Question 1

There are two categories of variable costs ________.     a. interest and taxes paid  b. cost of goods sold and other variable costs  c. gross costs and net variable costs  d. net variable costs and cost of goods sold

Accepted Answer

b. cost of goods sold and other variable costs

Question 2

Total Revenue divided by________ = units sold.    a. cost  b. profit  c. selling price  d. total operating costs

Accepted Answer

c. selling price

Question 3

Fixed Operating Costs ________.    a. include expenses like the DSL bill and rent  b. All of the above.  c. are not included in COGS  d. are not direct costs of creating each product

Accepted Answer

b. All of the above.

Question 4

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. Calculate Carla\'s average sale per customer    a. $4.00  b. $5.00  c. $0.80  d. $4.50

Accepted Answer

d. $4.50

Question 5

Overhead is another term for ________.    a. seed capital  b. administrative costs  c. fixed operating costs  d. net costs

Accepted Answer

c. fixed operating costs

Question 6

Which of the following is not a category of fixed costs?    a. capital  b. depreciation  c. rent  d. advertising

Accepted Answer

a. capital

Question 7

Record keeping for a very small business can be accomplished by a journal and two boxes for storing ________.    a. costs and expenses  b. debits and credits  c. receipts and costs  d. receipts and invoices

Accepted Answer

d. receipts and invoices

Question 8

In the acronym USAIIRD, IRD stand for __________.    a. inventory cost, repositioning costs, depletion  b. interest, rent, depreciation  c. interest, rent, delivery expense  d. investment cost, ratios, depreciation

Accepted Answer

b. interest, rent, depreciation

Question 9

If a business sells 5,000 units for a total profit of $200,000, what is its profit per unit?    a. $50  b. $400  c. $40

Accepted Answer

c. $40

Question 10

If a business has total gross profit of $14,720 and total operating costs of $11,500, what is its total profit?    a. $0  b. $3,220  c. $1,150  d. $3,000

Accepted Answer

b. $3,220

Question 11

To create a same size analysis, calculate each line item as a percentage of ________.    a. sales  b. income  c. costs  d. profit

Accepted Answer

a. sales

Question 12

Return on Sales (ROS) is also called a(n) ________.    a. profit margin  b. operating margin  c. gross margin  d. contribution margin

Accepted Answer

a. profit margin

Question 13

Successful entrepreneurs use their financial records to prepare ________ income statements that show sales and costs for the previous period.    a. All of the above.  b. monthly  c. quarterly  d. yearly

Accepted Answer

a. All of the above.

Question 14

To see how costs are affecting net profit, try analyzing the income statement by expressing each    a. as a percentage of costs.  b. as a percentage of profit.  c. as a percentage of sales.  d. as a percentage of administrative expense.

Accepted Answer

c. as a percentage of sales.

Question 15

If you extend credit, it is critical to minimize this number to keep cash flowing.    a. inventory turnover ratio  b. debt-to equity ratio  c. collection-period ratio  d. receivable turnover ratio

Accepted Answer

c. collection-period ratio

Question 16

How would you express a ratio as a percentage?    a. multiply it by 100  b. divide it by 100  c. add a percentage sign  d. none of the above.

Accepted Answer

a. multiply it by 100

Question 17

The last line of an income statement shows a business\'s ________.    a. gross margin  b. profit or loss  c. net profit or net loss  d. gross profit or gross loss

Accepted Answer

c. net profit or net loss

Question 18

Liabilities that will be paid over a period of more than one year are ________.    a. equity  b. None of the above.  c. long-term assets  d. long-term liabilities

Accepted Answer

d. long-term liabilities

Question 19

If you invest $1,525,000 in a business and earn a return of $775,000 what is your ROI?    a. 42%  b. 51%  c. 45%

Accepted Answer

b. 51%

Question 20

Entrepreneurs use a ________ to track assets and liabilities.    a. cash flow statement  b. income statement  c. profit and loss  d. balance sheet

Accepted Answer

d. balance sheet

Question 21

Corporate, partnership, individual income tax, and __________ tax returns must be filed on time with the U.S. Internal Revenue Service.    a. state  b. local - city or county  c. self-employment  d. township

Accepted Answer

c. self-employment

Question 22

A burn rate is ________.    a. the number of months a business can survive without making sales  b. the amount of cash per month a business can spend before it runs out of cash  c. the amount of cash a business burns on rent per month  d. the number of days a business can survive without making sales

Accepted Answer

b. the amount of cash per month a business can spend before it runs out of cash

Question 23

Which of the three financial statements an entrepreneur prepares is used to guide the day-to-day operations of the business?    a. the cash flow statement  b. the income statement  c. the balance sheet  d. tax returns

Accepted Answer

a. the cash flow statement

Question 24

Because entrepreneurs do not have Social Security tax taken out of their income by their employer, they must pay a ________.    a. self-employment tax  b. sales tax  c. operating tax  d. capital assets tax

Accepted Answer

a. self-employment tax

Question 25

Orders are not entered onto the cash flow statement as cash receipts because you ________.    a. don\'t get the cash until the customer actually pays for the order  b. might get them confused with revenue on the income statement  c. will have a more accurate cash flow statement if you enter them once a month  d. might get a cancellation

Accepted Answer

a. don\'t get the cash until the customer actually pays for the order

Question 26

Why is it not a good idea to rely on your income statement to run your business?    a. The income statement records cash when it comes into the business.  b. The income statement adds non-cash expenses back to the business\'s earnings.  c. The income statement deducts non-cash expenses, such as depreciation, even when no cash is actually flowing out of the business.  d. The income statement usually contains errors that other statements don\'t have.

