Deck 2: Financial Management and Planning

Question 1

Which of the following is an example of primary data?

A)reading the newspaper
B)public information in libraries
C)gathering your own data first hand
D)the gathering information about your competition

Answer 1

gathering your own data first hand

Question 2

Which of the following is true for a Limited Liability Company (LLC)?

A)Business income is taxed at the corporate rate.
B)The company is limited in its liability.
C)Business income is taxed at the individual's personal rate.
D)The owners have unlimited liability.
E)None of the above.

Answer 2

Business income is taxed at the individual's personal rate.

Question 3

Which of the following forms of business ownership is the most prevalent for a buy- sell agreement?

A)LLC
B)Sub Chapter S Corporation
C)corporation
D)partnership

Answer 3

partnership

Question 4

Jane is the president of a business.She runs the business on a daily basis and makes all of the decisions because she has ten years of experience in this business.There are ten other owners in this business,but they have no say in how this business is being run.Jane's business is probably organized as a

A)partnership.
B)corporation.
C)Subchapter S corporation.
D)sole proprietorship.
E)limited partnership.

Question 5

Which of the following is not a disadvantage of the sole proprietorship?

A)limited lifetime of the business
B)limited management expertise
C)limited access to capital
D)limited liability for the owner

Question 6

Which of the following stages is less than 3 years old the product and service is available?

A)early stage
B)seed/start up stage
C)later stage
D)expansion stage

Question 7

Carla has just started a business and is asking herself the following question.Where do I want my business to be in five years? Carla is in the process of

A)determining how to write a functional plan.
B)establishing basic parameters for her business.
C)analyzing her financial requirements.
D)establishing the basic control functions for her business.
E)developing a strategic plan.

Question 8

Converting functional plans into annual dollar requirements is the process of

A)budgeting.
B)controlling.
C)accounting.
D)financial planning.
E)monetary planning.

Question 9

Gathering all of the monetary requirements that a firm will need in order to support each functional plan is the process of

A)budgeting.
B)monetary planning.
C)controlling.
D)accounting.
E)financial planning.

Question 10

In identifying your form of business ownership the following should be included

A)your ownership structure.
B)reasons for your selection.
C)advantages of your choice.
D)all of the above.

Question 11

The management function that takes us from some current state to a desired future state is

A)planning.
B)directing.
C)controlling.
D)staffing.
E)organizing.

Question 12

The form of business ownership that involves double taxation and limited liability for the owners is the

A)partnership.
B)corporation.
C)Subchapter S corporation.
D)limited partnership.
E)sole proprietorship.

Question 13

Which of the following variables in the marketing mix is the easiest to change rapidly?

A)promotion
B)product
C)place
D)price

Question 14

Unlimited liability for the owner is a problem for which of the following?

A)limited partnership
B)corporation
C)partnership
D)sole proprietorship
E)both C and D above

Question 15

Bankers differ from investors in that

A)bankers are looking for company growth.
B)bankers are looking for a return on equity.
C)bankers are looking for assurances of interest payments and repayment of the principal of the loan.
D)all of the above.

Question 16

The form of business ownership that gives the owner total control of how the business is run is the

A)Subchapter S corporation.
B)corporation.
C)sole proprietorship.
D)partnership.
E)limited partnership.

Question 17

Which of the following holds true for the Small Business Adminstration?

A)The SBA actually loans money to small business and is a bank.
B)A 504 Loan Program requires a 25 percent minimum down payment.
C)The SBA does not guarantee small business loans.
D)The SBA requires that you create your business plan or loan proposal prior to applying for an SBA guaranteed loan.

Question 18

Which of the following pertain to the external factors which are outside the control of a company?

A)strengths and threats
B)opportunities and weaknesses
C)strengths and weaknesses
D)strengths and opportunities
E)opportunities and threats

Question 19

The financial plan consists of

A)breakeven analysis.
B)a 12 month projection.
C)a 4 year profit projection.
D)all of the above.

Question 20

George is analyzing the market for his bagel business.He saw an advertisement for a new bagel shop which has just opened one mile from his bagel shop.For George's bagel business,this represents a(n)

A)weakness.
B)strength.
C)opportunity.
D)obligation.
E)threat.

Question 21

One drawback to a partnership is that it

A)generally has more access to capital than the sole proprietor.
B)is subject to double taxation.
C)has unlimited liability for each of the partners.
D)generally has more management expertise than the sole proprietorship.

Question 22

The sole proprietor has all of the following advantages,except

A)choice of how to pay federal and local taxes.
B)choice of location for the business.
C)choice of services to be offered.
D)choice of retirement plan.
E)choice of product to be sold.

Question 23

Which of the following hold true with regard to grants?
I.Grants are moneys provided to business and other entities that don't have to be repaid.
II.Grantee must perform the service for which the grant was approved.
III.Government grants exceed $400 billion per year.
IV.Size Standards for all businesses to qualify for grants are the same for all industries.

A)I & II
B)I & IV
C)I,II,& IV
D)I,II,& III

Question 24

Which of the following is not an advantage of obtaining a franchise?

