QUESTION 1No matter the size of a business, the leader sets the ________ for how the organization operates. If the leader is chaotic, chances are the business will be too. If the leader is well organized and efficient, the business may well be too.asset optimizationexpense constraintsprofit expectationstone/style2 points QUESTION 2Credit is ________.exemplified by purchasing a product to sell, and you don’t have to pay until after you have sold itthe ability to buy something without spending actual cashboth of the aboveessentially using someone else’s money for gain2 points QUESTION 3Relying primarily on debt financing is very dangerous for a company because ________.creditors can force a company into bankruptcy or take over company propertycreditors can sabotage the business by refusing to lend it moneycreditors can gain a majority share of the company and take it overit can be very stressful for the owners, thus causing them to make mistakes2 points QUESTION 4What did Ray Kroc do, when he franchised McDonald’s, that set the bar for future franchise operations?He provided training and support to franchisees to ensure that quality would be consistent in every McDonald’s restaurant.He licensed the McDonald’s name to a wide variety of products such as hats and shirts.He sold franchises in competing territories to encourage franchise owners to compete and come up with innovations for the company.He improved the quality of hamburgers and customer service2 points QUESTION 5If the amount of cash that flows in and out of your business changes significantly during certain times of the year, you should include ________ in your business plan.a cash flow statementa projected cash flow statementa seasonality scenarioa flow chart2 points QUESTION 6Some contracts specify that conflicts may be settled through ________ instead of court.negotiationcoercionarbitrationsmall claims2 points QUESTION 7No matter what way you approach raising money for your business, you will need a ________.written business planfamily investmentwinning lottery ticketbank loan2 points QUESTION 8Which of the following is not necessary for a contract to be binding?Signing parties must exchange something of value or agree not to do something they are legally entitled to do.Signing parties must have their signatures notarized.Both parties must sign the contract.None of the above2 points QUESTION 9Employees who feel used by their company ________.may exhibit negative behaviors to customerswill not do their bestmay quit the businessall of the above2 points QUESTION 10A ________ is a business that markets a product or service in the exact manner prescribed by the person who developed the business.portfolio extensionfranchiselicensenone of the above2 points QUESTION 11Entrepreneurs use a(n) ________ to track assets and liabilities.income statementcash flow statementbalance sheetprofit and loss2 points QUESTION 12Orders are not entered onto the cash flow statement as cash receipts because you ________.don’t get the cash until the customer actually pays for the ordermight get them confused with revenue on the income statementwill have a more accurate cash flow statement if you enter them once a monthmight get a cancellation2 points QUESTION 13Which of the following is not a type of community development loan fund?community development bankspublic employee credit unioncommunity development credit unionsventure capital2 points QUESTION 14________ are the building blocks of business.Letters of agreementContractsPersonal relationshipsCustomer services2 points QUESTION 15Bonds are a form of ________.debt financingequity financingboth of the abovenone of the above2 points QUESTION 16Corporate, partnership, individual income tax, and __________ tax returns must be filed on time with the U.S. Internal Revenue Service.statelocal city or countyself-employmenttownship2 points QUESTION 17The standards and rules in businesses that help someone decide right from wrong are called ________.corporate governancelawsethicsmorals2 points QUESTION 18This is an exit strategy when an entrepreneur sells his or her company to its managers.a mergera management buy-outa management takeoveran employee buy-out2 points QUESTION 19The time period in which legal action may be taken is the ________.limit of liabilitystatute of legal obligationsstatute of limitationsnone of the above2 points QUESTION 20You purchase $250,000 worth of insurance to protect your restaurant with a $10,000 deductible. How much money are you entitled to receive as a payout if a fire destroys your store, which is valued at $250,000?$240,000$10,000$250,000$ $240,000 less copayment2 points QUESTION 21What are the two steps in making a cash flow projection?projecting receipts and paying bills before they are dueprojecting expected cash expenses and subtracting inventory costprojecting cash receipts and subtracting expected cash expensesprojecting receipts and capital expenditures for a quarter2 points QUESTION 22Which of the following is not a role of management according to the acronym POLDSCCRIM?planningstaffingoptimizinginnovating2 points QUESTION 23The greater the potential reward, ________.the riskier the investment is likely to bethe more the investment is likely to costthe less risky the investment is likely to bethe longer it will take to show a return2 points QUESTION 24Cash itself or items that could be quickly turned into cash or will be used within one year are called ________.liquid assetslong-term assetscurrent assetsliquid cash2 points QUESTION 25If a business owner wants his or her pay to be a variable operating cost, a ________ is most appropriate.bonuswagesalarycommission2 points QUESTION 26Some federal agencies provide grants, loans, and/or loan guarantees for businesses that meet specific criteria. One of these is the United States ________.Interstate Commerce Commission (ICC)Small Business Administration (SBA)Federal Land Bank (FLB)Agricultural Extension Agency (AEA)2 points