Accepted Answer

c. The income statement deducts non-cash expenses, such as depreciation, even when no cash is actually flowing out of the business.

Question 27

What are the two steps in making a cash flow projection?    a. projecting receipts and paying bills before they are due  b. projecting expected cash expenses and subtracting inventory cost  c. projecting cash receipts and subtracting expected cash expenses  d. projecting receipts and capital expenditures for a quarter

Accepted Answer

c. projecting cash receipts and subtracting expected cash expenses

Question 28

One of the penalties for failure to file proper wage taxes is sweeping your company bank account. What action will the federal government take?    a. cleaning out your inventory of saleable items  b. charge interest and penalties  c. taking out any available funds  d. confiscate your state business license

Accepted Answer

c. taking out any available funds

Question 29

Entrepreneurs should always ________.    a. ask to be audited by the IRS  b. pay self-employment tax  c. keep records, file returns, and pay taxes on time  d. attempt to make the highest profit possible

Accepted Answer

c. keep records, file returns, and pay taxes on time

Question 30

On your cash flow statement, you will need to ________ the amount you deducted from the income statement as a depreciation expense.    a. subtract  b. amortize  c. double  d. add back

Accepted Answer

d. add back

Question 31

Financing with earnings is an option under what circumstances?    a. A company has no debt and is growing.  b. A company is profitable and has positive cash flow from operations.  c. A company is profitable and has negative cash flow from operations.  d. A company has substantial cash savings and marketable securities.

Accepted Answer

b. A company is profitable and has positive cash flow from operations.

Question 32

A share of stock represents _________ in a company.    a. interest  b. a right to discounts on purchases  c. a concept like insurance  d. ownership

Accepted Answer

d. ownership

Question 33

High risk = high reward and conversely, low risk = low reward.    True  False

Accepted Answer

True

Question 34

Business failure is defined by Dun and Bradstreet as \"business termination ________.\"    a. with no notice  b. because of owner illness  c. with losses to creditors  d. with loss of sales in three continuous quarters

Accepted Answer

c. with losses to creditors

Question 35

If you are a small business owner looking for a loan, a bank will expect you to ________.    a. find equity investors to spread the banks risk  b. incorporate in order to maximize cash flow  c. personally guarantee that you will be responsible for the business loan  d. incorporate in order to avoid taxation

Accepted Answer

c. personally guarantee that you will be responsible

Question 36

The equity investors risk is ________ than that of the debt lender.    a. much lower  b. lower than  c. the same as  d. higher than

Accepted Answer

d. higher than

Question 37

The USDA has a long tradition of providing financial and technical assistance to __________ businesses.    a. service  b. rural and agricultural  c. manufacturing  d. sole proprietorships

Accepted Answer

b. rural and agricultural

Question 38

A rule of investment is that you always want to have your money now. If you cannot have it now, you want to be compensated with a ________.    a. return  b. profit  c. salary  d. minimum sum

Accepted Answer

a. return

Question 39

________ are forms of gifts or grants to businesses.    a. Tax abatements  b. Tax credits  c. Unpaid labor by friends and family  d. All of the above

Accepted Answer

d. All of the above

Question 40

Some federal agencies provide grants, loans, and/or loan guarantees for businesses that meet  specific criteria. One of these is the United States ________.    a. Interstate Commerce Commission (ICC)  b. Small Business Administration (SBA)  c. Federal Land Bank (FLB)  d. Agricultural Extension Agency (AEA)

Accepted Answer

b. Small Business Administration (SBA)

Question 41

If you invent something and don\'t patent it, it falls into the public domain, meaning that ________.    a. You can sell your invention publicly without paying the U.S. Patent Office  b. anyone can manufacture your invention and profit from selling it without paying the you  c. You can sell the right to manufacture the invention  d. you can save a lot of money

Accepted Answer

b. anyone can manufacture your invention and profit from selling it without paying the you

Question 42

Some contracts specify that conflicts may be settled through ________ instead of court.    a. negotiation  b. coercion  c. arbitration  d. small claims

Accepted Answer

c. arbitration

Question 43

The time period in which legal action may be taken is the ________.    a. limit of liability  b. statute of legal obligations  c. statute of limitations  d. None of the above

