Question 1

An example of a capital expenditure that should be budgeted for would be __________.

Accepted Answer

A)  equipment purchase 
B)  computer system purchase 
C)  company vehicle(s) purchase 
D)  facility purchase or major renovation 
E)  All of the answers are correct. 
A)  equipment purchase 
B)  computer system purchase 
C)  company vehicle(s) purchase 
D)  facility purchase or major renovation 
E)  All of the answers are correct.

Question 2

The financial ratio that is considered crucial for restaurants, fast-food outlets, and construction firms would be which of the following?

Accepted Answer

A)  debt/equity ratio 
B)  working capital ratio 
C)  wages to sales ratio 
D)  inventory to sales ratio 
E)  gross profit margin 
A)  debt/equity ratio 
B)  working capital ratio 
C)  wages to sales ratio 
D)  inventory to sales ratio 
E)  gross profit margin

Question 3

Liquidity Ratios: Current Ratio; This ratio is commonly used to measure the short-term solvency of the venture or its ability to meet its short-term debts.

Accepted Answer

A) True 
 B)False

Question 4

A business would want to pay its creditors promptly for which of the following reasons?

Accepted Answer

A)  to establish a good credit rating 
B)  to take advantage of any early payment discounts or rebates offered 
C)  to develop a good relationship with suppliers 
D)  to establish a good credit rating and to develop a good relationship with suppliers 
E)  All of the answers are correct. 
A)  to establish a good credit rating 
B)  to take advantage of any early payment discounts or rebates offered 
C)  to develop a good relationship with suppliers 
D)  to establish a good credit rating and to develop a good relationship with suppliers 
E)  All of the answers are correct.

Question 5

By definition, cash flow __________.

Accepted Answer

A)  is essentially the same as profit 
B)  is the result of subtracting expenses from sales 
C)  results from the differences between cash receipts and cash payments 
D)  None of the answers apply. 
A)  is essentially the same as profit 
B)  is the result of subtracting expenses from sales 
C)  results from the differences between cash receipts and cash payments 
D)  None of the answers apply.

Question 6

Liabilities: Although prompt payment of what is owed (payables) establishes good credit ratings and a good relationship with suppliers, it is often necessary to delay payments of bills in order to____________________________.

Accepted Answer

A)  Use those liabilities due for payment within a year 
B)  everything owed to creditors 
C)  more effectively manage cash flow. 
D)  those liabilities the business intends to pay within the next month 
E)  None of the answers apply. 
A)  Use those liabilities due for payment within a year 
B)  everything owed to creditors 
C)  more effectively manage cash flow. 
D)  those liabilities the business intends to pay within the next month 
E)  None of the answers apply.

Question 7

When evaluating financial information in a business plan, investors like to see __________.

Accepted Answer

A)  the more numbers, the better 
B)  monthly income statements for the first year, annual for years 2 and 3 
C)  monthly balance sheets for the first year, annual for years 2 and 3 
D)  the fewer numbers, the better 
E)  None of the answers apply. 
A)  the more numbers, the better 
B)  monthly income statements for the first year, annual for years 2 and 3 
C)  monthly balance sheets for the first year, annual for years 2 and 3 
D)  the fewer numbers, the better 
E)  None of the answers apply.

Question 8

Salaries and wages for the company should reflect the __________.

Accepted Answer

A)  the more numbers, the better 
B)  number of personnel employed as well as their role in the organization 
C)  monthly balance sheets for the first year, annual for years 2 and 3 
D)  The sales produced by the employees 
E)  None of the answers apply. 
A)  the more numbers, the better 
B)  number of personnel employed as well as their role in the organization 
C)  monthly balance sheets for the first year, annual for years 2 and 3 
D)  The sales produced by the employees 
E)  None of the answers apply.

Question 9

Banks track several "ratios"when evaluating new businesses. One of those ratios decreases over time: which ratio would that be?

Accepted Answer

A)  debt/equity ratio 
B)  working capital ratio 
C)  wages to sales ratio 
D)  inventory to sales ratio 
E)  gross profit margin 
A)  debt/equity ratio 
B)  working capital ratio 
C)  wages to sales ratio 
D)  inventory to sales ratio 
E)  gross profit margin

Question 10

Before developing the pro forma income statement, the entrepreneur should prepare operating and capital budgets.

