Question 1

When projecting increases in sales in financial statements,a new business should also project related increased costs.

Accepted Answer

A) True 
 B)False

Question 2

If a company is profitable,that means it has adequate cash..

Accepted Answer

A) True 
 B)False

Question 3

Identify and discuss the tools that investors can use to manage information and asymmetry problems.

Accepted Answer

Investors often include a variety of pro

Question 4

Net income divided by net sales is known as

Accepted Answer

A)  profit margin. 
B)  cost of sales ratio. 
C)  return on sales. 
D)  both profit margin and cost of sales ratio. 
E)  both profit margin and return on sales. 
A)  profit margin. 
B)  cost of sales ratio. 
C)  return on sales. 
D)  both profit margin and cost of sales ratio. 
E)  both profit margin and return on sales.

Question 5

The single most important source of capital for new ventures is the entrepreneur's own savings.

Accepted Answer

A) True 
 B)False

Question 6

To convert information from your income statement to your cash flow statement,which of the following would you NOT do?

Accepted Answer

A)  Take your net profit and add back depreciation. 
B)  Add increases in accounts receivable. 
C)  Subtract increase in inventory. 
D)  Add increases in accounts payable. 
E)  Subtract decrease in notes/loans payable. 
A)  Take your net profit and add back depreciation. 
B)  Add increases in accounts receivable. 
C)  Subtract increase in inventory. 
D)  Add increases in accounts payable. 
E)  Subtract decrease in notes/loans payable.

Question 7

Assume that you are running a small business and you estimate that you will run out of cash in two months. Which of the following could you do to avoid running out of cash?

Accepted Answer

A)  Arrange to pay accounts payable later. 
B)  Offer customers a discount for paying more quickly. 
C)  Reduce raw materials. 
D)  All of these will help to increase cash available. 
E)  None of these (a, b, or c) will help to increase cash. 
A)  Arrange to pay accounts payable later. 
B)  Offer customers a discount for paying more quickly. 
C)  Reduce raw materials. 
D)  All of these will help to increase cash available. 
E)  None of these (a, b, or c) will help to increase cash.

Question 8

Investors in new ventures almost never make investments in companies located near them.

Accepted Answer

A) True 
 B)False

Question 9

When someone is unable to distinguish between two people,one who has a desired quality and the other who doesn't,it presents a problem known as

Accepted Answer

A)  confusions. 
B)  adverse selection. 
C)  critical selection. 
D)  indistinguishable qualities. 
E)  syndication. 
A)  confusions. 
B)  adverse selection. 
C)  critical selection. 
D)  indistinguishable qualities. 
E)  syndication.

Question 10

An entrepreneur needs office equipment for the new business. In order to raise the money to buy the equipment,the entrepreneur takes a loan and pledges the equipment as collateral for the loan. This type of financing is known as

Accepted Answer

A)  equity-based. 
B)  asset-based. 
C)  covenant-based. 
D)  social-based. 
E)  cost of capital-based. 
A)  equity-based. 
B)  asset-based. 
C)  covenant-based. 
D)  social-based. 
E)  cost of capital-based.

Question 11

Which of the following is NOT an advantage provided to entrepreneurs by venture capital?

Accepted Answer

A)  Serves as a major source of money for high-risk business. 
B)  Demonstrates the credibility of a new business. 
C)  Provides connections to important stakeholders. 
D)  Gives assistance running a new business. 
E)  All of the above are possible advantages. 
A)  Serves as a major source of money for high-risk business. 
B)  Demonstrates the credibility of a new business. 
C)  Provides connections to important stakeholders. 
D)  Gives assistance running a new business. 
E)  All of the above are possible advantages.

Question 12

List several different sources of capital that a new business can have and discuss the characteristics of each.

Accepted Answer

Entrepreneurs have a wide variety of sou

Question 13

Of the following statements,which one is false?

