Test Bank for Canadian Entrepreneurship And Small Business Management 12th Edition By Wesley Balders

Test Bank for Canadian Entrepreneurship And Small Business Management 12th Edition By Wesley Balderson, Peter Mombourquette, Penny Farley (All Chapter 1-14, 100% Original Verified, A+ Grade) Answers at the end of each Chapter.

Chapter 1

Student name:__________ 1) The ______ is the most important player in the building of the global economy, so much so

that big companies are decentralizing and reconstituting themselves as networks of this type of business person.

A) entrepreneur B) manager C) leader D) employee

2) Approximately 500 000 people start a business each year in Canada, and interest among

Canadians about entrepreneurship seems to be ______.

A) decreasing B) growing C) waning D) indifferent

3) The growth of small business in Canada has consistently A) surpassed the growth of the Canadian economy as a whole until the COVID-19

pandemic.

B) fallen short of the growth of larger organizations in Canada.

C) been a matter of frustration for Canadian bankers.

D) been centred in the Maritime Provinces.

4) Historically, the growth of small businesses has consistently ______ that of larger

organizations and the economy as a whole.

A) lagged B) mimicked C) surpassed D) trailed

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Chapter 1 5) The goal of social entrepreneurs is to A) create a workplace environment that is friendly and caring.

B) create social change.

C) primarily earn a profit without hurting their customers' feelings.

D) have the freedom that comes by not being an employee.

6) A ______ entrepreneur is a person who applies the skills of entrepreneurship, such as risk

taking, problem solving, and business planning, to create social change.

A) capitalist B) plutocrat C) industrialist D) social

7) Determining the number of new small businesses that are established each year A) is a matter of reviewing new business listings in the Canada.411 website.

B) is not an interesting statistic.

C) has proved to be difficult, if not impossible.

D) is a straightforward process of examining new business registration records.

8) Today, small business owners are viewed A) as people who are usually unemployable.

B) without much respect.

C) with suspicion.

D) very positively.

9) The number of small business-related courses at Canadian colleges and universities has

______ in the past few years.

A) risen dramatically B) declined C) remained the same D) risen slightly

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Chapter 1 10) Recently, both the federal and provincial governments have been working to ______ small

businesses have to manage.

A) reduce the amount of red tape or bureaucracy B) reduce the number of employees C) increase the number of employees D) increase the taxes and reporting

11) ______ can be defined as entrepreneurship within an existing organization.

A) Entrepreneurship B) Intrapreneurship C) Extrapreneurship D) Management

12) The small business community is a(n) ______ economic force in Canadian society.

A) insignificant B) irrelevant C) negligible D) significant

13) Small business owners and entrepreneurs are viewed ______ today.

A) very positively B) very negatively C) indifferently D) not very well

14) The majority of small business owners are A) employed elsewhere while running the small business.

B) single parents.

C) the managers of their business.

D) former executives in businesses in the same industry as their small business.

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Chapter 1 15) The BDC provides A) funding for all small Canadian owned start-up businesses.

B) programs for small businesses that satisfy certain criteria.

C) management support for small businesses in the manufacturing industry.

D) access to customer credit reports for small businesses before they extend credit.

16) A net operating profit of $500,000 A) is a cut off point for the small business deduction.

B) is considered a goal for start-ups to achieve in their first 5 years of operations.

C) can rarely be sustained by small business in Canada.

D) usually ensures that a small business can obtain bank financing.

17) Microbusinesses refer to A) businesses that operate in the computer industry.

B) retail businesses with only one location.

C) totally paperless businesses.

D) businesses that employ fewer than five employees.

18) Any business with less than ______ employees is considered a SME. A) 100 B) 250 C) 500 D) 1000

19) In addition to the large general increase in the number of small businesses in recent years,

more small businesses are being started by ______ people.

A) young B) old C) middle-aged D) elderly

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Chapter 1 20) Senior entrepreneurs A) are a small and stable component of Canadian small businesses.

B) refer to senior citizens who own a business.

C) are rarely successful in their business venture.

D) refer to entrepreneurs who have owned their successful business for many years.

21) Canadian small business activity is more dominant A) in sectors that are not capital intensive.

B) in the same sectors as Canadian large businesses.

C) in areas where commercial rental rates are lower than the national average.

D) in locations populated primarily by senior citizens.

22) The location of the most rapid growth in self-employment A) is expected to decline rapidly in the next few years.

B) has been impossible to determine.

C) is of little interest to motivated new small business owners.

D) has been Ontario and Alberta during the past 10 years.

23) Almost ______ percent of Canadian University students believe they will one day become an

entrepreneur.

A) 20 B) 30 C) 40 D) 50

24) Statistics Canada has found that 99 percent of Canadian SMEs would be classified as A) providing products to niche markets.

B) service or service related businesses.

C) providing health related services.

D) providing health related products.

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Chapter 1 25) The majority of innovations and inventions that society benefits from today A) were the responsibility of individuals in small businesses.

B) were developed in University research labs.

C) have been imported from countries with strong research centres.

D) were developed in large businesses with significant research funding.

26) Traditional thinking has been that A) the larger the organization, the more likely it is to dominate innovation in its industry.

B) the larger the organization, the greater its rate of growth.

C) the larger the organization, the less likely it is to succeed.

D) the larger the organization, the greater the opportunity to be more productive and

profitable.

27) Small businesses are generally able to respond A) to changes in the economy less quickly than large businesses.

B) to changes in competition at the same speed as large businesses.

C) to changes in government policies more quickly than large businesses.

D) without any long term impact to large business innovation.

28) Small business owners contribute to the communities in which they operate in non-business

ways A) if they are asked to do so.

B) to a greater extent than employees of a large corporation might do.

C) on a more limited basis than large corporations.

D) because owners of small businesses often are driven by a desire to be liked.

29) Which of these is NOT one of the six attributes of success listed by Peters and Waterman in

their study of successful corporations?

A) Unbiased Action B) Staying close to the customer C) Productivity through people D) Simple Form - Lean staff

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Chapter 1 30) Of businesses operating in Canada with less than $2 million in sales, less than one percent

are A) successful.

B) paying taxes.

C) viable long term.

D) foreign owned.

31) The current period of rapid change A) is generally believed to be almost finished.

B) is only imaginary and doesn't stand up to close scrutiny.

C) is not significant.

D) is expected to continue.

32) Computers allow the entrepreneur to A) provide customers with more attractive receipts.

B) evade charging sales tax for their products.

C) manage large amounts of information as effectively as larger businesses.

D) process more transactions than larger businesses.

33) The small business competitive environment has been mostly affected by A) the globalization of markets and big business's response to small business.

B) increasing fashion demands and the shrinkage of the middle class.

C) new product development and foreign currency rates of exchange.

D) better educated small business owners and free trade agreements.

34) ______ are an attractive market for business owners and are the largest in Canada.

A) Baby Boomers B) Generation X C) Generation Z D) Millennial generation

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Chapter 1 35) During downturns in the Canadian economy, small companies increase their focus on ______

to a greater degree than large businesses do.

A) profits B) innovation C) capital D) growth

36) It is generally felt that government regulation A) protects society's interests.

B) originally put small business at a competitive disadvantage to large business, but the

political climate seems to be improving.

C) cannot be simplified.

D) is an equal burden to most business regardless of their size.

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Chapter 1

Answer Key Test name: Chapter 1 1) A 2) B 3) A 4) C 5) B 6) D 7) C 8) D 9) A 10) A 11) B 12) D 13) A 14) C 15) B 16) A 17) D 18) C 19) A 20) B 21) A 22) D 23) D 24) B 25) A 26) D 27) C 28) B 29) A 30) D 31) D 32) C 33) A 34) D 35) B 36) B

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Chapter 2

Student name:__________ 1) Which of the following is NOT an advantage of small business ownership?

A) Enjoyment B) Limited financial rewards C) Challenge D) Skill Development

2) All of the following are disadvantages of small businesses except: A) skill development B) high levels of stress C) limited financial rewards D) people conflict

3) Which is not an advantage of small business ownership?

A) Independence B) Challenge C) Skill development D) More free time

4) The risks of self-employment include all of these EXCEPT A) income uncertainty.

B) work more than 9-5 schedule.

C) the business takes over the life of the owner.

D) guaranteed income.

5) The primary reason most people start their own business is to A) build security for their family.

B) earn large sums of money.

C) use their skills/abilities.

D) gain independence.

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Chapter 2 6) Personal characteristics of successful entrepreneurs include A) having a business degree.

B) risk taking and access to financial resources.

C) stubbornness.

D) risk taking and perseverance.

7) Entrepreneurial traits include A) risk adverse.

B) being a team player.

C) self-confidence.

D) works through others.

8) Successful entrepreneurs are sensitive to ______ in society arising from the ways consumers

experience products and to potential opportunities that result from these trends.

A) old trends B) new trends C) static ways of thinking D) uninteresting trends

9) A recent significant trend is that the greatest growth of small business start-ups come from

those who have A) family money.

B) both young and old.

C) internet programming skills.

D) interesting names.

10) Entrepreneurs are also becoming increasingly diverse with ______ percent of new businesses

being formed by recent visible-minority new Canadians.

A) 10 B) 40 C) 25 D) 70

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Chapter 2 11) Quite often, entrepreneurs tend to be A) lawyers of family owned businesses.

B) children of parents that owned their own businesses.

C) not well educated.

D) limited to people between 30 and 50 years of age.

12) Profit Magazine found that owners of small- and medium-sized businesses on average

worked A) 65 hours per week.

B) 54 hours per week.

C) 46 hours per week.

D) 40 hours per week.

13) Which of these is NOT a primary cause of small business failure?

A) Incompetence and inexperience B) Lack of financial capacity C) Management shows weakness by asking for help D) Lack of understanding financial information

14) Which of the following is NOT a major causes of business failure?

A) External shocks.

B) Owners dealing with problems quickly.

