Chapter 1 - Getting Started
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1.
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The tough questions to ask when starting a business do NOT include which of the following?
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  What are the downside risks?
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What are the Industry trends?
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What are the goodwill trends?
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What is the economic outlook?
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2.
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What percentage of American business are consideed 'small'?
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More than 99%
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Between 40% and 60%
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67%
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Less than 50%
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3.
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Reasons to start a franchise instead of an entirely new business include all of the following EXCEPT:
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Lower startup costs
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Established reputation
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Ability to leverage existing marketing expertise
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Higher probability of success
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4.
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Which of these is NOT likely a deciding factor in buying an existing business.
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Sales and net income
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The current owner’s FICO score
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Goodwill
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Proprietary items
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5.
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Which of the following is NOT a method of determining the value of a business?
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Book value (net worth)
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Break-even point
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Similar business value
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Integrated method
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6.
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A business value may be computed by multiplying net income by a:
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Profit multiplier
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Sales revenue multiplier
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Income multiplier
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Excess earnings multiplier
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7.
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There are many ways to determine the value of a business. What is one of the common methods used to determine the value of a business based on the revenue generating capacity of the company?
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Adjusted net assets method
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Capitalization of earnings method
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Gross sales (revenue) multiplier method
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Price-earnings ratio method
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8.
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Assume that gross revenue is $32,500,000 and gross revenue multiplier is 0.4. What is the valuation?
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$15,000,000
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$13,000,000
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$32,000,000
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$19,500,000
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9.
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The tough questions to ask when starting a business do NOT include?
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ownside risks
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Industry trends
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Goodwill
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Economic outlook
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10.
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Where should a retail store be located?
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Near competitors
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Near other retail stores
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Near the post office
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Near your suppliers
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11.
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Which of the following is NOT a benefit that results from developing a thorough business plan?
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It helps focus the company’s capital and efforts.
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It assists with raising new funds.
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It aids in discovering new opportunities.
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It assists with day-by-day operations.
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12.
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A business plan does NOT include which of the following sections?
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Preface
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Executive summary
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Table of contents
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Cover page
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13.
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A well-prepared business plan serves what functions?
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A blue print for success
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Raising money
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Getting the business started off right
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All the above
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14.
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A business plan can also be used as a(n):
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Marketing plan
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Long-term expenditure budget
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Loan proposal
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Cash budget
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Chapter 2 - Debt and Equity Financing
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15.
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Which of the following is NOT an important factor to be considered in deciding upon a source of financing?
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16.
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Which one of the following provides a cost-free source of financing for a firm?
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Trade credit
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Mortgage bonds
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Accounts receivable
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Debentures
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17.
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Prior to presenting loan proposals to lenders, what should potential SBA borrowers who are seeking to start a new business prepare first?
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Business plan
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Power of attorney
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Prequalification application
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Statement of financial position
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18.
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Leasing advantages include all EXCEPT:
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Balloon payments
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Lessor’s expert service
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Fewer financing restrictions
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Flexible payments
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Chapter 3 - Managing Financial Assets
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19.
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Which of the following is NOT an alternative marketable security suitable for short-term investment?
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U.S. Treasury bills
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Convertible bonds
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Eurodollars
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Commercial paper
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20.
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When managing cash, which of the following can be used to delay the outflow of cash?
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Concentration banking
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Request later payments
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Electronic Data Interchange (EDI)
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A lockbox system
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21.
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When managing cash and short-term investments, a corporate treasurer is primarily concerned with which of the following items?
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Maximizing rate of return
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Minimizing taxes
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Liquidity and safety
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Investing in Treasury bonds since they have no default risk
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22.
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Which of the following is something you should avoid when managing inventory?
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Keeping careful records of back orders
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Guarding against theft loss
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Maximizing lead time
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Ordering economically
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23.
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What do inventory ordering costs include?
