Question 1

Describe how an entrepreneur might develop and use a pro forma sources and applications of funds statement and why it might be important.

Accepted Answer

By definition, the pro forma sources and

Question 2

Ethics: When a company lies or inflates its numbers, why is it a problem?

Accepted Answer

When a company lies or inflates its numb

Question 3

When preparing a balance sheet, the value recorded for an asset is __________.

Accepted Answer

A)  the current market value of the item 
B)  the replacement cost of the item 
C)  the planned selling price for the item 
D)  the amount actually paid for the item 
E)  None of the answers apply. 
A)  the current market value of the item 
B)  the replacement cost of the item 
C)  the planned selling price for the item 
D)  the amount actually paid for the item 
E)  None of the answers apply.

Question 4

An entrepreneur should consider getting help when evaluating capital expenditures for which of the following reasons?

Accepted Answer

A)  Capital expenditure decisions can be complex. 
B)  Capital expenditures have tax liability issues which can vary significantly. 
C)  Due to their size, capital expenditure decisions carry a high degree of risk. 
D)  All of the answers are correct. 
E)  None of the answers apply. 
A)  Capital expenditure decisions can be complex. 
B)  Capital expenditures have tax liability issues which can vary significantly. 
C)  Due to their size, capital expenditure decisions carry a high degree of risk. 
D)  All of the answers are correct. 
E)  None of the answers apply.

Question 5

As defined in the text, cash and other items that are expected to be converted into cash or consumed in the operation of the business during a period of one year or less are known as __________.

Accepted Answer

A)  current assets 
B)  current liabilities 
C)  consumables 
D)  inventories 
E)  None of the answers apply. 
A)  current assets 
B)  current liabilities 
C)  consumables 
D)  inventories 
E)  None of the answers apply.

Question 6

When estimating sales revenue and operating expenses for a new business venture, it is important to keep in mind that __________.

Accepted Answer

A)  sales will likely build slowly at first 
B)  the cost of generating sales will be higher at first 
C)  fixed costs will decrease as volume builds due to the learning curve 
D)  sales will likely build slowly at first and the cost of generating sales will be higher at first 
E)  All of the answers are correct. 
A)  sales will likely build slowly at first 
B)  the cost of generating sales will be higher at first 
C)  fixed costs will decrease as volume builds due to the learning curve 
D)  sales will likely build slowly at first and the cost of generating sales will be higher at first 
E)  All of the answers are correct.

Question 7

For a new venture, the likelihood of incurring __________ in the first year is very high.

Accepted Answer

A)  large negative cash flows 
B)  a significant equity to debt ratio 
C)  large positive cash flows 
D)  a significant profit to cash flow ratio 
E)  None of the answers apply. 
A)  large negative cash flows 
B)  a significant equity to debt ratio 
C)  large positive cash flows 
D)  a significant profit to cash flow ratio 
E)  None of the answers apply.

Question 8

It can be more difficult to estimate sales for an Internet startup businesses than for a traditional retail business due to which of the following reasons?

Accepted Answer

A)  Traffic numbers for a traditional retail location are easier to estimate than for a virtual store. 
B)  Spending per customer on advertising for a retail location will be much higher than for a virtual business. 
C)  Traffic numbers for a traditional retail location are more difficult to estimate than for a virtual store. 
D)  There is very little information available on the relationship between "hits" and retail spending in stores. 
E)  All of the answers are correct. 
A)  Traffic numbers for a traditional retail location are easier to estimate than for a virtual store. 
B)  Spending per customer on advertising for a retail location will be much higher than for a virtual business. 
C)  Traffic numbers for a traditional retail location are more difficult to estimate than for a virtual store. 
D)  There is very little information available on the relationship between "hits" and retail spending in stores. 
E)  All of the answers are correct.

Question 9

Cash flow can be very different from profit due to which of the following?