Accepted Answer

A)  Proforma financial statements are also called breakeven reports.. 
B)  Proforma income statements estimate the profit and loss for the new business. 
C)  Proforma balance sheets show the financial structure of the business. 
D)  Proforma balance sheets allow investors to conduct ratio analysis. 
E)  All of the above are true. 
A)  Proforma financial statements are also called breakeven reports.. 
B)  Proforma income statements estimate the profit and loss for the new business. 
C)  Proforma balance sheets show the financial structure of the business. 
D)  Proforma balance sheets allow investors to conduct ratio analysis. 
E)  All of the above are true.

Question 14

To calculate the amount of cash that a business has at a given point in time,the manager must construct a(an)

Accepted Answer

A)  cash flow statement. 
B)  breakeven analysis. 
C)  equity statement. 
D)  capital ownership statement. 
E)  covenant statement. 
A)  cash flow statement. 
B)  breakeven analysis. 
C)  equity statement. 
D)  capital ownership statement. 
E)  covenant statement.

Question 15

The financial statement that shows such things as revenues,cost of sales,and operating expenses is called the income statement.

Accepted Answer

A) True 
 B)False

Question 16

Entrepreneurs might use an initial investment to reach a milestone,or a set target that they need to achieve for investors to consider additional financing. Which of the following is an example of a milestone?

Accepted Answer

A)  The development of a prototype for the product. 
B)  Obtaining customer feedback through a survey or focus group. 
C)  Organizing the relevant venture team. 
D)  Hiring employees. 
E)  Any of the above. 
A)  The development of a prototype for the product. 
B)  Obtaining customer feedback through a survey or focus group. 
C)  Organizing the relevant venture team. 
D)  Hiring employees. 
E)  Any of the above.

Question 17

By syndicating,investors can gather information from a greater variety of different people with different experience and knowledge.

Accepted Answer

A) True 
 B)False

Question 18

Two separate entrepreneurs have approached a potential investor to raise money for starting up their new businesses. One entrepreneur has good experience and skills for the planned new business. The other entrepreneur has considerably less experience and skills. The potential investor does not know this and decides to invest in the new business proposed by the entrepreneur with less experience and skills because that person was a more convincing speaker. This demonstrates the idea of

Accepted Answer

A)  proforma financing. 
B)  insolvent financing. 
C)  adverse selection. 
D)  self financing. 
E)  mandatory redemption. 
A)  proforma financing. 
B)  insolvent financing. 
C)  adverse selection. 
D)  self financing. 
E)  mandatory redemption.

Question 19

If an investor knows the entrepreneur,then the entrepreneur will be less likely to try to take advantage of the investor.

Accepted Answer

A) True 
 B)False

Question 20

The venture capitalists themselves,who make investment decisions in start-ups and manage those investments,are called

Accepted Answer

A)  general partners. 
B)  limited partners. 
C)  full partners. 
D)  commercial investors. 
E)  business angels. 
A)  general partners. 
B)  limited partners. 
C)  full partners. 
D)  commercial investors. 
E)  business angels.

When projecting increases in sales in financial statements,a new business should also project related increased costs.

If a company is profitable,that means it has adequate cash..

Identify and discuss the tools that investors can use to manage information and asymmetry problems.

Net income divided by net sales is known as

The single most important source of capital for new ventures is the entrepreneur's own savings.

To convert information from your income statement to your cash flow statement,which of the following would you NOT do?

Assume that you are running a small business and you estimate that you will run out of cash in two months. Which of the following could you do to avoid running out of cash?

Investors in new ventures almost never make investments in companies located near them.

When someone is unable to distinguish between two people,one who has a desired quality and the other who doesn't,it presents a problem known as

An entrepreneur needs office equipment for the new business. In order to raise the money to buy the equipment,the entrepreneur takes a loan and pledges the equipment as collateral for the loan. This type of financing is known as

Which of the following is NOT an advantage provided to entrepreneurs by venture capital?

List several different sources of capital that a new business can have and discuss the characteristics of each.

Of the following statements,which one is false?