Accepted Answer

A) True 
 B)False

Question 11

Fixed assets are those that are tangible and will be used ________________________.

Accepted Answer

A)  immediately 
B)  over a long period of time. 
C)  For the owner's equity 
D)  To buy materials, inventory, and supplies 
E)  cash 
A)  immediately 
B)  over a long period of time. 
C)  For the owner's equity 
D)  To buy materials, inventory, and supplies 
E)  cash

Question 12

Estimating operating expenses for a business can be very difficult as there are very few industry standards or benchmarks that exist for these type of costs.

Accepted Answer

A) True 
 B)False

Question 13

As described in the Opening Profile to Chapter 7, even in his early days as an entrepreneur, Ted Rogers (deceased 2008 Dec.) used a rational method of cash flow management that was based in quantitative science.

Accepted Answer

A) True 
 B)False

Question 14

Assets. These represent everything of value that is owned by the business. Value is not necessarily meant to imply the cost of replacement or what its market value would be but is the actual cost or amount expended for the asset.

Accepted Answer

A) True 
 B)False

Question 15

A business attempting to manage its cash flow might employ which of the following tactics?

Accepted Answer

A)  delay paying its creditors 
B)  make an effort to collect from its customers 
C)  buy on credit whenever possible 
D)  offer discounts for customers willing to pay cash 
E)  All of the answers are correct. 
A)  delay paying its creditors 
B)  make an effort to collect from its customers 
C)  buy on credit whenever possible 
D)  offer discounts for customers willing to pay cash 
E)  All of the answers are correct.

Question 16

Because pro forma cash flow and income statements are based on best estimates, it is sometimes useful to provide __________.

Accepted Answer

A)  several scenarios, based on different levels of success 
B)  revisions of projections to provide accurate information 
C)  a cash cushion in liquid investment to be used during negative cash flow periods 
D)  All of the answers are correct. 
A)  several scenarios, based on different levels of success 
B)  revisions of projections to provide accurate information 
C)  a cash cushion in liquid investment to be used during negative cash flow periods 
D)  All of the answers are correct.

Question 17

As defined in the text, items that are owned or available to be used in the venture operations are known as__________.

Accepted Answer

A)  assets 
B)  liabilities 
C)  owner's equity 
D)  materials, inventory, and supplies 
E)  None of the answers apply. 
A)  assets 
B)  liabilities 
C)  owner's equity 
D)  materials, inventory, and supplies 
E)  None of the answers apply.

Question 18

Which of the following are likely to be fixed costs?

Accepted Answer

A)  depreciation 
B)  commissions 
C)  raw materials 
D)  Commissions and raw materials 
E)  All of the answers are correct. 
A)  depreciation 
B)  commissions 
C)  raw materials 
D)  Commissions and raw materials 
E)  All of the answers are correct.

Question 19

As discussed in the text, when Lissa D'Aquanni created a gourmet chocolate business in her Albany, New York, basement in 1998, her approach to financing was __________.

Accepted Answer

A)  several scenarios, based on different levels of success 
B)  revisions of projections to provide accurate information 
C)  a cash cushion in liquid investment to be used during negative cash flow periods 
D)  conventional financing wasn't an option. 
A)  several scenarios, based on different levels of success 
B)  revisions of projections to provide accurate information 
C)  a cash cushion in liquid investment to be used during negative cash flow periods 
D)  conventional financing wasn't an option.

Question 20

Discuss the recommendations presented in the text for helping an entrepreneur to reduce his or her expenses. Why should an entrepreneur be frugal in the first place?

Accepted Answer

Frugality in an entrepreneur is a sign o

An example of a capital expenditure that should be budgeted for would be __________.

The financial ratio that is considered crucial for restaurants, fast-food outlets, and construction firms would be which of the following?

Liquidity Ratios: Current Ratio; This ratio is commonly used to measure the short-term solvency of the venture or its ability to meet its short-term debts.

A business would want to pay its creditors promptly for which of the following reasons?

By definition, cash flow __________.