A)having a pre- determined location that guarantees a profit
B)standardization of products and services
C)name recognition
D)training of employees and managers
E)marketing strategy and advertising

Question 25

Which of the following should not be in the executive summary?

A)a summary of quarterly revenue
B)a brief description of the product or service
C)tour business strategy for success
D)an estimate of how much money you will need

Question 26

George is analyzing the market for his bagel business.He noticed that there are no bagel shops in the northeast section of his city.For George's bagel business,this represents a(n)

A)threat.
B)opportunity.
C)strength.
D)obligation.
E)weakness.

Question 27

George is analyzing the market for his bagel business.He knows that his has the highest quality bagel in the city.He has picked up several customers who previously shopped at a competitor but told him they changed because of his consistent quality.For George's bagel business,this represents a(n)

A)weakness.
B)opportunity.
C)obligation.
D)strength.
E)threat.

Question 28

Which of the following does hold true for venture capitalists?

A)They invest several million dollars.
B)Invest in companies with proven track records.
C)They provide financing at the later stages of business development.
D)All of the above.

Question 29

Which of the following pertain to the internal workings of a company?

A)opportunities and weaknesses
B)strengths and opportunities
C)strengths and weaknesses
D)strengths and threats
E)opportunities and threats

Question 30

Location is probably the single most important factor affecting the success of the _ business establishment.

A)manufacturing
B)retailing
C)wholesale
D)both A and B above
E)both B and C above

Question 31

A mission statement

A)is a brief statement explaining the purpose of the company and its guiding principles.
B)helps the organization reach its goals.
C)is very specific.
D)none of the above.

Question 32

Carl is a construction supervisor.He has to make sure that the inside rooms of the house are painted by this evening because the carpeting company is scheduled to bring in the carpeting first thing tomorrow morning.He told Tim to paint the hall and told Anne to paint the master bedroom.Because he is short handed,he will paint the kitchen.Carl is performing the management function of

A)planning
B)directing.
C)staffing.
D)controlling.
E)organizing.

Question 33

Jennifer is the manager of a credit card processing department.She has determined that each processor should be able to input information on 75 credit purchases per hour.She has established a range of plus or minus 5 purchases and an error rate of no more than 2 per hour.Jennifer is performing the management function of

A)directing.
B)organizing.
C)planning.
D)staffing.
E)controlling.

Question 34

Timothy is in the process of establishing goals for his company.Which of the following is a goal?

A)Our business should increase sales every year.
B)Our business should market to all customers.
C)Our marketing area should include the entire United States.
D)Our business should increase sales by 10 percent.
E)Our business should increase sales by 10 percent every year for the next five years.

Question 35

Tom is establishing some basic plans for his business.He is in the process of writing down some basic questions that he believes the plans should answer.Which of the following questions does not relate to establishing a functional plan?

A)Where will they perform their duties?
B)Where do I want my business to be in five years?
C)Who will carry out this plan?
D)What skills do they need?
E)When will it be accomplished?

Question 36

An executive summary should be attached to

A)the beginning of the business plan.
B)the end of the completed business plan.
C)somewhere in the middle of the business plan.
D)none of the above.

Question 37

Which of the following stages has high revenue growth but does not show a profit?

A)later stage
B)early stage
C)seed/start up stage
D)expansion stage

Question 38

You have always wanted to own your own McDonald's restaurant.You contacted this corporation and received the details of purchasing one of these restaurants.If you are granted permission you will become a and the McDonald's corporation is the .

A)franchiser;franchiser
B)franchiser;franchisee
C)franchisee;franchisee
D)franchisee;franchiser

Question 39

When formulating a Business Succession Plan the owner should determine several things.Which of the following is not considered?

A)Should ownership be held by family members only?
B)Are the owner and the spouse on the same page with respect to continuing the business?
C)Should the business be sold to pay inheritance taxes?
D)Does the owner want the business ownership to pass directly to the heirs or in trust?

Question 40

Which of the following does not hold true for angel investors?

A)They have an intolerance for loss.
B)They normally are wealthy individuals.
C)They provide the seed money for the startup and early stages of company growth.
D)They take an active position and provide mentoring.

Question 41

Which of the following stages has a positive cash flow?

A)expansion stage
B)later stage
C)seed/start up stage
D)early stage

Question 42

A marketing mix is a marketing strategy.

Question 43

Carl,Anne,and Al were friends in college.After graduation they decided to open a company that sells computer printer ribbons and cartridges.They each have $20,000 to put into the business,and want equal shares of the business.They are not worried about liability because they are not actually going to work on printers or work in their customer's place of business.They also want to avoid double taxation.The most likely form of business organization for them would be a

A)sole proprietorship.
B)Subchapter S corporation.
C)limited partnership.
D)corporation.
E)partnership.

Question 44

Which of the following are not included in the financial section of a business proposal when seeking a bank loan?

A)The amount of the loan.
B)How many years it will take to repay the loan.
C)What collateral you are offering for the loan.
D)The interest rate that will be paid for the loan.

