Question 1

The most common standards for asset valuation do not include which of the following?

Accepted Answer

A)   Book value
B)   Adjusted book value
C)   Liquidation value
D)   Adjusted liquidation value
E)   Replacement value D

Question 2

Which of the following is not a method to determine the value of a business?

Accepted Answer

A)   Worth of stockholders' equity
B)   Asset valuation
C)   Earnings valuation
D)   Cash flow valuation
E)   Sentimental valuation E

Question 3

In a whole business sale, the buyer acquires ________ of the company, known or unknown.

Accepted Answer

A)   All assets and liabilities
B)   Only the assets
C)   None of the liabilities
D)   The building
E)   The customers A

Question 4

All of the following can help reduce your learning curve except ________.

Accepted Answer

A)   Having transferrable skills from prior experience that fit the business
B)   Seeking out employment in the type of company you want to purchase
C)   Volunteer activities
D)   Read books about the industry
E)   All of the above can reduce your learning curve.

Question 5

An overly eager seller, or a price that sounds too good to be true, is never a sign that the opportunity actually is too good to be true.

Accepted Answer

A) True 
 B)False

Question 6

Difficulty in finding and retaining necessary staff is a common undisclosed reason to sell a business.

Accepted Answer

A) True 
 B)False

Question 7

It is difficult to fall in love with the idea of owning a business and overlook the pitfalls and problems.

Accepted Answer

A) True 
 B)False

Question 8

Buying into a business over time is an option that may permit a current owner to separate from a company over time, receive a stream of payments, and support customer loyalty.

Accepted Answer

A) True 
 B)False

Question 9

Records of information that a buyer should request and review during due diligence include all of the following except ________.

Accepted Answer

A)   Tax returns for the previous three to five years
B)   Bank deposit tickets for the past two years
C)   Employee records and turnover history for five years
D)   Supplier lists and references
E)   Personal correspondence

Question 10

Which of the following is a way of looking at earnings valuation?

Accepted Answer

A)   Future earnings under new ownership
B)   Future earnings under current ownership
C)   Past earnings under new ownership
D)   All of the above
E)   None of the above

Question 11

What methods discussed in the text would you use in finding leads on existing businesses? Which methods would work the best? Why?

Accepted Answer

The answer of What methods discussed in the text would...

Question 12

Discuss some of the reasons why buying an existing business would benefit you.

Accepted Answer

The answer of Discuss some of the reasons why buying...

Question 13

________ is not a sign of potential problems when practicing due diligence.

Accepted Answer

A)   Inconsistent information
B)   Refusal to provide contact names
C)   Hesitancy to open up to questions
D)   Conflicting information
E)   Accurate information

Question 14

The offer price and the maximum amount you are willing to pay should encompass all of the financial factors you have identified.

Accepted Answer

A) True 
 B)False

Question 15

Becoming a successful entrepreneur is a process that can be ________ and ________ by purchasing an operating business.

Accepted Answer

A)   Simplified, accelerated
B)   Simplified, stunted
C)   Complicated, accelerated
D)   Convoluted, accelerated
E)   Simplified, enhanced

Question 16

A firm that has two or more members of the same family managing and/or working in it and that is owned and operated for the benefit of that family's members is called a ________.

Accepted Answer

A)   Family business
B)   Mob business
C)   Domestic business
D)   Household business
E)   None of the above

Question 17

The majority of small businesses that change owners are still in business five years later, about ________ the rate of start-up survival.

Accepted Answer

A)   Double
B)   Triple
C)   Four times
D)   Fifty times
E)   None of the above

Question 18

You must consider the fit of the business you are buying to your personal habits and interests.

Accepted Answer

A) True 
 B)False

Question 19

With a family business, much like the acquisition of any going concern, there is a chance to build upon its strengths and to turn around problematic aspects.

Accepted Answer

A) True 
 B)False

Question 20

It is appropriate to interview all of the following except ________.

Accepted Answer

A)   Former suppliers
B)   Customers
C)   Employees
D)   Family members
E)   All of the above are appropriate to interview.

Exam 3: Finding Opportunity in an Existing Business

The most common standards for asset valuation do not include which of the following?

Which of the following is not a method to determine the value of a business?

In a whole business sale, the buyer acquires ________ of the company, known or unknown.

All of the following can help reduce your learning curve except ________.

An overly eager seller, or a price that sounds too good to be true, is never a sign that the opportunity actually is too good to be true.

Difficulty in finding and retaining necessary staff is a common undisclosed reason to sell a business.

It is difficult to fall in love with the idea of owning a business and overlook the pitfalls and problems.

Buying into a business over time is an option that may permit a current owner to separate from a company over time, receive a stream of payments, and support customer loyalty.

Records of information that a buyer should request and review during due diligence include all of the following except ________.

Which of the following is a way of looking at earnings valuation?

What methods discussed in the text would you use in finding leads on existing businesses? Which methods would work the best? Why?

Discuss some of the reasons why buying an existing business would benefit you.

________ is not a sign of potential problems when practicing due diligence.

The offer price and the maximum amount you are willing to pay should encompass all of the financial factors you have identified.

Becoming a successful entrepreneur is a process that can be and by purchasing an operating business.

A firm that has two or more members of the same family managing and/or working in it and that is owned and operated for the benefit of that family's members is called a ________.

The majority of small businesses that change owners are still in business five years later, about ________ the rate of start-up survival.

You must consider the fit of the business you are buying to your personal habits and interests.

With a family business, much like the acquisition of any going concern, there is a chance to build upon its strengths and to turn around problematic aspects.

It is appropriate to interview all of the following except ________.