Accepted Answer

A)  Some sales are made on a credit basis and not paid for until the next reporting period. 
B)  Not all bills from suppliers are paid immediately, depending on cash reserves. 
C)  Some expenses such as depreciation do not involve the payment of cash. 
D)  All of the answers are correct. 
E)  None of the answers apply. 
A)  Some sales are made on a credit basis and not paid for until the next reporting period. 
B)  Not all bills from suppliers are paid immediately, depending on cash reserves. 
C)  Some expenses such as depreciation do not involve the payment of cash. 
D)  All of the answers are correct. 
E)  None of the answers apply.

Question 10

The most easy thing with projecting cash flows is determining exact monthly receipts and disbursements.

Accepted Answer

A) True 
 B)False

Question 11

Fixed expenses __________.

Accepted Answer

A)  are those expenses incurred regardless of sales volume 
B)  can be estimated by examining industry benchmarks 
C)  include items such as rent, insurance, and utilities 
D)  All of the answers are correct. 
E)  None of the answers apply. 
A)  are those expenses incurred regardless of sales volume 
B)  can be estimated by examining industry benchmarks 
C)  include items such as rent, insurance, and utilities 
D)  All of the answers are correct. 
E)  None of the answers apply.

Question 12

As described in the Opening Profile to Chapter 9, early in his business career, Ted Rogers used which of the following methods of cash flow management when dealing with creditors?

Accepted Answer

A)  first in, first paid 
B)  loudest complaint, first paid 
C)  the "invoice hat" random selection process 
D)  aging of payables 
E)  None of the answers apply. 
A)  first in, first paid 
B)  loudest complaint, first paid 
C)  the "invoice hat" random selection process 
D)  aging of payables 
E)  None of the answers apply.

Question 13

Break-even analysis is a useful technique for determining how many units must be sold or how much sales volume must be achieved in order to break even: break-even is that volume of sales at which the business will neither make a profit nor incur a loss.

Accepted Answer

A) True 
 B)False

Question 14

For the first year of a new venture, cash flow statements should be developed on a(n) __________basis.

Accepted Answer

A)  annual 
B)  semi-annual 
C)  quarterly 
D)  monthly 
E)  None of the answers apply. 
A)  annual 
B)  semi-annual 
C)  quarterly 
D)  monthly 
E)  None of the answers apply.

Question 15

One major problem that new ventures face is cash flow. Many profitable firms fail because of lack of cash. Thus, using profit as a measure of success for a new venture may be deceiving if there is a significant negative cash flow.

Accepted Answer

A) True 
 B)False

Question 16

Calculations of financial ratios - why do you do them? Are they useful?

Accepted Answer

Calculations of financial ratios can als

Question 17

To estimate the amount of sales for the coming 12 months; this can be done by completing the market-share calculations, or by ___________________________.

Accepted Answer

A)  estimate the amount of profits 
B)  determining from primary and secondary sources what competitors' sales are and making adjustments. 
C)  Estimate sales costs and expenses. 
D)  Count the number of potential employees. 
E)  None of the answers apply. 
A)  estimate the amount of profits 
B)  determining from primary and secondary sources what competitors' sales are and making adjustments. 
C)  Estimate sales costs and expenses. 
D)  Count the number of potential employees. 
E)  None of the answers apply.

Question 18

Estimates of sales revenue may be derived from which of the following sources of information?

Accepted Answer

A)  marketing research 
B)  industry sales data 
C)  competitive financial information 
D)  sales forecasting techniques 
E)  All of the answers are correct. 
A)  marketing research 
B)  industry sales data 
C)  competitive financial information 
D)  sales forecasting techniques 
E)  All of the answers are correct.

Question 19

As described in the Opening Profile to Chapter 7, the challenge for Ted Rogers of Rogers Communications is in competition against Bell Canada, who dominates the local telephone service industry.

Accepted Answer

A) True 
 B)False

Question 20

A manufacturing or production budget is necessary when high levels of inventory are required or the business experiences large seasonal fluctuations in demand.