Liabilities: Although prompt payment of what is owed (payables) establishes good credit ratings and a good relationship with suppliers, it is often necessary to delay payments of bills in order to____________________________.

When evaluating financial information in a business plan, investors like to see __________.

Salaries and wages for the company should reflect the __________.

Banks track several "ratios"when evaluating new businesses. One of those ratios decreases over time: which ratio would that be?

Before developing the pro forma income statement, the entrepreneur should prepare operating and capital budgets.

Fixed assets are those that are tangible and will be used ________________________.

Estimating operating expenses for a business can be very difficult as there are very few industry standards or benchmarks that exist for these type of costs.

As described in the Opening Profile to Chapter 7, even in his early days as an entrepreneur, Ted Rogers (deceased 2008 Dec.) used a rational method of cash flow management that was based in quantitative science.

Assets. These represent everything of value that is owned by the business. Value is not necessarily meant to imply the cost of replacement or what its market value would be but is the actual cost or amount expended for the asset.

A business attempting to manage its cash flow might employ which of the following tactics?

Because pro forma cash flow and income statements are based on best estimates, it is sometimes useful to provide __________.

As defined in the text, items that are owned or available to be used in the venture operations are known as__________.

Which of the following are likely to be fixed costs?

As discussed in the text, when Lissa D'Aquanni created a gourmet chocolate business in her Albany, New York, basement in 1998, her approach to financing was __________.

Discuss the recommendations presented in the text for helping an entrepreneur to reduce his or her expenses. Why should an entrepreneur be frugal in the first place?

The Entrepreneurial Mind-Set

Corporate Entrepreneurship

Generating and Exploring New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Protecting the Idea and Other Legal Issues for the Entrepreneur

The Marketing Plan

The Organizational Plan

The Financial Plan

Sources of Capital

Informal Risk Capital, Venture Capital, and Going Public

Filters

Exam 7: The Business Plan: Creating and Starting the Venture

An example of a capital expenditure that should be budgeted for would be __________.

The financial ratio that is considered crucial for restaurants, fast-food outlets, and construction firms would be which of the following?

Liquidity Ratios: Current Ratio; This ratio is commonly used to measure the short-term solvency of the venture or its ability to meet its short-term debts.

A business would want to pay its creditors promptly for which of the following reasons?

By definition, cash flow __________.

Liabilities: Although prompt payment of what is owed (payables) establishes good credit ratings and a good relationship with suppliers, it is often necessary to delay payments of bills in order to____________________________.

When evaluating financial information in a business plan, investors like to see __________.

Salaries and wages for the company should reflect the __________.

Banks track several "ratios"when evaluating new businesses. One of those ratios decreases over time: which ratio would that be?

Before developing the pro forma income statement, the entrepreneur should prepare operating and capital budgets.

Fixed assets are those that are tangible and will be used ________________________.

Estimating operating expenses for a business can be very difficult as there are very few industry standards or benchmarks that exist for these type of costs.

As described in the Opening Profile to Chapter 7, even in his early days as an entrepreneur, Ted Rogers (deceased 2008 Dec.) used a rational method of cash flow management that was based in quantitative science.

Assets. These represent everything of value that is owned by the business. Value is not necessarily meant to imply the cost of replacement or what its market value would be but is the actual cost or amount expended for the asset.

A business attempting to manage its cash flow might employ which of the following tactics?

Because pro forma cash flow and income statements are based on best estimates, it is sometimes useful to provide __________.

As defined in the text, items that are owned or available to be used in the venture operations are known as__________.

Which of the following are likely to be fixed costs?

As discussed in the text, when Lissa D'Aquanni created a gourmet chocolate business in her Albany, New York, basement in 1998, her approach to financing was __________.

Discuss the recommendations presented in the text for helping an entrepreneur to reduce his or her expenses. Why should an entrepreneur be frugal in the first place?

The Entrepreneurial Mind-Set

Corporate Entrepreneurship

Generating and Exploring New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Protecting the Idea and Other Legal Issues for the Entrepreneur

The Marketing Plan

The Organizational Plan

The Financial Plan

Sources of Capital

Informal Risk Capital, Venture Capital, and Going Public

Filters