C) Downturn in the economy.

D) Lack of management experience.

15) Which successful characteristic relates to the small business being flexible and being able to

be proactive with their planning?

A) Alertness to change B) Staying close to the customer C) Ability to obtain needed capital D) Effective handling of government laws

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Chapter 2 16) Which is NOT a characteristic of a successful small business?

A) High operating expenses B) Alertness to change C) Ability to attract and hold competent employees D) Thoroughness with operating details

17) Which is not an external shock that can negatively affect small business success?

A) Changes in the economy B) Loss of suppliers C) Poorly planned expansion D) Changes in interest or currency rates

18) Which of these is NOT a specific area of managerial problems that contributes to small

business failure?

A) Failing to control costs B) Growing too quickly C) Planning poorly for expansion D) Excessive controls on management expenses

19) Entrepreneurial skills are required to A) maintain a business.

B) start or expand a business.

C) solidify existing operations.

D) sell the business.

20) Those who start their own businesses are known as founders. If the founder has expertise in

the technical or operations side of the business they are known as a ______ entrepreneur A) artisan B) promoter C) trendy D) smart

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Chapter 2 21) Managerial small business skills traits include A) creativity.

B) skills in several functional areas.

C) innovativeness.

D) risk-taking.

22) In which situation would it be the most appropriate to utilize managerial skills?

A) Generating ideas B) Maintaining control of operations C) Generating solutions to problems D) Adding new products to the line

23) Managerial skills are required in all the following areas except: A) network development.

B) team work development.

C) develop new ideas.

D) personnel.

24) Which of these is NOT an entrepreneurial trait?

A) Flexibility B) Innovativeness C) Team player D) Independence

25) Which is not one of the Ten Commandments for intrapreneur success?

A) Share credit wisely B) Come to work each day willing to be fired C) Ask for resources before asking for advice D) Honour your sponsor

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Chapter 2 26) The primary motives of an intrapreneur are A) independence, ability to advance, and gain corporate rewards.

B) promotion and other traditional corporate rewards such as office, staff, and power.

C) independence, opportunity to create, and money.

D) recognition, staff, and promotion.

27) Many large organizations realize that to remain competitive, they need to encourage A) entrepreneurial activity.

B) intrapreneurial activity.

C) risk-taking activity.

D) confidence-building activity.

28) The decision-making style of an intrapreneur is A) usually agree with those in upper management positions.

B) disagree with upper management decisions.

C) able to get others to agree to help achieve a dream.

D) follow dream with decisions.

29) The time orientation of an entrepreneur is A) short term-meeting quotas and budgets, weekly, monthly, quarterly, and the annual

planning horizon.

B) medium term (two to four years)-depending on the urgency to meet self-imposed and corporate timetable.

C) long term (15-20 year plan)-to ensure continued growth of business.

D) survival and achieving a 5-10 year growth of the business.

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Chapter 2

Answer Key Test name: Chapter 2 1) B 2) A 3) D 4) D 5) D 6) D 7) C 8) B 9) B 10) C 11) B 12) B 13) C 14) B 15) A 16) A 17) C 18) D 19) B 20) A 21) B 22) B 23) C 24) C 25) C 26) A 27) B 28) C 29) D

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Chapter 3

Student name:__________ 1) The entrepreneurial process outlined in the text includes A) management of the business.

B) finding partners.

C) developing a relationship with major competitors.

D) developing quality of life goals.

2) All businesses start with A) a large sum of funds.

B) an idea.

C) strong relationships.

D) a mature marketplace.

3) The stages in the entrepreneurial process proceed A) simultaneously.

B) in whatever order makes the most sense in the circumstances.

C) sequentially.

D) based on the entrepreneur's strengths.

4) Which is not one of the four stages of the entrepreneurial process?

A) Development of a business plan B) Determination of the resources required C) Management of the business D) Idea generation

5) A focus group involves A) asking questions to solicit participant responses.

B) focusing a group of interested consumers on a new product.

C) a discussion among lenders and customers focused on pricing and payment terms.

D) a moderator leading a group of people through an open, in-depth discussion.

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Chapter 3 6) Normally, before writing a full business plan, entrepreneurs will A) ensure that they have enough funding to be successful.

B) engage in an opportunity assessment process.

C) hire key position employees.

D) visit a banker.

7) Regarding idea generation, many traditional employers A) ask employees to withdraw from daily work and simply relax.

B) discuss with family and friends what they think they should do for their business.

C) explore their own dislikes and look for some business idea that would have

consumers doing that work.

D) ask employees to think creatively and develop new concepts.

8) Which is not a source of new ideas indicated in the textbook?

A) Lifestyles B) Occupations C) Hobbies D) Observations

9) Fans who think they can do a better job selecting plays and managing their team than paid

professionals like coaches are called A) coaching experts.

B) couch coaches.

C) armchair quarterbacks.

D) fantasy coaches.

10) Before writing a full business plan, _______ engage in an opportunity assessment process to

determine if their idea has merit.

A) intrapreneurs B) entrepreneurs C) managers D) politicians

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Chapter 3 11) Qualitative assessments look at A) non-quantitative factors.

B) how well sales are doing for a particular product.

C) market dominance metrics.

D) cash flow numbers.

12) There are six factors the text has identified as major factors to consider in a qualitative

assessment to determine if the idea for a business aligns with an individual’s goals and expectations. When asking: What type of work will the business involve? The factor the entrepreneur is considering is ______.

A) goals B) content of work C) lifestyle D) capabilities

13) There are six factors the text has identified as major factors to consider in a qualitative

assessment to determine if the idea for a business aligns with an individual’s goals and expectations. When asking: Will the hours be long or concentrated in the evenings or on weekends? The factor the entrepreneur is considering is ______.

A) goals B) content of work C) lifestyle D) capabilities

14) Two important capabilities that an owner manager ought to have are A) pleasant personality and talent.

B) industry connections and knowledge.

C) good health and expertise in the fundamentals of management.

D) public image and banking contacts.

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Chapter 3 15) A business opportunity assessment includes consideration of A) impact on the entrepreneur's home life.

B) competitive advantage.

C) the entrepreneur's ability to manage people.

D) the possibilities for family succession.

16) One of the major causes of business failure is A) unbalanced experience.

B) lack of family support.

C) wide ranging interests.

D) strong imagination.

17) The major consideration when assessing your personal goals for the business is A) happiness.

B) failure.

C) excitement.

D) income.

18) A business opportunity assessment includes all the following considerations except: A) What will your start-up costs be?

B) Who will your competitors be?

C) Where will you get your major supplies?

D) Who will be your employees?

19) Offering a totally new product is A) a sure way to succeed.

B) generally, a low-risk gamble.

C) one way to enter a market.

D) the best way to dominate a market in the long term.

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Chapter 3 20) If a business wishes to offer a product or service similar to one that is already in the market,

they should A) try to make their product of service look the same as the existing product or service.

B) forget about this idea because it rarely works out well.

C) try to compete on the basis of price.

D) try to create a competitive advantage over the existing product or service.

21) Businesses selling fad or novelty type products can succeed because these types of products A) are usually inexpensive.

B) satisfy emotional needs.

C) have interesting operating characteristics.

D) are usually packaged in an appealing way.

22) Which is not one of the three major ways of entering a market?

A) Offer a totally new product to the market B) Offer an existing product to a different market or industry C) Offer a product or service similar to those already existing in the same market D) Offer a mediocre product to an existing market

23) A _______ advantage exists when a firm has a product or service that is viewed as better

than those of its competitors.

A) complacent B) competitive C) apathetic D) noncompetitive

24) In order to be successful, a business should ensure that it has A) a monopoly position.

B) ergonomic product design.

C) environmentally friendly aspects.

D) a competitive advantage.

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Chapter 3 25) Typically, in a service business, a major factor in generating revenue is A) equipment in good working condition.

B) a suitable accounting system.

C) the expertise of the owner-manager.

D) office layout.

26) From an industry perspective, a competitive advantage can be enjoyed by an entrepreneur in

all the following except: A) Businesses or industries in which the owner’s personal attention to daily operations is essential to success.

B) Markets in which demand is small or local, making large businesses generally reluctant to pursue them.

C) Industries that do not require flexibility.

D) Businesses that are more labour intensive and less capital intensive.

27) From an industry perspective, a competitive advantage can be enjoyed by an entrepreneur in

all the following except: A) Industries that receive considerable encouragement from the government in the form of financial, tax, and counselling assistance.

B) Industries that require flexibility.

C) Businesses in which owner contact with employees is important to the motivation of staff and the quality of work done.

D) Markets in which consumer demand is large.

28) A recent report by Canadian Business suggested that future growth in the following areas

would provide a good chance for success in the future A) services for small businesses.

B) recreational campground development.

C) bookstores.

D) supermarkets.

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Chapter 3 29) Some aspects of business that are more difficult for small businesses to achieve a competitive

advantage in are A) flexibility and innovation.

B) customer service and product quality.

C) price and location.

D) innovation and location.

30) Which is not a natural advantage for a small business?

A) Innovation B) Supplier volume C) Customer service D) Product quality

31) The key to making a wise decision regarding which industry to enter and the type of business

to start is the gathering and analysis of ______.

A) social media likes B) information C) sales D) hunches

32) Two general types of information available to prospective small business owners are A) paid data and free data.

B) primary data and secondary data.

C) high-quality data and empirical data.

D) micro data and macro data.

33) Most provincial and territorial governments use _____ to assist small businesses.

A) small business consultants B) online chat facilities C) case studies D) Skype

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Chapter 3 34) Test marketing involves A) asking potential customers how much they would pay for the product.

B) putting product into an existing outlet.

C) sending surveys to a significant number of customers in the industry.

D) simulating an actual market situation.

35) Which is not a method of collecting primary data?

A) Observation B) Internet surveys C) Personal interviews D) Statistics Canada labour market surveys

36) What method of collecting primary data has become the most popular survey method in

recent years, most likely because of its low cost and quick response time?

