1

1. No 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 optimization

   expense constraints

   profit expectations

   tone/style

2 points

QUESTION 2

1. Credit is ________.

   exemplified by purchasing a product to sell, and you don't have to pay until after you have sold it

   the ability to buy something without spending actual cash

   both of the above

   essentially using someone else's money for gain

2 points

QUESTION 3

1. Relying primarily on debt financing is very dangerous for a company because ________.

   creditors can force a company into bankruptcy or take over company property

   creditors can sabotage the business by refusing to lend it money

   creditors can gain a majority share of the company and take it over

   it can be very stressful for the owners, thus causing them to make mistakes

2 points

QUESTION 4

1. What 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 service

2 points

QUESTION 5

1. If 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 statement

   a projected cash flow statement

   a seasonality scenario

   a flow chart

2 points

QUESTION 6

1. Some contracts specify that conflicts may be settled through ________ instead of court.

   negotiation

   coercion

   arbitration

   small claims

2 points

QUESTION 7

1. No matter what way you approach raising money for your business, you will need a ________.

   written business plan

   family investment

   winning lottery ticket

   bank loan

2 points

QUESTION 8

1. Which of the following isnotnecessary 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 above

2 points

QUESTION 9

1. Employees who feel used by their company ________.

   may exhibit negative behaviors to customers

   will not do their best

   may quit the business

   all of the above

2 points

QUESTION 10

1. A ________ is a business that markets a product or service in the exact manner prescribed by the person who developed the business.

   portfolio extension

   franchise

   license

   none of the above

2 points

QUESTION 11

1. Entrepreneurs use a(n) ________ to track assets and liabilities.

   income statement

   cash flow statement

   balance sheet

   profit and loss

2 points

QUESTION 12

1. Orders 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 order

   might get them confused with revenue on the income statement

   will have a more accurate cash flow statement if you enter them once a month

   might get a cancellation

2 points

QUESTION 13

1. Which of the following isnota type of community development loan fund?

   community development banks

   public employee credit union

   community development credit unions

   venture capital

2 points

QUESTION 14

1. ________ are the building blocks of business.

   Letters of agreement

   Contracts

   Personal relationships

   Customer services

2 points

QUESTION 15

1. Bonds are a form of ________.

   debt financing

   equity financing

   both of the above

   none of the above

2 points

QUESTION 16

1. Corporate, partnership, individual income tax, and __________ tax returns must be filed on time with the U.S. Internal Revenue Service.

   state

   local city or county

   self-employment

   township

2 points

QUESTION 17

1. The standards and rules in businesses that help someone decide right from wrong are called ________.

   corporate governance

   laws

   ethics

   morals

2 points

QUESTION 18

1. This is an exit strategy when an entrepreneur sells his or her company to its managers.

   a merger

   a management buy-out

   a management takeover

   an employee buy-out

2 points

QUESTION 19

1. The time period in which legal action may be taken is the ________.

   limit of liability

   statute of legal obligations

   statute of limitations

   none of the above

2 points

QUESTION 20

1. You 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 copayment

2 points

QUESTION 21

1. What are the two steps in making a cash flow projection?

   projecting receipts and paying bills before they are due

   projecting expected cash expenses and subtracting inventory cost

   projecting cash receipts and subtracting expected cash expenses

   projecting receipts and capital expenditures for a quarter

2 points

QUESTION 22

1. Which of the following is not a role of management according to the acronym POLDSCCRIM?

   planning

   staffing

   optimizing

   innovating

2 points

QUESTION 23

1. The greater the potential reward, ________.

   the riskier the investment is likely to be

   the more the investment is likely to cost

   the less risky the investment is likely to be

   the longer it will take to show a return

2 points

QUESTION 24

1. Cash itself or items that could be quickly turned into cash or will be used within one year are called ________.

   liquid assets

   long-term assets

   current assets

   liquid cash

2 points

QUESTION 25

1. If a business owner wants his or her pay to be a variable operating cost, a ________ is most appropriate.

   bonus

   wage

   salary

   commission

2 points

QUESTION 26

1. Some federal agencies provide grants, loans, and/or loan guarantees for businesses that meet specific criteria. One of these is theUnited States________.

