […]

The attitudes of incompetent relatives working in a family-owned business can be changed by formal or informal education. Insurance companies treat large and small businesses alike. Answer: False A product layout can use the same general-purpose machines and equipment for […]

Incompetent family members working in a family-owned business may be handled by placing them in jobs which involve frequent interaction with other employees. Employee performance is a product of the employee’s ability to do the job and the application of […]

Proprietorship is the oldest and most prevalent form of ownership in the United States. Employees in large workplaces have higher job satisfaction than those in smaller firms. Answer: False Preferred stockholders usually retain the right to vote for company directors. […]

Long-range planning is important for a well-managed small business firm. Today more students think self-employment is a safer haven than working for big corporations. Answer: True If an established business is in a desirable location, it is a good idea […]

Reengineering is the fundamental redesign of a business, often resulting in reduction in size and markets. All U.S. laws affecting businesses are based on the federal or a state constitution. Answer: True Lack of an established product line does not […]

A cooperative is a business owned by two or more persons who have unlimited liability for its debt and obligations. When success leads a family-owned business into the second generation, younger relatives begin to lose interest in job titles. Answer: […]

In a limited partnership, the limited partners manage the business. Coinsurance exempts policyholders from paying the insurance premium. Answer: False Job enrichment emphasizes giving employees greater responsibility and authority over their jobs as the best way to motivate them. Answer: […]

The marketing concept emphasizes that the survival of any business depends on providing service. Profits are not necessarily in the form of cash. Answer: True Most small businesses use advertising agencies to develop their ad programs. Answer: False The primary […]

Premiums for product liability coverage have been declining steadily over the last several years. A corporation is considered by law to be a unique entity, separate and apart from those who own it. Answer: True In the context of small […]

Employee benefits are also referred to as fringe benefits. Small businesses should usually leave primary market research to experts. Answer: True In a SWOT analysis, strengths and weaknesses are part of a company’s external environment. Answer: False The owners of […]

Using internal sources for recruitment reduces a company’s stability. Small business owners need not absorb the losses of the firm. Answer: False Right-to-work laws define the areas in which an employer has the right to act freely as an employer, […]

In the context of franchising, a disclosure statement provides demographic information. Small business owners receive income from profits in the form of an increase in their share of the business through an increase in retained earnings. Answer: True The growth […]

Nowadays, smaller firms are exempt from many federal regulations and even some state and local ones. A website’s context focuses on how a site is designed and captures its aesthetic and functional look-and-feel. Answer: True Test marketing a product is […]

Saying something is backward compatible means that existing programs will run on the new hardware while still allowing newer software to take full advantage of the recent technological advancements. A buy-sell agreement provides for the corporation to buy back a […]

Consumerism is an organized effort to protect consumers from the undesirable effects of poorly designed products. A recent trend in the operation of a family business is that of retired parents wanting to buy their children’s business. Answer: False A […]

In a process layout, the facilities are laid out according to the sequence of operations to be performed. The profit margin indicates the relationship between revenues and expenses. Answer: True Business ethics are the standards used to judge the rightness […]

Only large firms can export successfully. An extended-coverage endorsement multiplies the liability of small businesses. Answer: False Defective code and partial testing often results in bugs. Answer: True The traditional form of the corporation is called a C corporation. Answer: […]

Kiosks are an inexpensive way of setting up a small business. Convenience goods stores are interested in a high flow of customer traffic. Answer: True Government regulations encourage small firms to hire more employees. Answer: False The objective of the […]

A badly managed small business is more liquid than a well-managed company. In a partnership, each partner is responsible for the acts of all the other partners. Answer: True To make a profit, your prices must cover only direct costs […]

Family-owned businesses run by husband-and-wife teams are referred to as copreneurs. Examples of software include Firefox and Microsoft Windows. Answer: True Borrowing from creditors is divided into current and long-term liabilities. Answer: True Internal audits furnish the owner(s), creditors, potential […]