A) Observation B) Telephone surveying C) Personal interviews D) Test marketing

37) The breakdown method refers to A) testing a product for incidence of breakdowns.

B) eliminating a demographic.

C) quality control.

D) impact of a product on customer relationships.

38) What is a method of forecasting sales where the entrepreneur identifies each target market

and estimates potential daily sales to each?

A) Breakdown method B) Balance method C) Build-up method D) Sales margin method

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Chapter 3 39) The purpose of calculating market potential is A) to arrive at a dollar or unit sales estimate for the total market.

B) to estimate the percentage of the total market potential the proposed business will

obtain.

C) to estimate the total amount of selling space in the market devoted to the merchandise the new business will sell.

D) to calculate the market share based on selling space.

40) Market share means A) the dollar volume of sales by the major business in a market.

B) the social responsibility of an industry with the communities in which it operates.

C) ease of entry into a market by a new business.

D) percentage of total market which a business controls.

41) An important part of a feasibility analysis for a manufacturing business is A) the ease of the manufacturing process.

B) the total dollars invested by owners.

C) the financial break-even point.

D) the relative newness of the product.

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Chapter 3

Answer Key Test name: Chapter 3 1) A 2) B 3) C 4) D 5) D 6) B 7) D 8) A 9) C 10) B 11) A 12) B 13) C 14) C 15) B 16) A 17) D 18) D 19) C 20) D 21) B 22) D 23) B 24) D 25) C 26) C 27) D 28) A 29) C 30) B 31) B 32) B 33) A 34) D 35) D 36) B 37) B

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Chapter 3 38) C 39) A 40) D 41) C

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Chapter 4

Student name:__________ 1) There are essentially three methods from which to choose when select the method of

establishing the business. Which of the following is NOT one of the three identify in the text?

A) Purchase a franchise B) Organize from Scratch C) Purchase an existing venture D) Organize a franchise concept.

2) Starting a business from scratch may be chosen by an entrepreneur because A) it provides a sense of satisfaction.

B) it is the most likely strategy to lead to success.

C) customers are often sympathetic to such start-ups.

D) there is lots of government funding for this strategy.

3) Starting a business from scratch can A) reduce the usual risks inherent in a new business.

B) is a proven model for surviving the first few years of operation.

C) result in the least amount of start-up costs.

D) requires a significant personal investment of money from the entrepreneur.

4) Which is not an advantage of organizing a small business from scratch?

A) The owner can personally select and train employees for the business B) The owner can develop his or her own information systems C) The owner can obtain the exact type of physical facilities they prefer D) The owner can resell existing inventory to the market

5) Advantages of organizing a small business from scratch include all the following

characteristics, except: A) defining the nature of the business.

B) identifying the competitive environment in which the business will operate.

C) clarifying the size and extent of operations.

D) inability to identify the appropriate market to offer goods/services to.

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Chapter 4 6) Organizing a new business from scratch A) eliminates the need to do significant market research.

B) often fails because of the lack of historical information.

C) is a good strategy for eliminating risk.

D) often overcomes the new owner's uncertainties.

7) When a competent feasibility study has been done by a new business owner A) it is possible to eliminate uncertainties.

B) starting a business from scratch is the most appropriate strategy.

C) demand after start-up is likely to be sufficient.

D) some uncertainties will always remain.

8) All the following are disadvantages of starting a new business, except: A) It is generally more difficult to obtain financing if projections are based on

estimates/projections.

B) A new business always has start-up problems or bugs that have to be worked out.

C) The owner can obtain fresh inventory tailored to the target market.

D) Establishing outside relationships with financial institutions, suppliers, and other key professionals is often time consuming.

9) A new business ______ has start-up problems.

A) rarely B) only sometimes C) always D) never

10) Writing a business plan is essential for A) both raising capital and helping them understand the business.

B) raising money.

C) managing the new business.

D) attracting reliable suppliers.

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Chapter 4 11) A business plan is a blueprint that helps to A) attract customers.

B) generate growth.

C) direct retail store layout.

D) keep business growth on course.

12) A business plan is of value to A) start-ups.

B) both start-ups and established businesses.

C) established businesses.

D) new business owners.

13) Which is not one of the three basic principles of the lean start-up process?

A) The summary is brought to consumers in a process referred to as customer

development, gaining feedback on the marketing mix, including customer acquisition.

B) The lean start-up process does not require a business plan as these types of businesses do not need external funding.

C) Rather than create an elaborate business plan, entrepreneurs draft a short summary about how their product or service can create value.

D) The entrepreneur engages in agile development, that is, building the product concurrently to obtaining customer feedback.

14) Which is not identified by critics as one of the disadvantages of using the lean start-up

process?

A) The potential business may struggle to get accurate feedback on unfinished products or ideas.

B) Many business analysts confirm the concept is not always appropriate for traditional small businesses.

C) The method could eliminate good ideas as there is no clear method of deciding when an idea should be removed or eliminated.

D) Research has indicated that speed to market is more important than the selection of an appropriate business strategy.

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Chapter 4 15) When a business plan is being formatted for a lender, it should: A) emphasize the entrepreneur’s security or collateral position and the cash flow

statement.

B) requires more detail to compensate for greater risk, including a thorough description of the manager’s or management team’s capabilities C) Provide emphasis on the projected rate of return.

D) be interested in knowing how to liquidate ownership interest in a few years.

16) An analysis of competitors in a marketing plan would A) consider suppliers' needs.

B) be written for investors.

C) assess legal restrictions.

D) determine who the competitors are.

17) It is recommended that business plans A) should be written by an outside consultant.

B) should be adapted from existing successful business plans.

C) should only be used when required by lenders.

D) should be written by the entrepreneur.

18) Due to the time it takes to write a plan, it is advisable to A) work on a business plan based on intuition.

B) draft sections of a business plan as information becomes available.

C) plan the preparation of your business plan.

D) work on a business plan in its entirety at once.

19) The executive summary A) is primarily for investors.

B) is primarily for management.

C) is primarily for lenders.

D) is primarily for employees.

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Chapter 4 20) A business plan should include A) location impact on industry history.

B) product failure statistics.

C) social media contact information for management.

D) industry and market forecasts.

21) What is the last component in a condensed business plan?

A) Describe the management team.

B) Plan the financing.

C) Plan the marketing approach.

D) Assess the risk.

22) What is the first component in a condensed business plan?

A) Describe the management team.

B) Prepare a table of contents.

C) Establish business objectives.

D) Assess the risk.

23) A table of contents is mainly for the benefit of outside users of the business plan.

A) outside users B) marketing department C) chief-executive -officer D) accounting department

24) Which is not a question typically addressed in the Executive Summary?

A) How will it make money?

B) What are your short-term exit strategies?

C) What advantages does the business have?

D) Why will you be successful?

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Chapter 4 25) Which is not a question typically addressed in the Executive Summary?

A) What is the business?

B) Why will you be successful?

C) What are your short-term exit strategies?

D) How is this business unique?

26) Some well-known investors insist on business owners A) with relevant industry experience.

B) with engaging personalities.

C) who are well funded.

D) who are younger than 55.

27) What is not typically included when describing the owner-manager in a business plan?

A) Qualifications B) Experience C) Education D) Family status

28) Which of these is not typically described in the Business Objectives section of a business

plan?

A) Business size B) Production levels C) Profit margins D) Performance levels

29) New laws for the most part, A) only impact management passion.

B) influence customer attraction.

C) have significant overall impact on the business.

D) change product usefulness.

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Chapter 4 30) A saturation index refers to A) the number of units of products owned by customers in the trading area.

B) the ratio of competing retail sales to competing retail space.

C) the frequency with which customers encounter products in retail outlets.

D) the age and history of a product.

31) Which of these is not one of the four major financial aspects that should be planned in

advance of opening a business?

A) Establish capital requirements and make feasibility projections B) Determine sources of funding C) Plan the accounting and bookkeeping systems D) Determine financial personnel evaluation measures

32) The personnel plan would include the A) plan for hiring, training, and managing those who will work in the business.

B) computer systems that would contain job descriptions.

C) accounting system that contains payroll information.

D) renovation required for physical facilities.

33) Business owners would consider incorporation mostly because A) they wish to limit liability.

B) it presents a more sophisticated looking image.

C) they are confused by a partnership arrangement.

D) it makes them feel successful from the beginning.

34) In a business legal structure where business decisions and actions do not require anyone

else’s consent, the business operates as a ______.

A) corporation B) sole proprietorship C) partnership D) co-operative

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Chapter 4 35) Which of the following is NOT of the elements to consider when assessing risk? The

entrepreneur should: A) indicate the potential risks to the new venture.

B) have a discussion of what might happen if these risks become reality.

C) discuss the strategy that will be employed to either prevent, minimize, or respond to the risks should they occur.

D) Rely on the federal government to provide risk assessment on the entrepreneur’s behalf.

36) Which is not a control element to measure business plan progress?

A) Inventory control B) Production control C) Customer control D) Disbursements

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Chapter 4

Answer Key Test name: Chapter 4 1) D 2) A 3) C 4) D 5) D 6) B 7) D 8) C 9) C 10) A 11) D 12) B 13) B 14) D 15) A 16) D 17) D 18) C 19) A 20) D 21) D 22) B 23) A 24) B 25) C 26) A 27) D 28) C 29) C 30) B 31) D 32) A 33) A 34) B 35) D 36) C

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Chapter 5

Student name:__________ 1) It is argued in the text that the most significant advantage of buying a business is A) it has already been registered with the authorities.

B) it has inventory.

C) it has an established image and track record.

D) to avoid being sued.

2) Which of these is not an advantage of purchasing an existing small business?

A) Established marketing structure B) Existing employees C) More opportunity to be creative D) Increased number of competitors

3) Which of these is NOT an advantage of purchasing an existing small business?