   Interstate Commerce Commission (ICC)

   Small Business Administration (SBA)

   Federal Land Bank (FLB)

   Agricultural Extension Agency (AEA)

2 points

QUESTION 27

1. A ________ is the amount of loss or damage that you agree to cover before any insurance coverage takes over.

   deductible

   carrying cost

   premium

   co-insurance

2 points

QUESTION 28

1. ________, an American economist, argued that business should focus on making quality products instead of maximizing profits and that profit would follow.

   Conrad Hilton

   W. Edwards Deming

   Paul Samuelson

   Adam Smith

2 points

QUESTION 29

1. If 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 method

   market-based approach

   future earnings method

   pay-back method

QUESTION 30

1. A(n) ________ rate of return means that interest is earned on the base amount plus any interest previously earned.

   compound

   accrued

   annual

   fixed

QUESTION 31

1. Which of the three financial statements that an entrepreneur prepares is used to guide the day-to-day operations of the business?

   the cash flow statement

   the income statement

   the balance sheet

   tax returns

QUESTION 32

1. _______ = Cash on Hand + Cash ReceiptsCash Disbursement.

   Profit

   Revenue

   Cash flow

   Gross profit

QUESTION 33

1. Research indicates that ________ is the most important characteristic required for successful leadership.

   self-esteem

   business knowledge

   drive

   intelligence

QUESTION 34

1. Lost sales and goodwill are potentially significant costs that may arise from ________.

   too little inventory

   too much inventory

   either too little or too much inventory

   poor customer service with inventory

QUESTION 35

1. The number of stockholders in a Subchapter S Corporation is limited to ________.

   75

   50

   12

   250

QUESTION 36

1. The 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 control

   proximal management

   estimation

   visual control

QUESTION 37

1. Businesses 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 earnings

   future value

   present value

   tangible and intangible value

QUESTION 38

1. The 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.

   3.4

   34

   0.34

   .344

QUESTION 39

1. Madam C. J. Walker was an entrepreneur who became ________.

   the first female pharmacist in America

   the first African-American businessperson to become a millionaire

   the first entrepreneur to franchise a business

   the first self-made female millionaire

QUESTION 40

1. Licensing is ________.

   the right to sell knockoffs of a product

   the right to start a business and run it exactly as the licensor wants it to be run

   the right to operate a business

   renting your brand or other intellectual property to increase sales

QUESTION 41

1. Which 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 42

1. If you extend credit, it is critical to minimize which number to keep cash flowing?

   receivable turnover ratio

   inventory turnover ratio

   collection-period ratio

   debt-to-equity ratio

QUESTION 43

1. An income statement shows whether the difference between revenues (sales) and expenses (costs) is a profit or a ________.

   loss

   net profit

   breakeven

   semi-loss

QUESTION 44

1. The act of Congress that requires employers to pay men and women the same amount for the same work is called ________.

   The Equal Opportunity Act

   The Equal Pay Act

   The Work Compensation Act

   Anti-discrimination Act

QUESTION 45

1. The three factors included in the calculation of the Reorder Point are ________.

   demand, lead time, and safety stock

   supply, price, and safety stock

   demand, inventory, and price

   supply, demand, and holding costs

QUESTION 46

1. Ways 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 value

   net present value

   fair market value

   profit maximizing price

QUESTION 47

1. A brand is a combination of name, logo, and design that ________.

   identifies the owner of a company

   expresses the philanthropic intentions of a company to consumers

   puts people in the mood to buy the product or service

   becomes associated in the minds of consumers with the products or services of a company

QUESTION 48

1. What 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 49

1. William 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 above

QUESTION 50

1. Which of the following isnota 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.