Accepted Answer

c. statute of limitations

Question 44

________ protects people from having property or wealth stolen, lost or destroyed. There are many kinds and in order to purchase it you pay a monthly, quarterly or annual ________.    a. Insurance/carrying cost  b. Insurance/premium  c. Insurance/dividend  d. Insurance/maintenance fee

Accepted Answer

b. Insurance/premium

Question 45

A(n) ________ is the amount of loss or damage that you agree to cover before any insurance  coverage takes over.    a. deductible  b. carrying cost  c. premium  d. co-insurance

Accepted Answer

a. deductible

Question 46

What is used to identify and distinguish the source of a service rather than a product?    a. sales mark  b. trademark  c. service mark  d. intellectual property

Accepted Answer

c. service mark

Question 47

________ insurance is designed to cover in the event that a business (its employees) fails to do something that causes harm to a customer.    a. Negligence  b. Errors and omissions  c. Product liability  d. Casualty

Accepted Answer

b. Errors and omissions

Question 48

An injured party whose rights in a contract have been breached can bring a ________ against the other party.    a. arbitration  b. motion  c. mediation  d. lawsuit

Accepted Answer

d. lawsuit

Question 49

________ insurance compensates employees for loss of income and for medical expenses due to job-related injuries.    a. Short-term disability  b. Disability  c. Injury  d. Worker\'s compensation

Accepted Answer

d. Worker\'s compensation

Question 50

Which is not a potential penalty for breaking a contract?    a. You may lose a share of the ownership of your business to the other party who signed the contract.  b. You may be sued in a court of law by the other party who signed the contract  c. A court may order you to pay damages to the other party who signed the contract.  d. It can be costly.

Accepted Answer

a. You may lose a share of the ownership of your business to the other party who signed the contract.

Question 51

Retail point-of-sales systems, restaurant menu order systems, and concert venue ticketing systems are all examples of ________.    a. custom software applications  b. industry-specific technology  c. systems for large businesses  d. indirect marketing

Accepted Answer

b. industry-specific technology

Question 52

Home-based entrepreneurs have special considerations other businesses don\'t have.    True  False

Accepted Answer

True

Question 53

If you are considering starting a business venture in your home, thoroughly investigate zoning ordinances, civic association rules, and _________.    a. the neighborhood  b. deed restrictions  c. distance from the Interstate  d. proximity to city hall

Accepted Answer

b. deed restrictions

Question 54

Which of the following is not a step in the production - distribution chain?    a. A retailer buys 6 rings  b. A consumer enters a jewelry shop and buys a ring  c. A consumer wears jewelry to work  d. A goldsmith crafts 10 rings

Accepted Answer

c. A consumer wears jewelry to work

Question 55

Organizations applying for the Baldrige Award are judged on ________.    a. customer and market focus  b. leadership and strategic planning  c. process management and human resources  d. all of the above

Accepted Answer

d. all of the above

Question 56

The three factors included in the calculation of the Reorder Point are ________.    a. demand, lead time, and safety stock  b. supply, price, and safety stock  c. demand, inventory, and price  d. supply, demand, and holding costs

Accepted Answer

a. demand, lead time, and safety stock

Question 57

The inventory method where you look at the inventory on hand, and when the stock level of an item appears to be low, you reorder is called ________.  a. basic control  b. proximal management  c. estimation  d. visual control

Accepted Answer

d. visual control

Question 58

The central focus of total quality management (TQM) is continuous improvement.    True  False

Accepted Answer

True

Question 59

A measure of quality that may be used in Total Quality Management (TQM) is ________.    a. on-time delivery  b. compliance with product specifications  c. repeat rates  d. All of the above

Accepted Answer

d. All of the above

Question 60

If the lead time for garage doors is 2 weeks, and you sell 100 doors per week, and you always want at least 20 doors in stock, what is the Reorder Point?    a. 320  b. 220  c. 420  d. 440

Accepted Answer

b. 220

Question 61

A tool that can assist an entrepreneur in time management is a PERT chart. The acronym stands for ________.    a. Process Emulation and Review Test  b. Project Estimation and Review Technique  c. Program Evaluation and Review Technique  d. Project Estimation and Results Technique

Accepted Answer

c. Program Evaluation and Review Technique

Question 62

A share of a company\'s profits paid to an investor is called a ________.    a. commission  b. stock  c. dividend  d. return

Accepted Answer

c. dividend

Question 63

Which is not an effective way to protect yourself from a wrongful termination suit brought by an employee whom you have fired?    a. I can keep documentation of all my reasons for firing the employee to prove that he/she violated company ethics or was not performing his/her duties.  b. I can conduct regular reviews of employee performance.  c. I can call upon 2 or 3 witnesses  d. I can hire a lawyer to protect me from lawsuits.

Accepted Answer

d. I can hire a lawyer to protect me from lawsuits.

Question 64

A business behavior might be legal but still not be ________.    a. invalid  b. ethical  c. wrong  d. profitable

Accepted Answer

b. ethical

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