A) Lower cost B) Customers familiar with the location C) Increased startup time.

D) Finding financing dollars to buy an existing successful business is easier than finding

money to start a company from scratch.

4) According to the text, most businesses that are for sale A) are only marginally successful.

B) have valuable locations to transfer to a new owner.

C) provide a steady base on which it can be expanded.

D) have solid banking arrangements in place.

5) Goodwill A) is the process of extending credit to needy customers.

B) measures the added value of a product.

C) always exists so long as a business operates.

D) is essentially a business's favourable reputation.

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Chapter 5 6) Which of these is NOT a disadvantage of purchasing an existing small business?

A) Marginal Success Record B) Inventory may be obsolete or hard to sell.

C) The outstanding accounts may be uncollectible or at least costly and time consuming

to collect.

D) By buying an ongoing business, the entrepreneur can reduce the number of competitors operating in a market.

7) Common sources of businesses for sale include A) supermarket ad boards.

B) trade journals.

C) yellow pages (hard copy or web-based).

D) FAQ pages.

8) If a business is not listed as being for sale A) its privacy should be respected.

B) then it won't be for sale.

C) it's not worth investigating it.

D) a prospective purchaser can ask the owner if they would be interested in selling.

9) Government departments A) are not likely to be aware of business for sale.

B) are never connected with individual businesses.

C) may be aware of businesses for sale.

D) often act as brokers in connecting purchasers and sellers of businesses.

10) Which is not a common source of businesses for sale?

A) Internet B) Real estate brokers C) Community centre ad board D) Word of mouth

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Chapter 5 11) Which of the following is NOT an area which needs thorough investigating when

considering the possibility of purchasing a business?

A) The lifecycle stage of the business.

B) The degree of competition C) The state of the economy D) Legal restrictions currently affecting the operations of the business

12) The entrepreneur should ask the following questions about the owner of the business except: A) Why is the owner selling the business?

B) What type of business did the owner run prior to operating this business?

C) Will the previous owner be available—temporarily, at least—to provide assistance

and advice to the new owner?

D) Is the owner a well-known and respected member of the community?

13) When buying another business an entrepreneur should consider all the following questions

except: A) Does the purchase help your current business?

B) Are there opportunities for a reduction in expenses with the purchase?

C) Is your business ready for an expansion through acquisition?

D) How will it hurt sales of competitors?

14) The ______ of a prospective business is perhaps the most important area to evaluate.

A) Financial Condition of the Business B) Quality of Personnel C) Condition of the Assets D) External Relationships (customers and suppliers)

15) When purchasing a business, non-liquid assets A) should be considered not to have any value.

B) should be subjected to an independent appraisal.

C) should by ignored for business planning purposes.

D) should be valued at 20% of total fixed assets.

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Chapter 5 16) Strong customer relations is usually an indicator A) of a market with few competitors.

B) of a high-demand product or service.

C) of good management and employees.

D) of low pricing.

17) When considering conditions of a business’s records which of the following is NOT

something one does not need to consider: A) Credit files B) Personnel files C) Lists of competitors D) Sales reports

18) Which is not one of the four approaches to valuing a business?

A) Market Value B) Asset Value C) Equity Value D) Earnings Value

19) Market value is A) the price where demand and supply meet.

B) the lowest amount that a seller will accept in the market.

C) the average of the three most recent sales transactions in an industry.

D) the net realizable value of a business's fixed assets.

20) The times earnings method is also called A) productivity velocity method.

B) return on investment accelerator.

C) efficiency measure.

D) price-earnings ratio.

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Chapter 5 21) The purchase agreement should cover the following areas except: A) The purchase price, including principal and interest amounts.

B) Payment dates—when and to whom payments are to be made.

C) A guarantee by the sell that the business won’t fail within five years after transfer of

the business has been completed.

D) Provisions for noncompliance with conditions, including penalties for breaches of the contract.

22) An offer to purchase will most likely be made A) to the seller's CEO. B) by the buyer or through a realtor or lawyer.

C) by the buyer's banker on behalf of the buyer.

D) anonymously (until accepted).

23) Which of these provinces have not passed legislation requiring greater financial disclosure by

franchisors?

A) Manitoba B) Alberta C) Ontario D) Saskatchewan

24) One of the attractive benefits of being a franchisee is A) future income is a high certainty.

B) it can replace a lost job.

C) there is no need to learn about an industry in depth.

D) the total freedom of owning your own business.

25) According to research, traditional franchise businesses include A) hotels.

B) construction.

C) retailing.

D) soft drink bottlers.

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Chapter 5 26) The fastest growing sector in the Canadian economy is the A) service sector.

B) professional sector.

C) manufacturing sector.

D) import/export sector.

27) Under a franchising arrangement A) a franchisor owns an outlet.

B) both the franchisor and the franchisee operate an outlet.

C) a franchisee owns an outlet.

D) a franchisee develops the best system for their outlet.

28) ________ is a type of franchise.

A) Manufacturer-retailer-directed B) Wholesaler-retailer-directed C) Retailer-service depot D) Service-retailer depot

29) A franchise system can best be characterized as A) a voluntary chain.

B) a money-making machine.

C) a business excellence strategy.

D) an approach to market dominance.

30) When a manufacturer of a product grants a dealer the right to sell the product, normally in an

exclusive geographic area.

A) Manufacturer-retailer-directed franchise B) Wholesaler-retailer-directed franchise C) Retailer-service depot D) Manufacturer-directed franchise

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Chapter 5 31) Established franchises can provide A) guaranteed cash flow.

B) franchisee success.

C) instant brand recognition.

D) healthy opportunities for franchisee creativity.

32) Franchisee training is most likely to involve A) Internet research.

B) personal industry reading.

C) competitor research.

D) site visits.

33) Information about the performance of existing franchises is normally supplied by the A) franchisee.

B) bank.

C) suppliers.

D) franchisor.

34) Which is not a common franchise agreement restriction?

A) Product or service offered B) Line forcing C) Exaggeration of financial success D) Remodelling clauses

35) Which is not a potential disadvantage of franchising?

A) Proven dispute resolution methods B) Saturation of the market C) Cost of the franchise D) Lack of security

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Chapter 5 36) Which is not a typical question that a potential franchise should find answers to prior to

purchasing a franchise?

A) Does the franchisor have expertise in production, finance, and marketing?

B) Are most of the expenses of the franchise a function of the fees from the sale of franchises?

C) How many franchises are in the organization?

D) How successful is each of the members of the franchise organization?

37) A proven franchise offers A) greater opportunity and more freedom.

B) small market share and weaker competition.

C) lower risk and higher financial investment.

D) higher returns and reduced employee turnover.

38) Of the following elements, a potential franchisor should be concerned most about A) supply chains.

B) renewal and termination terms.

C) hours of business operation.

D) future Canadian/US dollar exchange rates.

39) Franchises with territorial protection A) are the most desirable.

B) are increasing in frequency.

C) are generally not possible.

D) are illegal due to non-competition laws.

40) Becoming a franchisor A) is a retirement strategy.

B) is a way of reducing one's management pressures.

C) is inevitable in a successful business.

D) is a form of entrepreneurship.

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Chapter 5 41) When setting up a business to be franchised there are several important steps. When the

franchisor develops standardized procedures to manage and monitor operations they are developing ______.

A) a prototype B) legal requirements C) a planned and standardized program of operations D) a support system

42) Converting existing chain outlets into franchises is called A) mini-franchises.

B) branchising.

C) piggybacking.

D) teamchising.

43) Future growth of franchising will A) reduce employment numbers.

B) make competition more difficult for small businesses in certain industries.

C) result in less competition.

D) lead to more monopolies.

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Chapter 5

Answer Key Test name: Chapter 5 1) C 2) D 3) C 4) A 5) D 6) D 7) B 8) D 9) C 10) D 11) A 12) B 13) D 14) A 15) B 16) C 17) A 18) C 19) A 20) D 21) C 22) B 23) D 24) B 25) D 26) A 27) C 28) B 29) A 30) D 31) C 32) D 33) D 34) C 35) A 36) B 37) C

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Chapter 5 38) B 39) A 40) D 41) C 42) B 43) B

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Chapter 6

Student name:__________ 1) Small businesses need financing A) to fund a start-up and as capital for ongoing operations.

B) to reduce the risk of losing their personal funds.

C) in order to support price competition.

D) to keep their administrative offices modern-looking.

2) Financing difficulties of small business are often A) due to bias against entrepreneurs.

B) a symptom of management problems.

C) because there are too many small businesses.

D) a symptom of small business as a cause of unemployment.

3) A common financial problem in a small business is A) an excess of personal funds.

B) punitive conditions in government grants.

C) lack of knowledge of financing sources.

D) taxation of profits.

4) One financing dilemma that entrepreneurs face is that funds are needed A) and there are often too many offers to provide funding.

B) for inclusion in local telephone books.

C) and entrepreneurs have too much in the form of personal funds to get financing.

D) for expansion as the business grows.

5) Lack of managerial competence and experience can often result in the following specific

financial problems except: A) Failure to plan for future needs, resulting in last-minute financial crises.

B) Overestimating financial requirements, leading to overcapitalization.

C) Poor financial control of operations, leading to failure in payment of loan obligations.

D) Lack of knowledge of sources of equity and debt capital, leading to either an inability to obtain funds or the failure to obtain them at the lowest cost.

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Chapter 6 6) "Cash is king" refers to the need to A) fund promotional events.

B) hire competent employees.

C) market effectively.

D) pay bills as they come due.

7) Entrepreneurs should be aware of the following issues when trying to raise capital except: A) When will the funds be used?

B) How much do you need?

C) What type of leadership strategy is the company going to leverage?

D) How long will the money last?

8) Entrepreneurs should be aware of the following issues when trying to raise capital except: A) Will HR be outsourced or a manger hired to run the HR department internally?

B) Will I get anything else besides money?

C) Do you need funds immediately?