Question 45

The time horizon for strategic plans is

A)more than one year.
B)fifteen or more years.
C)five years.
D)ten or more years.
E)There is no definite time horizon for strategic plans.

Question 46

When running a SWOT analysis,one should also consider personal Strengths and Weaknesses because

A)business owners should evaluate those items where they are weak.
B)business owners should list those items that they really dislike doing.
C)business success requires that owners have no weaknesses.
D)both A and B above.
E)both B and C above.

Question 47

Geoffrey is in the process of determining how many people he will require to operate his restaurant during each business day.He is performing the management function of

A)directing.
B)organizing.
C)planning.
D)staffing.
E)controlling.

Question 48

The basic five functions that every manager must perform include

A)planning,organizing,controlling,directing,financing
B)planning,financing,bookkeeping,controlling,staffing.
C)planning,organizing,bookkeeping,directing,staffing.
D)planning,directing,organizing,staffing,controlling.
E)None of the above include all of the management functions.

Question 49

Which of the following stages has a concept and is less than 18 months old?

A)seed/start up stage
B)early stage
C)later stage
D)expansion stage

Question 50

Which of the following is a weakness?

A)an area of your business that you perform well in
B)you perform better than your competitors
C)inexperienced workers
D)None of the above.

Question 51

If your business has more than 10 people,you do not need an organizational chart.

Question 52

Environmental factors can lead the business owner to evaluate and change his or her business plans.An industry that recently underwent a major shift in marketing due to technological change and new competition,according to the textbook is

A)the oil industry.
B)the convenience store industry.
C)the automobile industry.
D)the cereal industry.
E)the fast food industry.

Question 53

SCORE is a source of information and training for the small business owner.The acronym SCORE stands for

A)Special College for Retraining Employees.
B)Service College for Retaining Employees.
C)Special Core of Retired Entrepreneurs.
D)Service Core of Retired Executives.
E)none of the above.

Question 54

The SBA lends the funds for a business start- up but is not a guarantor of the loan.

Question 55

The executive summary is the initial introduction to the business plan.

Question 56

Carl,Anne,and Al were friends in college.After graduation they decided to open a computer consulting business.They each have $20,000 to put into the business,and want equal shares of the business.However,they are worried about liability,because they heard of a consultant who crashed a client's computer and was sued for $1,000,000.They also want to avoid double taxation.The most likely form of business organization for them would be a

A)Subchapter S corporation.
B)sole proprietorship.
C)partnership.
D)limited partnership.
E)corporation.

Question 57

SWOT is an acronym which stands for

A)Strengths,Weaknesses,Opportunities,and Troubles.
B)Strengths,Working capital,Obligations,and Threats.
C)Strengths,Weaknesses,Obligations,and Threats.
D)Strengths,Weaknesses,Opportunities,and Threats.
E)Strengths,Working capital,Opportunities,and Threats.

Question 58

The majority of businesses in the United States today are organized as

A)limited partnerships.
B)subchapter S corporations.
C)partnerships.
D)sole proprietorships.
E)corporations.

Question 59

The Operational plan describes how a business will actually deliver your product or service to the customer.

Question 60

When applying for a loan with the Small Business Administration,you will have to provide tax returns for a period of

A)four years.
B)three years.
C)two years.
D)five years.
E)one year.

Question 61

Limited partnerships have limited liability for all of the partners.

Question 62

The Service Core of Retired Executives (SCORE)is a group of retired government bureaucrats who provide help to small business owners.

Question 63

A company in the Later Stage of development usually has negative cash flow.

Question 64

The SBA has two major programs: 7(a)for general business purposes and 504 for the purchase of buildings or major equipment.

Question 65

Prior to applying for a loan through an approved Small Business Administration lender,you must establish the form of business ownership.

Question 66

A mission statement is specific.

Question 67

Company goals describe where you want your business to be at some future date.

Question 68

The SBA,SCORE and the authors recommend that an executive summary be attached to the beginning of the business plan.

Question 69

Public corporations have double taxation,unlimited liability for owners,and can raise large amounts of cash by selling stocks or bonds.

Question 70

In a limited liability Partnership all of the partners can participate in day to day operations.

Question 71

The best place to get a loan for a business is the Small Business Administration because they loan you government funds.

Question 72

A plan that relates to a specific area of a business,such as marketing,is known as a strategic plan.

Question 73

Every succession plan must have a buy- sell agreement.

Question 74

The buy- sell agreement prevents a partner from selling a partnership interest without the consent of the other partners.

Question 75

Secondary data gathers information first hand.

Question 76

The buy sell agreement preserves the continuity of ownership and insures that everyone is treated fairly.

Question 77

When borrowing funds for a business,lenders provide money in exchange for partial ownership of the business.

Question 78

A goal is a measurable objective that can be reached in a specified time frame.

Question 79

When obtaining funds for a business,investors provide money in exchange for partial ownership of the business.

Question 80

Franchisers purchase the right to sell products or services of the franchisee.