Question 1

The method used to save money that will be needed to replace expensive pieces of equipment is called ________.

Accepted Answer

A)  Inventory 
B)  Deductible 
C)  Depreciation 
D)  Amortization 
A)  Inventory 
B)  Deductible 
C)  Depreciation 
D)  Amortization

Question 2

Other variable costs per unit subtracted from Total COGS per unit equals ________.

Accepted Answer

A)  Total other variable costs per unit 
B)  Contribution margin per unit 
C)  Cost of goods sold per unit 
D)  Operating profit per unit 
A)  Total other variable costs per unit 
B)  Contribution margin per unit 
C)  Cost of goods sold per unit 
D)  Operating profit per unit

Question 3

Why is it best to pay expenses for your business with a check, not with cash?

Accepted Answer

A)  A check can't be traced. 
B)  A check provides written proof of payment. 
C)  Cash is easier to lose. 
D)  Cash payments are always applied more slowly. 
A)  A check can't be traced. 
B)  A check provides written proof of payment. 
C)  Cash is easier to lose. 
D)  Cash payments are always applied more slowly.

Question 4

Net profit is calculated before taxes are taken into consideration.

Accepted Answer

A) True 
 B)False

Question 5

A cash reserve is also known as a(n) ________.

Accepted Answer

A)  Emergency fund 
B)  Pool of cash resources 
C)  Contingency fund 
D)  All of the above 
A)  Emergency fund 
B)  Pool of cash resources 
C)  Contingency fund 
D)  All of the above

Question 6

One of the most important things an entrepreneur learns is keeping accurate records of the money flowing in and out of a business. Keeping numerical records is called ________.

Accepted Answer

A)  Cost analysis 
B)  Cash flow analysis 
C)  Accounting 
D)  Reconciliation 
A)  Cost analysis 
B)  Cash flow analysis 
C)  Accounting 
D)  Reconciliation

Question 7

Fixed Operating Costs ________.

Accepted Answer

A)  Are not included in COGS 
B)  Include expenses like the DSL bill and rent 
C)  Are not direct costs of creating each product 
D)  All of the above. 
A)  Are not included in COGS 
B)  Include expenses like the DSL bill and rent 
C)  Are not direct costs of creating each product 
D)  All of the above.

Question 8

Under the accrual method of accounting transactions are recorded at the time of occurrence.

Accepted Answer

A) True 
 B)False

Question 9

Paying cash for business purchases is highly recommended over paying via check or electronic transfer.

Accepted Answer

A) True 
 B)False

Question 10

Jarvis is starting a business requiring initial start-up of $5.5 million. The business is projecting a net cash flow per month of $100,000. How many months will it take to make back his start-up investment?

Accepted Answer

A)  5.5 
B)  55 
C)  20 
D)  None of the above 
A)  5.5 
B)  55 
C)  20 
D)  None of the above

Question 11

List 10 categories of start-up costs that are common to many businesses.

Accepted Answer

Among the possible items are:
a. Land
b.

Question 12

Fixed operating costs can change over time.

Accepted Answer

A) True 
 B)False

Question 13

Carla sells hot coffee, cider and tea from a sidewalk cart near Wall Street in New York City. Last month she sold $4,500 worth of product to 1,000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: Utilities = $100, Salary = $2,000, Advertising = $0, Insurance = $0, Interest = $0, Rent (cart) = $600, Depreciation = $0. What is Carla's monthly cost of goods sold?

Accepted Answer

A)  $800 
B)  $100 
C)  $450 
D)  $1,500 
A)  $800 
B)  $100 
C)  $450 
D)  $1,500

Question 14

If you sell $2,500 of product, pay COGS of $800 and other variable costs of $450, what is your contribution margin in percentage form?

Accepted Answer

A)  25.5% 
B)  50.0% 
C)  20.3% 
D)  33.3% 
A)  25.5% 
B)  50.0% 
C)  20.3% 
D)  33.3%

Question 15

Start-up investment is the one-time expense of opening a business. It is also called ________.

Accepted Answer

A)  Down payment 
B)  Seed capital 
C)  Entry cost 
D)  Initial deposits 
A)  Down payment 
B)  Seed capital 
C)  Entry cost 
D)  Initial deposits

Question 16

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000. What should the company do?

Accepted Answer

A)  Invest - the NPV is greater than $0. 
B)  Not invest - the NPV is less than the 10% stated. 
C)  Find a way to reduce the initial investment to $1,200,000 and still yield the same amount. 
D)  None of the above 
A)  Invest - the NPV is greater than $0. 
B)  Not invest - the NPV is less than the 10% stated. 
C)  Find a way to reduce the initial investment to $1,200,000 and still yield the same amount. 
D)  None of the above

Question 17

Expenses associated with materials and direct labor for production until the products are sold are called fixed operating costs.