D) What type of financing (debt versus equity) will be used?

9) For a lender or investor, it is helpful to divide required funding into two categories: A) start-up costs and ongoing operating requirements.

B) personal funds and investor funds.

C) debt funding and equity funding.

D) capital costs and start-up costs.

10) Capital requirements = Start-up costs plus Operating requirements minus A) entrepreneur's assets available for investment.

B) entrepreneur's knowledge, skills, and abilities.

C) entrepreneur's character, credit, and credentials.

D) entrepreneur's focus on competing businesses.

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Chapter 6 11) The start-up phase financing period will generally be A) two to six months.

B) one to two years.

C) one to three months.

D) two months.

12) What would most likely not be considered a start-up cost?

A) Rent deposit B) Prepaid insurance C) Licenses and permits D) Loan repayment

13) An ______ is simply a record of all projected cash inflows and outflows.

A) income statement B) equity statement C) cash flow statement D) balance sheet

14) The entrepreneur should prepare a ______ to calculate financial operating requirements after

the start-up period.

A) cash flow statement B) equity statement C) income statement D) balance sheet

15) A method of financing that allows the business to withdraw and deposit funds on an ongoing

basis as long as the total amount withdrawn, at any point in time, does not exceed the approved amount is called A) mortgage.

B) traditional bank loan.

C) personal guarantee.

D) line of credit.

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Chapter 6 16) Preparing this statement will not only help determine the amount of the owner’s funds to

invest in the business but will also probably be required by a lending institution if the owner needs to borrow the necessary capital.

A) personal net worth statement B) retained earnings statement C) income statement D) balance sheet

17) A personal net worth and capability statement A) is no one's business.

B) will usually justify borrowing.

C) is more descriptive than numeric.

D) is similar to a business balance sheet.

18) Trade credit is a form of A) cost-cutting.

B) debt financing.

C) equity financing.

D) interest payment.

19) Entrepreneurs who are pursuing a high-growth venture are much more likely to use _______

in financing their business.

A) only equity B) both equity and debt C) only debt D) only credit cards

20) Early-stage business financing for SMEs include A) seed capital and start-up funds.

B) second and third stage financing.

C) traditional acquisitions.

D) leveraged buyouts.

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Chapter 6 21) The majority of new businesses in Canada rely on A) government grant programs.

B) small business funding from a chartered bank.

C) supplier credit.

D) self-funding (personal financing).

22) The type of financing sought is likely to be dictated by A) the entrepreneur's commitment to the venture.

B) the strength of competition.

C) the type of opportunity a business is pursuing.

D) the nature of the target market.

23) Expansion or development financing is often provided by A) venture capitalist.

B) tax incentive programs.

C) provincial government aid programs.

D) social networking.

24) A disadvantage of equity financing is A) dilution of ownership interest.

B) the pressure to pay dividends.

C) the appearance of failure.

D) interest expense.

25) Small business owners sometimes use personal credit cards to A) repay bank borrowing.

B) finance the start-up phase.

C) pay employees.

D) control interest expense.

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Chapter 6 26) The informal risk-capital market refers to A) low-risk high-return business ventures.

B) handshake borrowing.

C) other businesses who will help a new entry into the market.

D) business angels.

27) When an entrepreneur solicits small investments and/or donations from the public to fund the

start-up of their company, this is referred to as A) using business angels.

B) using corporate investors.

C) crowd-funding.

D) bootstrap financing.

28) What is not a common characteristic of Canadian Angel investors?

A) Mostly Male B) Under 50 years old C) Well-educated D) Are or were entrepreneurs

29) An entrepreneur relying on personal investment including retained earnings to fund the

startup of a business is called ______ financing.

A) bootstrap B) risky C) networking D) burn rate

30) Several sources of debt financing are available to small businesses, including all the

following except: A) Private lenders B) Corporate lenders C) Angel Investors D) Government agencies

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Chapter 6 31) What is the name of the non-for-profit organization that may provide access to start-up and

growth funds to young entrepreneur who are 39 or younger?

A) Canada Small Business Financing Program B) Business Development Bank C) Futurpreneur D) Canadian Federation of Independent Businesses

32) Choosing a particular lender may be most influenced by A) friendliness and understanding of the lender.

B) the entrepreneur's experiences in a previous venture.

C) the need for privacy.

D) length of the term and the use of the funds.

33) Demand loans are usually most appropriate for A) funding inventory.

B) delivery equipment.

C) when cash flow is a problem.

D) situations where lenders and borrowers are good friends.

34) What would not be considered a long-term loan?

A) Demand loans B) Mortgage C) Bonds D) Debentures

35) A lender will want to know the following in order to assess an applicant's management

ability A) the applicant's level of knowledge about the business.

B) the applicant's personal interests and hobbies.

C) how well-liked the applicant is by their employees.

D) performance evaluations received by the applicant when they were employed.

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Chapter 6 36) "Collateral" refers to A) other business being done with the lender.

B) security given for a loan.

C) alternative sources of funding.

D) the benefits received form dealing with a particular lender.

37) What is not normally provided to potential lender in order to judge an applicant's

creditworthiness?

A) Personal Information B) Present debt and past lending history C) Will the applicant bank with the lender?

D) Amount of debt the applicant has invested

38) A business should provide a lender with the following A) sample products for the lenders own use.

B) gifts to show their appreciation.

C) up to date information.

D) personal information about employees.

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Chapter 6

Answer Key Test name: Chapter 6 1) A 2) B 3) C 4) D 5) B 6) D 7) C 8) A 9) A 10) A 11) A 12) D 13) C 14) A 15) D 16) A 17) D 18) B 19) B 20) A 21) D 22) C 23) A 24) A 25) B 26) D 27) C 28) B 29) A 30) C 31) C 32) D 33) A 34) A 35) A 36) B 37) D

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Chapter 6 38) C

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Chapter 7

Student name:__________ 1) A marketing plan is not A) a generalized document.

B) a guide for implementing marketing decision making.

C) based on a collection of marketing details for future planning.

D) an annually prepared document.

2) Most successful marketing plans are based on A) the entrepreneurs' commitment to the product.

B) secondary and primary marketing research data.

C) financial resources.

D) a scattergun approach.

3) The marketing plan should be prepared _______ production or manufacturing decisions are

made.

A) after B) at the same time as C) before D) without regard to when

4) Which is not a question that the marketing plan is designed to answer?

A) How do we get there?

B) Where have we been?

C) What resources do we need?

D) Where do we want to go?

5) Marketing plans should A) be developed from scratch each year.

B) be repeated without being redrawn if they have worked well.

C) be based on proven business intuition.

D) provide for continuity from annual plan to annual plan.

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Chapter 7 6) What is not an important characteristic of a marketing plan identified in the textbook?

A) It should be based on the hopes and dreams of the organization.

B) It should provide a strategy for accomplishing the company mission or goal.

C) It should be simple and short.

D) It should specify performance criteria that will be monitored and controlled.

7) What is not one of the facts needed for market planning?

A) What are the pricing changes in the market, who has initiated these changes, and

why?

B) What are the overall objectives of the company for the next ten years?

C) What are the market's attitudes concerning competitive products?

D) What channels of distribution supply consumers, and how do they function?

8) What is NOT one of the facts needed for market planning?

A) What are the company’s strengths and Weaknesses?

B) What are the company’s production capabilities by product?

C) Who are the users, where are they located, how much do they buy, from whom do

they buy, and why?

D) What marketing techniques are used by the most unsuccessful competitors?

9) A marketing system is A) different from a marketing plan.

B) the process by which you prepare a marketing plan.

C) identifies the major interacting components, both internal and external to the firm,

that enable the firm to successfully provide products or services to the marketplace.

D) has more to do with business management than with marketing itself.

10) In connection with marketing, an owner manager A) can do nothing to alleviate the consequences of certain external and uncontrollable

factors.

B) can do some things to effectively respond to certain external and uncontrollable factors.

C) is rarely subject to uncontrollable factors.

D) can monitor uncontrollable factors so as to avoid them.

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Chapter 7 11) Which is not an external influence of a firm's marketing system?

A) Economy B) Competition C) Technology D) Suppliers

12) Which is NOT an internal influence of a firm's marketing system?

A) Financial resources B) Legal consideration C) Suppliers D) Management team

13) A company's mission A) outlines its position in society.

B) describes the nature of the business.

C) explains what profit levels the owner hopes to accomplish.

D) reflects what customers want.

14) Which of the marketing mix P’s does this refer to: Quality of components or materials, style,

features, options, brand name, packaging, sizes, service availability, and warranties A) Place B) Product C) Promotion D) Price

15) Which of the marketing mix P’s does this refer to: Media alternatives, message, media

budget, role of personal selling, sales promotion (displays, coupons, etc.), and media interest in publicity A) Place B) Price C) Product D) Promotion

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Chapter 7 16) The textbook identifies four important marketing variables. They are A) product, price, place, and promotion.

B) preferences, policies, placement, and price.

C) positives, promotion, preconditions, and population.

D) price, promotions, priorities, and place.

17) All the following are steps in preparing a marketing plan except: A) Examine the product/service and market situation.

B) Determine the management strategies and prepare action programs.

C) Review competitors’ goals and restraints.

D) Draft the marketing plan, with steps to monitor progress of programs.

18) Situation analysis refers to A) where a business is likely to be in the near future.

B) where a business is currently.

C) where a business fits relative to its competition.

D) where a business has been.

19) Psychographic segmentation A) is based on psychological wellness in the target market.

B) is based on personality types.

C) requires psychological testing of customers.

D) is based on buyer behaviour.

20) A market segment that produces the most revenue A) is the key to maximizing profits.

B) is the most difficult to access.

C) does not necessarily produce the most profit.

D) produces the most loyal customers.

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Chapter 7 21) Consumers looking for lasting value and tangible benefits are most likely to be A) in their 20s.

B) teenagers.

C) seniors.