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Insurance costs, purchasing costs, shipping costs, and spoilage
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Obsolescence, setup costs, quantity discounts lost, and storage costs
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Clerical costs, shipping costs, setup costs, and quantity discounts lost
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Spoilage costs, obsolescence, setup costs, and capital invested
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24.
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What does the result of the economic order quantity formula indicate?
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Annual quantity of inventory to be carried
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Quantity of each individual order to be placed during the year
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Annual usage of materials during the year
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Safety stock plus estimated inventory for the year
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25.
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In inventory management, when will the level of safety stock tend to increase?
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When carrying costs increase
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When the cost of running out of stock decreases
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When lead time increases
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When the variability of the usage rate decreases
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26.
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This is NOT a credit bureau:
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Trans Union
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Dow Jones
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Experian
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Equifax
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Chapter 4 - Legal Considerations
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27.
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To qualify as an S corporation, a corporation cannot have more than how many shareholders.
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28.
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Which of the following may be included in a patent application:
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Description and specification of product
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Any claims you are making about the product
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Filing Fees
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All of the Above
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29.
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Legal purchase agreements do NOT generally include which of the following items?
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Seller warranties
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The purchase price
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Key personnel contracts
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Date the buyer effectively owns the business
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30.
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Which of the following activities will help protect your business products from competitive infringement?
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Registering with the Better Business Bureau
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Patenting a product
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Placing an advertisement
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Sending out a press release
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31.
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You may obtain a utility patent granting you exclusive rights for how many years.
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Chapter 5 - Accounting, Cost and Financial Analysis
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32.
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Which of the following is NOT one of the questions that will generally be answered by an adequate financial recordkeeping system?
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How does my current year profit compare to last year?
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How am I doing relative to my competition?
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How successful were my sales promotions?
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What is my net worth?
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33.
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Activity ratios do NOT include:
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Accounts receivable turnover ratio
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Collection period
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Inventory turnover ratio
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Times interest earned (interest coverage) ratio
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34.
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Financial ratios can be classified into all but which one of the following types:
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Vector ratios
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Liquidity ratios
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Activity ratios
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Leverage ratios
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Chapter 6 - Taxes
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35.
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Startup costs do NOT include which of the following?
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Advertising costs related to the opening of a business
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Professional fees
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Amortization expenses
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Architect fees
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36.
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If an employee does not fill out a W-4, the business should treat them as:
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A noncomformist and should keep an eye on them.
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A single person with no withholding exemptions.
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Married filing jointly as this is the most common filing status.
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Unemployable.
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37.
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Most states provide specific exemptions from sales taxes to all of the following entities EXCEPT:
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Wholesalers
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Retailers
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Manufacturers
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Service businesses
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Chapter 7 - Marketing
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38.
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Which of the activities is NOT a major area of marketing research?
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Internal information
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Objective research
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Secondary research
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Primary research
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39.
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The potential advantages of new product introduction do NOT include which of the following?
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Increased sales and profitability
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Product development costs
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Reducing overall overhead by using idle facilities
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Strengthening existing products
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40.
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What does ‘personal selling’ involve?
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Face-to-face dealing
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Telecommunication
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Mass media
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Local advertising
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41.
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Which one of the following is not mentioned as a factor to be considered in establishing a selling price?
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Type of item
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Life cycle of product
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Use of leaders
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Manufacturers' variable costs
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42.
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The different basic pricing approaches for a new product does NOT include which of the following strategies?
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Bid pricing
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Competitive pricing
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A low price (penetration)
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A high price (skimming)
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Chapter 8 - Operations
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43.
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When selecting an insurer, which of the following is NOT listed as an important factor?
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Ability to modify coverage
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Agent accessibility
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Cost
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Insurance services needed
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44.
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This is accounting software for the small business.
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Quickbooks
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Turbo-tax
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Excel
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IBM notes
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Chapter 9 - Managing Human Resources
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45.
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What is a disadvantage of using a temporary agency for temporary help?
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They offer flexibility
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They command a higher hourly rate
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They can be used on a need basis
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They impose no cost for fringe benefits
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