Accepted Answer

A) True 
 B)False

Describe how an entrepreneur might develop and use a pro forma sources and applications of funds statement and why it might be important.

Ethics: When a company lies or inflates its numbers, why is it a problem?

When preparing a balance sheet, the value recorded for an asset is __________.

An entrepreneur should consider getting help when evaluating capital expenditures for which of the following reasons?

As defined in the text, cash and other items that are expected to be converted into cash or consumed in the operation of the business during a period of one year or less are known as __________.

When estimating sales revenue and operating expenses for a new business venture, it is important to keep in mind that __________.

For a new venture, the likelihood of incurring __________ in the first year is very high.

It can be more difficult to estimate sales for an Internet startup businesses than for a traditional retail business due to which of the following reasons?

Cash flow can be very different from profit due to which of the following?

The most easy thing with projecting cash flows is determining exact monthly receipts and disbursements.

Fixed expenses __________.

As described in the Opening Profile to Chapter 9, early in his business career, Ted Rogers used which of the following methods of cash flow management when dealing with creditors?

Break-even analysis is a useful technique for determining how many units must be sold or how much sales volume must be achieved in order to break even: break-even is that volume of sales at which the business will neither make a profit nor incur a loss.

For the first year of a new venture, cash flow statements should be developed on a(n) __________basis.

One major problem that new ventures face is cash flow. Many profitable firms fail because of lack of cash. Thus, using profit as a measure of success for a new venture may be deceiving if there is a significant negative cash flow.

Calculations of financial ratios - why do you do them? Are they useful?

To estimate the amount of sales for the coming 12 months; this can be done by completing the market-share calculations, or by ___________________________.

Estimates of sales revenue may be derived from which of the following sources of information?

As described in the Opening Profile to Chapter 7, the challenge for Ted Rogers of Rogers Communications is in competition against Bell Canada, who dominates the local telephone service industry.

A manufacturing or production budget is necessary when high levels of inventory are required or the business experiences large seasonal fluctuations in demand.

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

Describe how an entrepreneur might develop and use a pro forma sources and applications of funds statement and why it might be important.

Ethics: When a company lies or inflates its numbers, why is it a problem?

When preparing a balance sheet, the value recorded for an asset is __________.

An entrepreneur should consider getting help when evaluating capital expenditures for which of the following reasons?

As defined in the text, cash and other items that are expected to be converted into cash or consumed in the operation of the business during a period of one year or less are known as __________.

When estimating sales revenue and operating expenses for a new business venture, it is important to keep in mind that __________.

For a new venture, the likelihood of incurring __________ in the first year is very high.

It can be more difficult to estimate sales for an Internet startup businesses than for a traditional retail business due to which of the following reasons?

Cash flow can be very different from profit due to which of the following?

The most easy thing with projecting cash flows is determining exact monthly receipts and disbursements.

Fixed expenses __________.

As described in the Opening Profile to Chapter 9, early in his business career, Ted Rogers used which of the following methods of cash flow management when dealing with creditors?

Break-even analysis is a useful technique for determining how many units must be sold or how much sales volume must be achieved in order to break even: break-even is that volume of sales at which the business will neither make a profit nor incur a loss.

For the first year of a new venture, cash flow statements should be developed on a(n) __________basis.

One major problem that new ventures face is cash flow. Many profitable firms fail because of lack of cash. Thus, using profit as a measure of success for a new venture may be deceiving if there is a significant negative cash flow.

Calculations of financial ratios - why do you do them? Are they useful?

To estimate the amount of sales for the coming 12 months; this can be done by completing the market-share calculations, or by ___________________________.

Estimates of sales revenue may be derived from which of the following sources of information?

As described in the Opening Profile to Chapter 7, the challenge for Ted Rogers of Rogers Communications is in competition against Bell Canada, who dominates the local telephone service industry.

A manufacturing or production budget is necessary when high levels of inventory are required or the business experiences large seasonal fluctuations in demand.

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