D) non-existent.

22) Which is not a characteristic of market segmentation noted by Lawrence Stevenson?

A) Meaningful B) Measurable C) Mutually exclusive D) Mundane

23) Which is not a way to divide the market into smaller groups based on the characteristics of

the customer and buying situation, as indicated in the textbook?

A) Demographic B) Geographic C) Physiographic D) Price sensitivity

24) The entrepreneur must be sure to include all the information from the segmentation process

and expand on it to deal with such factors as the following except: A) Demographic questions B) Competitor’s attitudes on price and quality C) Where customers want to buy the product D) Why customers buy the product

25) Which of these is not a key to establishing an effective relationship marketing program?

A) Identify the most profitable customer groups.

B) Entrepreneurs should be trying to establish long-term relationships with customers.

C) Develop products and services that are solely beneficial to the organization.

D) Focus on building relationships with customers that show the most potential to offer

profits in the future.

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Chapter 7 26) CRM stands for A) Customer Relationship Marketing.

B) Customer Recall Monitoring.

C) Customer Relationship Metrics.

D) Customer Relationship Management.

27) Generally, it is recognized that A) new customers are better sources of revenue than existing customers.

B) it costs a business more to attract than to retain a customer.

C) retaining customers can be more costly than attracting a new one.

D) new customers and existing customers represent the same financial considerations.

28) One of the best tools in customer relationship marketing (CRM) is the use of A) a database to track customer buying habits, personal information, and anything else

that is relevant.

B) a handshake to confirm that a deal has been made.

C) a personal style of customer interaction where you can call them by name.

D) secondary data to create stereotypes of individuals that fit within those categories.

29) Before developing a marketing strategy, goals and objectives should be A) creative and broadly defined.

B) consistent with the owners' wishes.

C) realistic and specific.

D) subjected to ongoing and continuous revisions.

30) Marketing goals and objectives respond to the question A) "what is our favourite way to market?"

B) "what are our goals?"

C) "who is our target market?"

D) " where do we want to go? "

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Chapter 7 31) It is a good idea to limit the number of marketing goals or objectives to between ______.

A) two and four B) six and eight C) ten to twelve D) one to three

32) Once the marketing goals and objectives are established, A) customers can start responding to the marketing effort.

B) the entrepreneur can begin to develop the marketing strategy and action plan to

achieve them.

C) suppliers will want to provide products or services to your organization.

D) investors will wish to become associated with your organization.

33) Weak signals from a monitoring process A) should be tracked until the end of the budget period.

B) should lead to modification in the existing marketing effort.

C) should lead to increase borrowing.

D) should result in terminations of poorly performing employees.

34) Well-prepared marketing plans A) should succeed as planned.

B) are not possible.

C) will likely not succeed exactly as expected.

D) will result in respectable profits.

35) Which is not a reason for the failure of a business due to its marketing plan?

A) Lack of a real plan B) Unrealistic goals C) Lack of an adequate situation analysis D) Anticipated competitive moves

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Chapter 7 36) Product deficiencies often result from A) rushing the product to market.

B) corporate sabotage.

C) poor consumer education.

D) unacceptably low pricing.

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Chapter 7

Answer Key Test name: Chapter 7 1) A 2) B 3) C 4) C 5) D 6) A 7) B 8) D 9) C 10) B 11) D 12) B 13) B 14) B 15) D 16) A 17) B 18) D 19) D 20) C 21) A 22) D 23) C 24) B 25) C 26) A 27) B 28) A 29) C 30) D 31) B 32) B 33) B 34) C 35) D 36) A

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Chapter 8

Student name:__________ 1) Marketing activities A) are sometimes overlooked by entrepreneurs.

B) are often overlooked by entrepreneurs.

C) are never overlooked by entrepreneurs.

D) are always overlooked by entrepreneurs.

2) A key element in a marketing plan is A) reflecting what the entrepreneur feels is right.

B) establishing the correct marketing mix.

C) using the entrepreneur's personal strengths.

D) emphasizing the negative aspects of the competition.

3) Creating an easy-to-use product A) is a strategy for winning industry competitions.

B) doesn't overcome unreasonable pricing.

C) is a way to create value for customers.

D) provides feelings of financial accomplishment.

4) The product or service to be offered should be designed to meet ______ demand.

A) secondary competitor’s B) the target market C) anyone’s D) unrelated target segments

5) To ensure responsiveness to consumer demand, the owner-manager should think of the

product or service in terms of the ways and extent to which it satisfies ______ needs.

A) consumer B) competitors C) a wholesaler’s D) supplier

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Chapter 8 6) Product policies should cover such all the following items except: A) quality level B) product or service depth and width C) level of service D) financial terms

7) For many small businesses, contracting with another firm to manufacture the product is

______.

A) dangerous B) advantageous C) disastrous D) uninviting

8) Which is not a phase of the product life cycle?

A) Depart B) Introduction C) Maturity D) Growth

9) Which is a phase of the product life cycle?

A) Inception B) Peak C) Maturity D) Downturn

10) Characteristics of this stage in the product lifecycle include such attributes as high expenses

and little to no sales.

A) Introduction B) Maturity C) Growth D) Decline

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Chapter 8 11) "Innovators" is used in the text to describe A) creative producers of new products.

B) new industries.

C) adaptations of existing products.

D) first customers.

12) Faster adoption rates can result from A) products that operate on both electric and battery power.

B) better delivery services.

C) good communication of a product's significant advantages.

D) good economic times.

13) Which is not a factor identified in the textbook to speeding up product adoption?

A) Complexity B) Divisibility C) Relative advantage D) Durability

14) Which is not one of the standard classification system categories of consumer products?

A) Sought after products B) Specialty products C) Convenience products D) Shopping products

15) Products that are purchased only after comparison with similar products are ______ products.

A) convenience B) unsought C) specialty D) shopping

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Chapter 8 16) Products that inspire substantial brand or product loyalty in customers are _______ products.

A) convenience B) unsought C) specialty D) shopping

17) Products that are purchased with minimal effort are _______ products.

A) convenience B) unsought C) specialty D) shopping

18) Businesses classify their products or services based on their use and the classification of

business purchases falls into seven categories. Which of the following is NOT one of those categories?

A) component parts B) raw materials C) consumer services D) accessory equipment

19) Distribution channel refers to A) the route used by a delivery service.

B) the path from producer to consumer.

C) the movement of raw materials through the production process.

D) the markets in which a company advertises its product or service.

20) When a customer may see a good online and purchase it at a store with support from the sales

associate, or a customer may see a product on TikTok and purchase it on an eBay store the type of distribution channel being used is known as _______.

A) an omnichannel B) a short channel C) a multichannel D) hybrid channel

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Chapter 8 21) This type of distribution channel involves distributing the product or service directly to the

customer or consumer A) Manufacturer to Wholesaler/Retailer to Customer B) Manufacturer to Customer C) Long-Indirect Channel D) Long-direct Channel

22) In this type of distribution channel, the wholesaler or retailer purchases the product and

resells it to another channel member or to the consumer.

A) Manufacturer to Customer B) Long-Indirect Channel C) Short-Direct Channel D) Short-Indirect Channel

23) What is a channel decision of how many distributors or dealers will be allowed to sell the

product?

A) Multi-level marketing B) Channel length C) Channel intensity D) Channel size

24) Three general bases used for pricing in a small business are A) cost, demand, and competition.

B) packaging, location, and demand.

C) ease of use, special features, and demographics.

D) supply chain, cost, and hours of operation.

25) In _____-based pricing, the major influence is the cost of producing the product for the

manufacturer, of purchasing and selling the product for the retailer, and of providing the service for the service firm (internal influence).

A) demand B) competition C) cost D) consumer

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Chapter 8 26) The pricing type that adds a percentage markup reflecting the profit objective of the firm to

costs is called A) demand-based pricing.

B) competition-based pricing.

C) cost-based pricing.

D) none of these answers are correct.

27) _____-based pricing uses consumer sensitivity to price as the major factor in arriving at the

final price level (external influences).

A) Demand B) Competition C) Cost D) Consumer

28) When price is set based on the intersection between units demanded and price offered is A) competition-based pricing.

B) cost-based pricing.

C) demand-based pricing.

D) value-based pricing.

29) Value-based pricing depends on A) undercutting the price of competitor products.

B) associating product and their benefits.

C) having loyal customers.

D) the cash flow needs of the business.

30) "Build a better mousetrap" refers to: A) product design challenges.

B) a pricing strategy.

C) marketing to demographically mixed markets.

D) attracting significant numbers of customers.

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Chapter 8 31) The common theme of all forms of promotion is A) they are all successful to some extent.

B) they are fun.

C) they all cost money.

D) they all result in generating sales dollars.

32) Traditional promotion methods A) are sometimes not feasible for start-ups.

B) are generally no longer used.

C) are usually used by small enterprises.

D) usually are not well received by the buying public.

33) Promotional themes should A) be combined to be more effective.

B) reflect responsiveness to target needs.

C) provide lots of information for the consumer to consider.

D) focus on the technical strengths of the product.

34) The percentage of sales method of setting the promotional budget A) usually results in a "good" number.

B) uses a percentage that makes the entrepreneur feel comfortable.

C) is not often used.

D) is theoretically weak.

35) What form of promotion is generating positive awareness of your company?

A) Guerilla marketing B) Search engine optimization C) Public relations D) Pay-per-click advertising

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Chapter 8 36) Email marketing is just _________ to customers via the Internet.

A) direct marketing B) online blogs C) gamification D) public relations

37) Co-op advertising A) is advertising done by a co-op form of business.

B) is advertising based on competitors agreeing to a common theme.

C) occurs when a manufacturer and a retailer share advertising costs.

D) reflects the goodwill of market leaders by not criticizing each other's products.

38) Tradeshows A) don't address decision makers.

B) are most appropriate for large businesses.

C) are expensive.

D) are cost-effective.