Accepted Answer

A) True 
 B)False

Question 18

Describe how an entrepreneur should protect his/her financial records.

Accepted Answer

Always keep a copy of your financial rec

Question 19

Uses for a cash reserve include ________.

Accepted Answer

A)  Planned leasehold improvements 
B)  Taking advantage of unforeseen opportunities 
C)  Routine expenses 
D)  Seed capital 
A)  Planned leasehold improvements 
B)  Taking advantage of unforeseen opportunities 
C)  Routine expenses 
D)  Seed capital

Question 20

What is the reason to calculate the payback period and the net present value (NPV) for a business investment?

Accepted Answer

Calculating the payback period and the N

The method used to save money that will be needed to replace expensive pieces of equipment is called ________.

Other variable costs per unit subtracted from Total COGS per unit equals ________.

Why is it best to pay expenses for your business with a check, not with cash?

Net profit is calculated before taxes are taken into consideration.

A cash reserve is also known as a(n) ________.

One of the most important things an entrepreneur learns is keeping accurate records of the money flowing in and out of a business. Keeping numerical records is called ________.

Fixed Operating Costs ________.

Under the accrual method of accounting transactions are recorded at the time of occurrence.

Paying cash for business purchases is highly recommended over paying via check or electronic transfer.

Jarvis is starting a business requiring initial start-up of $5.5 million. The business is projecting a net cash flow per month of $100,000. How many months will it take to make back his start-up investment?

List 10 categories of start-up costs that are common to many businesses.

Fixed operating costs can change over time.

If you sell $2,500 of product, pay COGS of $800 and other variable costs of $450, what is your contribution margin in percentage form?

Start-up investment is the one-time expense of opening a business. It is also called ________.

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000. What should the company do?

Expenses associated with materials and direct labor for production until the products are sold are called fixed operating costs.

Describe how an entrepreneur should protect his/her financial records.

Uses for a cash reserve include ________.

What is the reason to calculate the payback period and the net present value (NPV) for a business investment?

Entrepreneurs Recognize Opportunities

Franchising

Finding Opportunity in an Existing Business

The Business Plan: Road Map to Success

Creating Business From Opportunity

Exploring Your Market

Developing the Right Marketing Mix and Plan

Pricing and Credit Strategies

Integrated Marketing Communications

Marketing Globally

Smart Selling and Effective Customer Service

Using Financial Statements to Guide a Business

Cash Flow and Taxes

Financing Strategy: Debt, Equity, or Both

Addressing Legal Issues and Managing Risk

Operating for Success

Location, Facilities, and Layout

Human Resources and Management

Leadership and Ethical Practices

Franchising, Licensing, and Harvesting: Cashing in Your Brand

Filters

Exam 12: Understanding and Managing Start-Up, Fixed, and Variable Costs

The method used to save money that will be needed to replace expensive pieces of equipment is called ________.

Other variable costs per unit subtracted from Total COGS per unit equals ________.

Why is it best to pay expenses for your business with a check, not with cash?

Net profit is calculated before taxes are taken into consideration.

A cash reserve is also known as a(n) ________.

One of the most important things an entrepreneur learns is keeping accurate records of the money flowing in and out of a business. Keeping numerical records is called ________.

Fixed Operating Costs ________.

Under the accrual method of accounting transactions are recorded at the time of occurrence.

Paying cash for business purchases is highly recommended over paying via check or electronic transfer.

Jarvis is starting a business requiring initial start-up of $5.5 million. The business is projecting a net cash flow per month of $100,000. How many months will it take to make back his start-up investment?

List 10 categories of start-up costs that are common to many businesses.

Fixed operating costs can change over time.

If you sell $2,500 of product, pay COGS of $800 and other variable costs of $450, what is your contribution margin in percentage form?

Start-up investment is the one-time expense of opening a business. It is also called ________.

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000. What should the company do?

Expenses associated with materials and direct labor for production until the products are sold are called fixed operating costs.

Describe how an entrepreneur should protect his/her financial records.

Uses for a cash reserve include ________.

What is the reason to calculate the payback period and the net present value (NPV) for a business investment?

Entrepreneurs Recognize Opportunities

Franchising

Finding Opportunity in an Existing Business

The Business Plan: Road Map to Success

Creating Business From Opportunity

Exploring Your Market

Developing the Right Marketing Mix and Plan

Pricing and Credit Strategies

Integrated Marketing Communications

Marketing Globally

Smart Selling and Effective Customer Service

Using Financial Statements to Guide a Business

Cash Flow and Taxes

Financing Strategy: Debt, Equity, or Both

Addressing Legal Issues and Managing Risk

Operating for Success

Location, Facilities, and Layout

Human Resources and Management

Leadership and Ethical Practices

Franchising, Licensing, and Harvesting: Cashing in Your Brand

Filters