Question 1

Few businesses that are for sale have a high amount of ____ value.

Accepted Answer

A)  Current asset 
B)  Long-term asset 
C)  Goodwill 
D)  Equipment 
A)  Current asset 
B)  Long-term asset 
C)  Goodwill 
D)  Equipment C

Question 2

When the owner of a business decides to sell,the reasons the owner tells prospective buyers may be somewhat different than the actual reasons.

Accepted Answer

A) True 
 B)False  True

Question 3

A unique factor in a family business that makes it different from all other businesses is

Accepted Answer

A)  The profit margin 
B)  The asset ownership 
C)  The sales potential 
D)  The intricate succession planning needed 
A)  The profit margin 
B)  The asset ownership 
C)  The sales potential 
D)  The intricate succession planning needed D

Question 4

When gathering information about an existing business in order to evaluate its potential,all but which of the following questions should be asked?

Accepted Answer

A)  How many previous owners has the business had? 
B)  What is the condition of the inventory? 
C)  Is the equipment in good condition? 
D)  Has the owner ever been convicted of a felony? 
A)  How many previous owners has the business had? 
B)  What is the condition of the inventory? 
C)  Is the equipment in good condition? 
D)  Has the owner ever been convicted of a felony?

Question 5

Determining the price offered for a business should begin by adding the value of the tangible and intangible assets with the sales potential of the business.

Accepted Answer

A) True 
 B)False

Question 6

When analyzing the financial statements of the business,it is important to rely most heavily on the most recent year of operation.

Accepted Answer

A) True 
 B)False

Question 7

To determine the financial condition of an existing business,it is necessary to compare ____ with ____ to identify where costs can be reduced or more money is needed.

Accepted Answer

A)  Operating ratios; fiscal averages 
B)  Operating ratios; industry averages 
C)  Expense ratios; fiscal averages 
D)  Expense ratios; industry averages 
A)  Operating ratios; fiscal averages 
B)  Operating ratios; industry averages 
C)  Expense ratios; fiscal averages 
D)  Expense ratios; industry averages

Question 8

Having an established supplier relationship is an advantage of buying an existing business.

Accepted Answer

A) True 
 B)False

Question 9

Inventory is an example of a tangible asset.

Accepted Answer

A) True 
 B)False

Question 10

Asking the owner of a business where you have been a regular customer whether the business is for sale may be one source of finding a potential new business.

Accepted Answer

A) True 
 B)False

Question 11

Goodwill is the term used to describe the difference between the purchase price of a company and the net value of the tangible assets.

Accepted Answer

A) True 
 B)False

Question 12

The intangible asset that allows a business to earn a higher return than a comparable business might generate with the same tangible assets is known as

Accepted Answer

A)  Intangible assets 
B)  Tangible assets 
C)  Preferred merchandise lines 
D)  Goodwill 
A)  Intangible assets 
B)  Tangible assets 
C)  Preferred merchandise lines 
D)  Goodwill

Question 13

It is important not to let emotions cloud judgment when making business purchase decisions.

Accepted Answer

A) True 
 B)False

Question 14

A provision that restricts the seller from entering the same type of business within a specified area for a certain amount of time is known as

Accepted Answer

A)  Due disclosure 
B)  A good cause clause 
C)  A noncompetitive clause 
D)  Just disclosure 
A)  Due disclosure 
B)  A good cause clause 
C)  A noncompetitive clause 
D)  Just disclosure

Question 15

About half of all family businesses survive through the second generation.

Accepted Answer

A) True 
 B)False

Question 16

What of these is used to indicate whether sales volume is increasing or decreasing?

Accepted Answer

A)  Financial records 
B)  Independent audit 
C)  Expense ratio 
D)  Working capital statement 
A)  Financial records 
B)  Independent audit 
C)  Expense ratio 
D)  Working capital statement

Question 17

When running a family business,there are four overlapping perspectives on its operations: family,management,ownership,and sales.

Accepted Answer

A) True 
 B)False

Question 18

An income statement method of business valuation focuses more on cash flow than asset value.

Accepted Answer

A) True 
 B)False

Question 19

When analyzing financial statements,remember that profits can be increased and expenses can be decreased to make the records look better

Accepted Answer

A)  In the short run 
B)  In the long run 
C)  For tax purposes 
D)  For bank audits 
A)  In the short run 
B)  In the long run 
C)  For tax purposes 
D)  For bank audits

Question 20

A method of determining the value of a business based on the worth of its assets is called

Accepted Answer

A)  Balance sheet method of business valuation 
B)  Asset method of business valuation 
C)  Income statement method of valuation 
D)  Cash-flow method of valuation 
A)  Balance sheet method of business valuation 
B)  Asset method of business valuation 
C)  Income statement method of valuation 
D)  Cash-flow method of valuation

Few businesses that are for sale have a high amount of ____ value.