39) A disadvantage of radio advertising is A) there is short exposure.

B) the reach is too wide.

C) it is inexpensive.

D) it caters to a target audience.

40) An advantage of Internet advertising is A) its focus on the local market.

B) it is cost-efficient.

C) that it is personalized.

D) reaches a segmented audience.

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Chapter 8 41) Guerilla marketing refers to A) advertising that attacks competitors.

B) creative, catchy, and low-cost promotion.

C) secret marketing initiatives.

D) entrepreneurs who are hands on marketers.

42) Gamification A) refers to marketing in the gaming industry.

B) is the set of relationships between a business and its customers.

C) uses game thinking to affect behaviour.

D) is a process allowing consumers to compete for product.

43) Snapchat A) allows users to chat in real-time on their mobile devices.

B) is the description of a shared promotional campaign.

C) means that advertising content is legitimate.

D) describes a set of key objectives in a marketing campaign.

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Chapter 8

Answer Key Test name: Chapter 8 1) A 2) B 3) C 4) B 5) A 6) D 7) B 8) A 9) C 10) A 11) D 12) C 13) D 14) A 15) D 16) C 17) A 18) C 19) B 20) A 21) B 22) B 23) C 24) A 25) C 26) C 27) A 28) C 29) B 30) D 31) C 32) A 33) B 34) D 35) C 36) A 37) C

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Chapter 8 38) D 39) A 40) B 41) B 42) C 43) A

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Chapter 9

Student name:__________ 1) Which is not one of the primary users of financial information as identified in the textbook?

A) Entrepreneurs B) Lenders C) Customers D) Government

2) Financial management skills are important for a small business, as illustrated throughout the

text. But ______ frequently lack these skills.

A) business owners B) lenders C) customers D) government

3) ______ may be tempted to neglect the financial aspects of the business in favour of the day-

to-day operational aspects, such as production, personnel management, and marketing. Often this is because they have an incomplete understanding of how to manage the record-keeping system effectively.

A) Lenders B) Small business owners C) Customers D) Government

4) Accounting transactions are recorded _____ in a record called a journal.

A) chronologically B) alphabetically C) numerically D) in order of value

5) Accounting uses ______-entry recording A) double B) single C) triple D) quadruple

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Chapter 9 6) The accounting cycle consists of A) recording, classifying, and summarizing.

B) sale, collection, and banking.

C) purchasing, presenting, and selling.

D) investing, selling, and collecting.

7) Double-entry recording in accounting means that the amounts of each transaction are

recorded A) once.

B) twice.

C) three times.

D) four times.

8) The ______ keeps a running balance of the dollar amounts in each account so that the net

totals are known at the end of each period.

A) journal B) ledger C) income statement D) balance sheet

9) A ledger is a(n) A) book that records customer contacts.

B) running balance of accounts.

C) accounting record of banking transactions.

D) record of salaries and wages paid to employees.

10) The recording and classifying steps of the accounting cycle are usually referred to as ______.

A) bookkeeping B) novelkeeping C) journalizing D) recordkeeping

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Chapter 9 11) A statement of changes in financial position A) is the same as a cash flow statement.

B) presents the extent to which sales changed from the previous fiscal period.

C) presents changes in balance sheet accounts from one period to the next.

D) summarizes a business's changes in its market position.

12) Balance sheet items are generally listed in order of A) quantum.

B) age.

C) frequency of the underlying transactions.

D) liquidity.

13) Which of these best describes accounting systems?

A) Small businesses use several different types of accounting systems.

B) Most accounting systems are appropriate for many different sizes of business.

C) Affordability is the most important factor in choosing an accounting system.

D) The number of transactions are not a relevant factor when choosing a computer-based

accounting system.

14) Which of the following statements is correct?

A) Although few businesses use manual accounting systems today, some very small

enterprises may find them useful, particularly start-ups.

B) Although many businesses use manual accounting systems today, some very small enterprises may find them useful, particularly start-ups.

C) Although few businesses use manual accounting systems today, some very mid-size enterprises may find them useful, particularly start-ups.

D) Although few businesses use manual accounting systems today, some very small enterprises may find them useful, particularly when shutting the business down.

15) Outsourcing financial activities A) is dangerous because of loss of control.

B) can be less costly than doing it in-house.

C) is rarely satisfactory.

D) often is found to be too expensive for small businesses.

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Chapter 9 16) Which is not a financial activity that businesses commonly outsource?

A) Payroll B) Accounts payable C) Budgeting D) Sales

17) Small business computers systems do all the following except: A) allow for increased speed and accuracy of maintaining records B) increase operating costs C) provide more timely information to managers D) improved service to customers

18) Variance analysis refers to A) calculations of the extent of different kinds of activities.

B) degrees of tolerance limits in manufacturing.

C) an investigation of differences between budget and actual numbers.

D) understanding how a business's performance differs from that of its competitors.

19) Projected financial statements can also be called A) balancing sheets.

B) pro forma financial statements.

C) cash flow statements.

D) government required financial statements.

20) Which is not an advantage of accounting software applications?

A) Increased operating costs B) Increased speed and accuracy of maintaining records C) Improved and more timely information for managers D) Improved service to customers

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Chapter 9 21) Rate-of-return measures A) how quickly first-time customers return to a store and make a second purchase.

B) the financial soundness of a capital investment decision.

C) the sales returns and allowances experience.

D) poor credit experience indicated by returned (bounced) cheques from credit

customers.

22) Payback method measures A) the frequency with which a supplier reimburses a business for increasing its purchases

of merchandise.

B) how quickly a business repays bank financing.

C) speed of repayment of a small business's founder's original cash investment.

D) the number of years it takes for a capital investment to pay for itself.

23) The break-even point is when A) sales dollars equal the total of fixed and variable costs.

B) is the point at which all existing customer demands have been satisfied.

C) total costs do not exceed the sum of borrowed and invested capital.

D) total sales match the total sales of a business's major competitor.

24) What can also be used to help the business owner decide whether to expand the scope of

operations?

A) Variance analysis B) Break-even analysis C) Variable cost analysis D) Fixed cost analysis

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Chapter 9 25) Which of the following statements is false regarding the evaluation of financial performance?

A) Quantitative evaluation of the performance of the business is an essential

management task.

B) Many small business owners rely on their accountants to look after the financial end of the business because they lack the financial knowledge themselves.

C) An accountant may be essential for preparing year-end financial statements, but few small businesses can afford ongoing financial management advice from this source.

D) The small business owner will never need to acquire a basic working knowledge of some key financial evaluation components of the business.

26) An income statement can show a profit A) as long as sales prices are greater than cost to produce.

B) even though a business's cash position may have deteriorated.

C) if selling prices remain competitive.

D) in times of increasing demand.

27) What type of accounting system is used in which a transaction need not involve a case

transfer to be recorded?

A) cash-based B) cheque-based C) accrual-based D) break-even-based

28) Which of the following is NOT an essential component regarding the cash position of a

business?

A) Time taken to pay accounts payable B) Time taken to sell inventory C) Time taken to receive payment for inventory D) Time taken to pay accounts receivable

29) Financial ratios are A) helpful for isolating and analyzing weaknesses in a business.

B) used to define management responsibilities.

C) usually not meaningful because businesses differ from one another.

D) mostly used by lenders.

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Chapter 9 30) Productivity ratios measure A) total manufacturing output.

B) quality of life.

C) employee satisfaction.

D) efficiency.

31) Inventory turnover refers to A) the need to replace old inventory with fresh product.

B) the frequency with which new models are brought to the market.

C) number of times inventory is sold in a year.

D) customer handling of merchandise on display frequency in a retail operation.

32) The expense ratio is A) expense item divided by sales.

B) expenses divided by equity.

C) expenses divided by profit.

D) expense item divided by assets.

33) What is net profit before tax divided by owner's equity?

A) Gross margin B) Quick ratio C) Debt ratio D) Return on Investment

34) What is calculated by the formula sales minus cost of goods sold?

A) Gross margin B) Quick ratio C) Debt ratio D) Return on Investment

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Chapter 9 35) What is calculated by the formula accounts receivable divided by daily credit sales?

A) Sales ratio B) Collection period C) Inventory turnover D) Liquidity ratio

36) One key advantage of offering credit is A) it is a social responsibility to operate a business.

B) interest on overdue accounts is a major source of income.

C) it creates sales volume which can then be used to borrow more funds from a bank.

D) it results in increased sales.

37) Which is not a disadvantage of offering credit listed in the textbook?

A) Bad debts B) Competitors for credit C) Slow payers D) Increased administrative cost

38) A credit collection policy is likely to include A) forced jail time if debts are not paid.

B) physical intimidation after customer refusals to pay.

C) various actions to be taken after a debt has been outstanding for 30, 45, 60, 75, or 90

days.

D) public announcements which identifies the customer who has refused to pay their debt.

39) Credit cards and online banking A) are not favoured by small business due to bank charges.

B) surpass the use of cash and cheques in Canada.

C) depend on the belief that cash on hand is at high risk for in-store robbery and theft.

D) are universally used by consumers of all ages.

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Chapter 9 40) Fees from credit card companies are usually from ______, depending on volume.

A) .5 to 1.0 percent of sales B) 1.5 to 3.0 percent of sales C) 2.5 to 8.0 percent of sales D) 4.0 to 10.0 percent of sales

41) Credit bureaus are used to A) evaluate customers before granting them credit.

B) obtain borrowed funds.

C) build a new business's reputation.

D) justify bank borrowing.

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Chapter 9

Answer Key Test name: Chapter 9 1) C 2) A 3) B 4) A 5) A 6) A 7) B 8) B 9) B 10) A 11) C 12) D 13) A 14) A 15) B 16) D 17) B 18) C 19) B 20) A 21) B 22) D 23) A 24) B 25) D 26) B 27) C 28) D 29) A 30) D 31) C 32) A 33) D 34) A 35) B 36) D 37) B

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Chapter 9 38) C 39) B 40) B 41) A

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Chapter 10

Student name:__________ 1) Entrepreneurs are typically A) strongest in marketing.