QUESTION 27A ________ is the amount of loss or damage that you agree to cover before any insurance coverage takes over.deductiblecarrying costpremiumco-insurance2 points QUESTION 28________, an American economist, argued that business should focus on making quality products instead of maximizing profits and that profit would follow.Conrad HiltonW. Edwards DemingPaul SamuelsonAdam Smith2 points QUESTION 29If you want to buy a business that is growing rapidly, what is the best valuation method to use to determine a fair price for it?book value methodmarket-based approachfuture earnings methodpay-back methodQUESTION 30A(n) ________ rate of return means that interest is earned on the base amount plus any interest previously earned.compoundaccruedannualfixedQUESTION 31Which of the three financial statements that an entrepreneur prepares is used to guide the day-to-day operations of the business?the cash flow statementthe income statementthe balance sheettax returnsQUESTION 32_______ = Cash on Hand + Cash Receiptsâ€“Cash Disbursement.ProfitRevenueCash flowGross profitQUESTION 33Research indicates that ________ is the most important characteristic required for successful leadership.self-esteembusiness knowledgedriveintelligenceQUESTION 34Lost sales and goodwill are potentially significant costs that may arise from ________.too little inventorytoo much inventoryeither too little or too much inventorypoor customer service with inventoryQUESTION 35The number of stockholders in a Subchapter S Corporation is limited to ________.755012250QUESTION 36The inventory method in which you look at the inventory on hand, and when the stock level of an item appears to be low, you reorder is called ________.basic controlproximal managementestimationvisual controlQUESTION 37Businesses typically sell for several times their income because the future stream of income is being sold. The price of the business is its ________.five times earningsfuture valuepresent valuetangible and intangible value QUESTION 38The statistical methods, within Six Sigma, are designed to eliminate defects to a failure rate of ________ defects per one million opportunities, or a 99.9997% success rate.3.4340.34.344QUESTION 39Madam C. J. Walker was an entrepreneur who became ________.the first female pharmacist in Americathe first African-American businessperson to become a millionairethe first entrepreneur to franchise a businessthe first self-made female millionaireQUESTION 40Licensing is ________.the right to sell knockoffs of a productthe right to start a business and run it exactly as the licensor wants it to be runthe right to operate a businessrenting your brand or other intellectual property to increase salesQUESTION 41Which statement best describes how the cash flow statement differs from the income statement?The income statement records sales and expenses when they happen, not when cash is actually exchanged. The cash flow statement records cash inflows and outflows when they actually occur.The income statement records income, as it comes in, while the cash flow statement records cash from sales.The income statement keeps track of cash when sales are made; the cash flow statement keeps track of cash after sales are made.The cash flow statement also includes the current market value of assets.QUESTION 42If you extend credit, it is critical to minimize which number to keep cash flowing?receivable turnover ratioinventory turnover ratiocollection-period ratiodebt-to-equity ratioQUESTION 43An income statement shows whether the difference between revenues (sales) and expenses (costs) is a profit or a ________.lossnet profitbreakevensemi-lossQUESTION 44The act of Congress that requires employers to pay men and women the same amount for the same work is called ________.The Equal Opportunity ActThe Equal Pay ActThe Work Compensation ActAnti-discrimination ActQUESTION 45The three factors included in the calculation of the Reorder Point are ________.demand, lead time, and safety stocksupply, price, and safety stockdemand, inventory, and pricesupply, demand, and holding costsQUESTION 46Ways to value a business include comparison to other firms, benchmarking, or looking at a multiple of net earnings. Any of these methods is an attempt to arrive at a ________.future valuenet present valuefair market valueprofit maximizing priceQUESTION 47A brand is a combination of name, logo, and design that ________.identifies the owner of a companyexpresses the philanthropic intentions of a company to consumersputs people in the mood to buy the product or servicebecomes associated in the minds of consumers with the products or services of a companyQUESTION 48What is the difference between strategic planning and operational planning?Strategic plans are for one year or less and have very specific objectives, while operational plans are more vague and long-term.Strategic planning covers the short-term day-to-day workings of a business, while operational planning sets out long-term goals.Strategic planning sets out strategies for the business to achieve long-term growth and other goals, while operational planning covers the day-to-day operations of the business.Strategic planning is reserved for middle management in large companies.QUESTION 49William Petty’s article on harvesting quotes Steven Covey, who says ________.the key to being effective in life is “beginning with the end in mind””your chance to sell or to merge typically occurs within the first two years of the life of the business””you may have only one chance to harvest your business”None of the aboveQUESTION 50Which of the following is not a potential penalty for breaking a contract?You may lose a share of the ownership of your business to the other party who signed the contract.You may be sued in a court of law by the other party who signed the contract.A court may order you to pay damages to the other party who signed the contract.It can be costly.
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