When the owner of a business decides to sell,the reasons the owner tells prospective buyers may be somewhat different than the actual reasons.

A unique factor in a family business that makes it different from all other businesses is

When gathering information about an existing business in order to evaluate its potential,all but which of the following questions should be asked?

Determining the price offered for a business should begin by adding the value of the tangible and intangible assets with the sales potential of the business.

When analyzing the financial statements of the business,it is important to rely most heavily on the most recent year of operation.

To determine the financial condition of an existing business,it is necessary to compare with to identify where costs can be reduced or more money is needed.

Having an established supplier relationship is an advantage of buying an existing business.

Inventory is an example of a tangible asset.

Asking the owner of a business where you have been a regular customer whether the business is for sale may be one source of finding a potential new business.

Goodwill is the term used to describe the difference between the purchase price of a company and the net value of the tangible assets.

The intangible asset that allows a business to earn a higher return than a comparable business might generate with the same tangible assets is known as

It is important not to let emotions cloud judgment when making business purchase decisions.

A provision that restricts the seller from entering the same type of business within a specified area for a certain amount of time is known as

About half of all family businesses survive through the second generation.

What of these is used to indicate whether sales volume is increasing or decreasing?

When running a family business,there are four overlapping perspectives on its operations: family,management,ownership,and sales.

An income statement method of business valuation focuses more on cash flow than asset value.

When analyzing financial statements,remember that profits can be increased and expenses can be decreased to make the records look better

A method of determining the value of a business based on the worth of its assets is called

Small Business An Overview

Small Business Management Entrepreneurship and Ownership

Social-Responsiblity-

The-Business-Plan

Franchising

Starting A New Business

Accounting Records and Financial Statements

Small Business Finance

The Legal Environment

Small-Busines-Marketing-Strategy-And-Research

Small Business Marketing Product

Small Business Marketing Place

Small Business Marketing Price and Promotion

International Small Business

Professional Small Business Management

Human Resource Management

Operations-Management

Filters

Exam 6: Taking Over An Existing Business

Few businesses that are for sale have a high amount of ____ value.

When the owner of a business decides to sell,the reasons the owner tells prospective buyers may be somewhat different than the actual reasons.

A unique factor in a family business that makes it different from all other businesses is

When gathering information about an existing business in order to evaluate its potential,all but which of the following questions should be asked?

Determining the price offered for a business should begin by adding the value of the tangible and intangible assets with the sales potential of the business.

When analyzing the financial statements of the business,it is important to rely most heavily on the most recent year of operation.

To determine the financial condition of an existing business,it is necessary to compare ____ with ____ to identify where costs can be reduced or more money is needed.

Having an established supplier relationship is an advantage of buying an existing business.

Inventory is an example of a tangible asset.

Asking the owner of a business where you have been a regular customer whether the business is for sale may be one source of finding a potential new business.

Goodwill is the term used to describe the difference between the purchase price of a company and the net value of the tangible assets.

The intangible asset that allows a business to earn a higher return than a comparable business might generate with the same tangible assets is known as

It is important not to let emotions cloud judgment when making business purchase decisions.

A provision that restricts the seller from entering the same type of business within a specified area for a certain amount of time is known as

About half of all family businesses survive through the second generation.

What of these is used to indicate whether sales volume is increasing or decreasing?

When running a family business,there are four overlapping perspectives on its operations: family,management,ownership,and sales.

An income statement method of business valuation focuses more on cash flow than asset value.

When analyzing financial statements,remember that profits can be increased and expenses can be decreased to make the records look better

A method of determining the value of a business based on the worth of its assets is called

Small Business An Overview

Small Business Management Entrepreneurship and Ownership

Social-Responsiblity-

The-Business-Plan

Franchising

Starting A New Business

Accounting Records and Financial Statements

Small Business Finance

The Legal Environment

Small-Busines-Marketing-Strategy-And-Research

Small Business Marketing Product

Small Business Marketing Place

Small Business Marketing Price and Promotion

International Small Business

Professional Small Business Management

Human Resource Management

Operations-Management

Filters

To determine the financial condition of an existing business,it is necessary to compare with to identify where costs can be reduced or more money is needed.