Question 1

In Scenario 6-2 above,in order to analyze the financial condition of the business,Sally Jo should consider all but which of the following?

Accepted Answer

A)  An independent audit 
B)  The profit trend 
C)  The emotional appeal of the business 
D)  Expense ratios

Question 2

Tangible assets are the product of a firm's past earnings and the basis on which future earnings are projected.

Accepted Answer

A) True 
 B)False

Question 3

The financial statements can provide access to ____,a very important piece of information for a prospective buyer to use in determining net profit.

Accepted Answer

A)  Sales volume 
B)  Net assets 
C)  Gross assets 
D)  Accounts payable

Question 4

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 5

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 6

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 7

To avoid animosity from nonfamily employees in a family owned business,which of the following policies are recommended in the text?

Accepted Answer

A)  Use nonfamily members to supervise family members when possible. 
B)  Do not allow a family member to stay in an entry-level position permanently. 
C)  To obtain permanent employment,family members must have at least five years experience outside the company. 
D)  All of the above.

Question 8

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 9

Expense ratios are useful because they are

Accepted Answer

A)  Standards or guides 
B)  Absolute measures of profitability 
C)  Significant in the number that is computed 
D)  Error free

Question 10

Stan owns a body shop,and his cousin recently came to him desperate to get a job.Stan,who is not currently looking to hire anyone,is concerned about the effect of a new hire on profits.This concern stems from which family business perspective?

Accepted Answer

A)  Family 
B)  Ownership 
C)  Marketing 
D)  External

Question 11

Family businesses make up 80 percent of all businesses in the United States and comprise nearly 50 percent of the nation's GNP.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Patents,copyrights,and trademarks protect against unauthorized use or infringements for which of the following time periods?

Accepted Answer

A)  Indefinitely 
B)  For an unknown time period 
C)  Five to seven years 
D)  For a definite time and usage period

Question 14

Intellectual property is a valuable ____.

Accepted Answer

A)  Intangible asset 
B)  Tangible asset 
C)  Goodwill asset 
D)  Current asset

Question 15

Assets that have value to a business but are not visible are known as

Accepted Answer

A)  Intangible assets 
B)  Tangible assets 
C)  Long-term assets 
D)  Current assets

Question 16

Before buying a business,one should engage in a thorough analysis of the firm's financial statement to see if any of them may be misleading.An example of that would be

Accepted Answer

A)  cutting the labor force temporarily to reduce expense and improve profits. 
B)  maintenance of equipment has been reduced to cut short term expense. 
C)  insufficient write-offs of bad debts. 
D)  all of the above.

Question 17

The longer it takes someone to pay their account receivable,the less likely they are to

Accepted Answer

A)  Ever pay the account 
B)  Make repeat purchases 
C)  Make a profit 
D)  Become a bad debt expense

Question 18

Compare and contrast tangible assets and intangible assets.

Accepted Answer

The answer of Compare and contrast tangible assets and intangible...

Question 19

If the business that is being purchased involves inventory,the bulk sales provisions of the ____ need to be followed.

Accepted Answer

A)  FTC 
B)  NAFTA 
C)  UCC 
D)  SBA

Question 20

Describe three places a potential small business owner might go when looking for a business for sale.

Accepted Answer

The answer of Describe three places a potential small business...

Exam 6: Taking Over An Existing Business

In Scenario 6-2 above,in order to analyze the financial condition of the business,Sally Jo should consider all but which of the following?

Tangible assets are the product of a firm's past earnings and the basis on which future earnings are projected.

The financial statements can provide access to ____,a very important piece of information for a prospective buyer to use in determining net profit.

Aging accounts receivable refers to the process of

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

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

To avoid animosity from nonfamily employees in a family owned business,which of the following policies are recommended in the text?

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

Expense ratios are useful because they are

Stan owns a body shop,and his cousin recently came to him desperate to get a job.Stan,who is not currently looking to hire anyone,is concerned about the effect of a new hire on profits.This concern stems from which family business perspective?

Family businesses make up 80 percent of all businesses in the United States and comprise nearly 50 percent of the nation's GNP.

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

Patents,copyrights,and trademarks protect against unauthorized use or infringements for which of the following time periods?

Intellectual property is a valuable ____.

Assets that have value to a business but are not visible are known as

Before buying a business,one should engage in a thorough analysis of the firm's financial statement to see if any of them may be misleading.An example of that would be

The longer it takes someone to pay their account receivable,the less likely they are to

Compare and contrast tangible assets and intangible assets.

If the business that is being purchased involves inventory,the bulk sales provisions of the ____ need to be followed.

Describe three places a potential small business owner might go when looking for a business for sale.