Limited-liability companies are permissible only in a few states in the U.S. Due to their inexperience, children must be excluded when making important decisions and setting goals for a family-owned business. Answer: False Long-term debt secured by real estate property […]

The current ratio shows how easily a company can pay its current obligations. Many applicants are eliminated at the preliminary screening stage for reasons such as inappropriate dress, attitude, education, or experience. Answer: True In the context of small businesses, […]

Rebates appeal to many manufacturers because few consumers actually redeem them. One of the unique contributions of small businesses is that they keep larger firms competitive. Answer: True Risk management is the process of increasing productivity by strategically managing the […]

Debt financing comes from lenders who will be repaid at a specified interest rate within an agreed-on time span. Just-in-time delivery increases inventory costs. Answer: False If a business has an operating history, its future needs can be estimated with […]

The most commonly used inventory costing method in the U.S. is: A) FIFO. B) specific identification. C) LIFO. D) weighted average. Which of the following statements about the Allowance for Doubtful Accounts is correct? A) The Allowance for Doubtful Accounts […]

The ratio that measures the company’s ability to meet required interest payments is the: A) debt-to-equity ratio. B) current ratio. C) Price/Earnings ratio. D) times interest earned ratio. Which of the following statements about dividends in arrears is correct? A) […]

Preferred stock differs from common stock in that: A) preferred stock has more voting power and, as such, greater control over the management of the company. B) preferred stockholders are paid dividends before common stockholders. C) preferred stock pays tax-free […]

Every financial statement should have “who, what, and when” in its heading. These include the: A) name of the person preparing the statement, the type of financial statement, and when the financial statement was reported to the SEC. B) name […]

If an analyst wanted to assess a company’s long-run survival, which of the following categories of ratios would most likely be used? A) Liquidity B) Market share C) Profitability D) Solvency Which of the following would be in the finished […]

Depreciation is added back to net income in a statement of cash flows prepared using the indirect method because it: A) reduces net income but not cash. B) is a cash inflow. C) is a revenue. D) is a valuation […]

Which of the following companies would be least concerned about a low inventory turnover ratio? A) A fish market selling fresh fish B) A hardware company selling drywall screws C) A dairy company selling butter and milk D) A semiconductor […]

Which of the following is a correct statement? A) The Sales Discounts account is a contra-asset account. B) The Sales Returns & Allowances account is a contra-revenue account. C) The Sales Returns & Allowances account is a credit balance account. […]

Accrued liabilities could include all of the following except: A) Wages and Salaries Payable. B) Current Portion of Long-Term Debt. C) Income Tax Payable. D) Interest Payable. The main purposes of internal controls include all of the following except: A) […]

On September 1, a company purchased a vehicle for $23,000 with a residual value of $3,000. The estimated useful life is 5 years and the company uses the straight-line method. What is the depreciation expense for the year ended December […]

Which of the following statements about equity and debt financing is correct? A) Equity financing is always better than debt financing. B) Equity financing requires dividends to be paid. C) Dividends are tax deductible. D) Equity financing can change stockholder […]

In a period of falling prices, the inventory costing method that assigns a value to inventory that approximates current cost is: A) FIFO B) LIFO. C) Specific identification. D) Weighted average Mercedes, Co. has the following quarterly financial information. Required: […]

If a perpetual inventory system is in use, which of the following statements about transactions with customers is correct? A) When a customer pays within the discount period, Accounts Receivable is credited for the full amount. B) If a customer […]

Choose the appropriate letter to match the term and the definition. Not all definitions will be used. Term 1> _____ Operating Activities 2> _____ Indirect Method 3> _____ Working Capital 4> _____ Cash Equivalents 5> _____ Investing Activities 6> _____ […]

Which of the following are generally recorded as liabilities on the balance sheet if the loss can be reasonably estimated? A) Remote likelihood liabilities B) Possible contingent liabilities C) Probable contingent liabilities D) Immaterial contingent liabilities A company sells a […]