Question 1

You should never ask the owners of a business where you are a customer whether they are interested in selling their business.

Accepted Answer

A) True 
 B)False

Question 2

Rob is selling a business with machinery that has been protected from unauthorized use or infringement for the next three years. What type of intangible asset does this involve?

Accepted Answer

A)  goodwill 
B)  trademark 
C)  patent right 
D)  copyright

Question 3

The most realistic approach for the buyer in determining the value of tangible assets is through ______.

Accepted Answer

A)  book value 
B)  replacement value 
C)  liquidation value 
D)  balance sheet valuation

Question 4

Analyze three areas that should be researched when deciding whether or not to purchase an existing business.

Accepted Answer

The answer of Analyze three areas that should be researched...

Question 5

A business that brings sellers of their businesses together with potential buyers is known as ______.

Accepted Answer

A)  a real estate broker 
B)  the Small Business Administration (SB
A)  
C)  a business broker 
D)  the FTC

Question 6

Word-of-mouth information through friends and family may turn up business opportunities that do not appear through formal channels.

Accepted Answer

A) True 
 B)False

Question 7

Goodwill is an example of a tangible asset.

Accepted Answer

A) True 
 B)False

Question 8

The most practical method of paying for a business is ______.

Accepted Answer

A)  paying a lump-sum 
B)  paying in installments 
C)  a loan from the bank 
D)  a loan from the Small Business Administration (SB
A)

Question 9

Buying an existing business looks appealing to the potential business owner for which of the following reasons?

Accepted Answer

A)  The existing firm is already functioning. 
B)  The existing firm will always make a profit. 
C)  The existing firm will have the best employees. 
D)  The existing firm's owner will always provide financing.

Question 10

Which of the following is a guideline that should be followed in a family business?

Accepted Answer

A)  to be hired, family members must meet more stringent criteria than nonfamily members 
B)  family members should be supervised by older family members whenever possible 
C)  family members should stay in entry-level positions indefinitely 
D)  family members must meet the same standards as nonfamily members in performance reviews

Question 11

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 12

Industry averages exist comparing expenses to sales for every size and type of business.

Accepted Answer

A) True 
 B)False

Question 13

Aging accounts receivable refers to the process of ______.

Accepted Answer

A)  determining their present value 
B)  determining their effect on sales 
C)  determining how many are still collectible and discounting them accordingly 
D)  determining future customer lists

Question 14

Many good business opportunities are never formally advertised. Instead, that information is found through which of the following?

Accepted Answer

A)  the local banker 
B)  the local college 
C)  word of mouth 
D)  the Small Business Administration (SB
A)

Question 15

______ is a current value for a company's long-term future cash flows.

Accepted Answer

A)  Future value 
B)  Dead value 
C)  Discount value 
D)  Terminal value

Question 16

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

Question 17

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

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

Along with purchasing a successful ice cream shop, Wilma acquired the building, as well as ice cream making equipment and enough inventories to operate for a month. These are best known as what type of assets?

Accepted Answer

A)  short-term assets 
B)  tangible assets 
C)  long-term assets 
D)  intangible assets

Question 20

Brokers take classes and pass examinations to become certified business intermediaries.

Accepted Answer

A) True 
 B)False

Exam 6: Taking Over an Existing Business

You should never ask the owners of a business where you are a customer whether they are interested in selling their business.

Rob is selling a business with machinery that has been protected from unauthorized use or infringement for the next three years. What type of intangible asset does this involve?

The most realistic approach for the buyer in determining the value of tangible assets is through ______.

Analyze three areas that should be researched when deciding whether or not to purchase an existing business.

A business that brings sellers of their businesses together with potential buyers is known as ______.

Word-of-mouth information through friends and family may turn up business opportunities that do not appear through formal channels.

Goodwill is an example of a tangible asset.

The most practical method of paying for a business is ______.

Buying an existing business looks appealing to the potential business owner for which of the following reasons?

Which of the following is a guideline that should be followed in a family business?

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.

Industry averages exist comparing expenses to sales for every size and type of business.

Aging accounts receivable refers to the process of ______.

Many good business opportunities are never formally advertised. Instead, that information is found through which of the following?

______ is a current value for a company's long-term future cash flows.

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

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

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

Along with purchasing a successful ice cream shop, Wilma acquired the building, as well as ice cream making equipment and enough inventories to operate for a month. These are best known as what type of assets?

Brokers take classes and pass examinations to become certified business intermediaries.