To calculate the amount of cash that a business has at a given point in time,the manager must construct a(an)

The financial statement that shows such things as revenues,cost of sales,and operating expenses is called the income statement.

Entrepreneurs might use an initial investment to reach a milestone,or a set target that they need to achieve for investors to consider additional financing. Which of the following is an example of a milestone?

By syndicating,investors can gather information from a greater variety of different people with different experience and knowledge.

If an investor knows the entrepreneur,then the entrepreneur will be less likely to try to take advantage of the investor.

The venture capitalists themselves,who make investment decisions in start-ups and manage those investments,are called

Entrepreneurship:: A Field, an Activity - and a Way of Life

Entrepreneurial Opportunities: Their Origins, Forms, and Suitability For New Ventures

Cognitive Foundations of Entrepreneurship: Creativity and Opportunity Recognition

What Entrepreneurs Need to Know Before They Start: Acquiring and Interpreting Information About Markets Competitors and Government

Assembling the Team: Acquiring and Utilizing Essential Human Capital

Writing An Effective Business Plan: Building A Road Map to Success

Legal Issues Relating To New Ventures: Protecting Your Reputation, Your Assets, And Your Ideas

Marketing in a New Venture

Strategy: Planning For Competitive Advantage

Preparing For And Attaining Growth: Strategies For Building Lasting Success

Managing New Ventures For Growth

Exit Strategies For Entrepreneurs: The Concluding Act

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Exam 6: Financial Resources For New Ventures: How To Get Them, How To Manage Them

When projecting increases in sales in financial statements,a new business should also project related increased costs.

If a company is profitable,that means it has adequate cash..

Identify and discuss the tools that investors can use to manage information and asymmetry problems.

Net income divided by net sales is known as

The single most important source of capital for new ventures is the entrepreneur's own savings.

To convert information from your income statement to your cash flow statement,which of the following would you NOT do?

Assume that you are running a small business and you estimate that you will run out of cash in two months. Which of the following could you do to avoid running out of cash?

Investors in new ventures almost never make investments in companies located near them.

When someone is unable to distinguish between two people,one who has a desired quality and the other who doesn't,it presents a problem known as

An entrepreneur needs office equipment for the new business. In order to raise the money to buy the equipment,the entrepreneur takes a loan and pledges the equipment as collateral for the loan. This type of financing is known as

Which of the following is NOT an advantage provided to entrepreneurs by venture capital?

List several different sources of capital that a new business can have and discuss the characteristics of each.

Of the following statements,which one is false?

To calculate the amount of cash that a business has at a given point in time,the manager must construct a(an)

The financial statement that shows such things as revenues,cost of sales,and operating expenses is called the income statement.

Entrepreneurs might use an initial investment to reach a milestone,or a set target that they need to achieve for investors to consider additional financing. Which of the following is an example of a milestone?

By syndicating,investors can gather information from a greater variety of different people with different experience and knowledge.

If an investor knows the entrepreneur,then the entrepreneur will be less likely to try to take advantage of the investor.

The venture capitalists themselves,who make investment decisions in start-ups and manage those investments,are called

Entrepreneurship:: A Field, an Activity - and a Way of Life

Entrepreneurial Opportunities: Their Origins, Forms, and Suitability For New Ventures

Cognitive Foundations of Entrepreneurship: Creativity and Opportunity Recognition

What Entrepreneurs Need to Know Before They Start: Acquiring and Interpreting Information About Markets Competitors and Government

Assembling the Team: Acquiring and Utilizing Essential Human Capital

Writing An Effective Business Plan: Building A Road Map to Success

Legal Issues Relating To New Ventures: Protecting Your Reputation, Your Assets, And Your Ideas

Marketing in a New Venture

Strategy: Planning For Competitive Advantage

Preparing For And Attaining Growth: Strategies For Building Lasting Success

Managing New Ventures For Growth

Exit Strategies For Entrepreneurs: The Concluding Act

Filters