B) weakest in production management.

C) equally talented in production, marketing, and financial management.

D) weaker in areas of marketing and financial management than in managing the

production process.

2) Operations management is one area in which many small business owners have ______.

A) their greatest weakness B) their greatest strength C) no real competitive advantage D) limited skill sets

3) Areas of quality control that mangers struggle with include all the following except: A) Cash flow B) Creativity C) Physical facilities issues D) Product costs

4) The production process involves the conversion of inputs, all of the following are inputs

except: A) Money B) People C) Services D) machines

5) The owner-manager's task is to A) maximize production to utilize 100% of the business's capacity.

B) produce goods as quickly as possible.

C) organize production so as to produce goods efficiently.

D) ensure that production satisfies its customers' demands.

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Chapter 10 6) PERT is: A) production evaluation and revision tasks.

B) priority evaluation and review technique.

C) production evaluation and revision technique.

D) performance evaluation and review technique.

7) TQM is A) a small business certification of environmental compliance.

B) a philosophy of management focused on problem-solving and control.

C) a process of technical quality methodology.

D) a traditional method of product pricing.

8) ISO 9000 is A) able to provide an effective marketing hook.

B) a cost-cutting strategy.

C) a regulatory standard for global shipping practices.

D) an International Scheme of Organization for owner-managed businesses.

9) Management must make sure that physical facilities A) do not harm their public image.

B) are efficient and up to date.

C) match their competitors' facilities.

D) provide a pleasant work space.

10) Which of these site factors are of minimum importance for a manufacturing business?

A) Setback and window space B) Space and access C) Frontage and access D) Building exteriors and floor space

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Chapter 10 11) Which of these site factors are of critical importance for a service business?

A) Parking and configuration B) Surroundings and stairways C) Utilities and expansion potential D) Age and expansion

12) For retailing firms, which aspects of building improvement potential are critical?

A) Surrounding area B) Streets and walks C) Expansion D) Frontage and age

13) The interior layout of facilities can A) dictate marketing strategies.

B) determine staffing needs of the financial management area.

C) impair the budget process.

D) greatly enhance productivity.

14) Compared to product layouts, process layouts usually A) are used in single-product manufacturing environments.

B) are more modern.

C) are more expensive and require more management time to ensure efficiency.

D) result in greater sales of product.

15) Process layouts are based on the premise that A) it is more efficient for products to move back and forth to processes.

B) it is more efficient for processes to move back and forth to product areas.

C) segregating processes is more important than outsourcing.

D) outsourcing processes is more cost effective than purchasing equipment for use in-

house.

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Chapter 10 16) Product layout provides for economies of A) scale and labour.

B) volume and production.

C) time and space.

D) cost and time.

17) Production processes move to the product in A) process layout.

B) fixed-position layout.

C) small factories.

D) high-tech industries.

18) According to the textbook, which of these is not one of the key areas to consider in planning

the interior of a manufacturing plant?

A) Location of utility outlets for machines B) Adequate lighting capability throughout C) Grid layout plan D) Safety aspects

19) According to the textbook, which of these is not one of the key areas to consider in planning

the interior of a manufacturing plant?

A) Provision for easy plant maintenance B) Provision for cleaning C) Location of receiving and shipping areas for raw materials D) Location of receiving and shipping areas for unfinished goods.

20) What type of production process would be used when manufacturing an airplane?

A) Product layout B) Process layout C) Fixed-position layout D) Grid layout

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Chapter 10 21) Different areas in a retail store A) should be equally accessible.

B) differ from one another in terms of productivity.

C) are more or less comfortable for customer shopping purposes.

D) all contribute equally to income.

22) Free-flow layout refers to A) a layout that gives customers more time to browse.

B) retail stores that do not charge for shopping carts.

C) a layout strategy often used in car dealerships.

D) a design strategy that is available for free to download from the Internet.

23) Keys to creating effective window displays include all the following except: A) Layering B) Storytelling C) Boldness and innovation D) Display commonality

24) For purposes of layout guidance A) service firms are considered to be manufacturing operations with a retail customer

base.

B) service firms can be classified into a standard format.

C) service firms mostly use the free flow strategy.

D) service firms tend to be so diverse that it is not possible to provide standard information.

25) Retail store product placement requires A) determining profit contribution and customer preferences.

B) charging premiums to suppliers.

C) ranking profitability and identifying high traffic areas.

D) municipal guidance by way of safety by laws.

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Chapter 10 26) Critics of what firm contend that store layouts are designed to ensure people spend more time

shopping and therefore could spend more than they originally planned?

A) IKEA B) Real Canadian Superstore C) Home Depot D) Costco

27) Successful retail layout starts with creating appropriate A) simplicity.

B) window displays.

C) classification of merchandise.

D) allocation of selling versus non-selling space.

28) The space at the front of a retail store is referred to as the A) storytelling zone.

B) layering area.

C) grid layout.

D) threshold or decompression zone.

29) Which of these is not one of the keys to creating effective window displays?

A) Boldness and innovation B) Display variety C) Minimalism D) Storytelling

30) In a small business, inventory management is important because A) generally there are limited economic resources.

B) customers will stop coming in to make purchases if the inventory is not well-

managed.

C) otherwise employees will not be happy.

D) inventory variety is usually the key to success.

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Chapter 10 31) Which is not a place where small businesses purchase their inventory?

A) Manufacturer B) Wholesaler C) Customer D) Retailer

32) Although sources vary considerably among industries, most small business owners purchase

their inventories from wholesalers.

A) Manufacturers B) Wholesalers C) Agents D) Retailers

33) Which is generally not one of the criteria used by small businesses to evaluate suppliers?

A) Services offered B) Cost C) Dependability D) Personability

34) Order lead time refers to A) the length of time before needing to reorder inventory items.

B) the length of time taken to process an order and transport the item(s).

C) the length of time before a customer wishes to have goods delivered.

D) the length of time before competitors begin to stock a specialty item.

35) What does JIT stand for?

A) just-in-time.

B) just-in-threshold.

C) judged-in-tolerance.

D) just-in-tolerance.

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Chapter 10 36) A-B-C analysis refers to A) an inventory analysis system that tracks Alternative Buying Choices.

B) management's analysis of Active Buying Customs in their industry.

C) Activity Based Cost allocation in a retail store.

D) an inventory management system which evaluates the efficiency with which products

A, B, and C are managed.

37) Shrinkage describes A) reducing inventory levels due to sales without replacement of stock.

B) decreasing purchasing power of sales dollars.

C) loss of inventory.

D) increasing inadequacy of floor space as volume increases.

38) What unit of control is suitable for firms with large amounts of inventory at a relatively low

per-unit value?

A) Dollar inventory control B) Per unit inventory control C) ABC analysis D) Minimum-turnover method

39) Which of the following is NOT an example of a policy that would ensure a successful

relationship with a supplier?

A) Define clear, identifiable, and measurable objectives for your supplier management strategy.

B) Be prepared to work with the supplier to identify and define the roles that each will perform.

C) Evaluate suppliers regularly, with an objective, standardized framework that is both quantitative and qualitative.

D) Do not attempt to employ technology to share data relating to forecasting.

40) Which is not a component of supply chain management?

A) Movement and storage of raw material B) Finished goods from the point of origin to the point of consumption C) Work-in-process inventory D) Labour availability in local area

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Chapter 10

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Chapter 10

Answer Key Test name: Chapter 10 1) D 2) B 3) B 4) C 5) C 6) B 7) B 8) A 9) B 10) A 11) C 12) D 13) D 14) C 15) A 16) D 17) B 18) C 19) D 20) C 21) B 22) A 23) D 24) D 25) C 26) A 27) B 28) D 29) C 30) A 31) C 32) B 33) D 34) B 35) A 36) D 37) C

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Chapter 10 38) A 39) C 40) D

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Chapter 11

Student name:__________ 1) No matter what size your business is, a major key to success is ______.

A) Multiple suppliers for every SKU you sell.

B) getting the right people to work with you.

C) Having a salesforce.

D) Having a chartered account manage your books.

2) It is a commonly held belief that HR fundamentals A) apply only to larger organizations.

B) are mostly a matter of intuition.

C) are never of much value.

D) are applied mostly to please the market.

3) Regardless of the size of business, not focusing on HR often results in problems for the

business except: A) frequent turnover of staff B) frequent grievances C) lack of motivation and initiative D) low absenteeism

4) Employees in small companies A) generally feel unsatisfied.

B) are more likely to rate their workplace as "good."

C) do not usually have close relationships with the business owner(s).

D) usually want to be owners.

5) Eventually most successful small business owners A) learn how to manage their successful business on their own.

B) find that their workload tends to diminish.

C) manage to transition to the new business levels without too much difficulty.

D) develop a management team.

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Chapter 11 6) A recent survey found that 91 percent of small business owners A) increased the time and money invested in employee labour management.

B) decreased the time and money invested in employee labour management.

C) believe training is important to grow their business.

D) decreased the time and money invested in employee training.

7) If an employee fails, then it is ultimately the responsibility of A) society.

B) fellow workers.

C) the person who hired them.

D) the educational system.

8) The cost of a poor hiring decision to a company’s bottom line is a net loss of ______ times

that person’s annual salary.

A) one to three B) two to four C) two to six D) three to five

9) Having (or creating) a strong ______ will help small business owners avoid poor hiring

decisions and ensure they have productive and engaged people working for them.

A) human resources plan B) leader C) accounting system D) purchasing methodology

10) Personnel requirements A) generally reflect customer preferences.

B) are often developed as part of a feasibility analysis.

C) are dependent on available labour force.

D) cannot be planned for.

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Chapter 11 11) Questions to consider in a human resources plan include all the following except: A) How many employees the company will require currently.

B) How much to pay for bookkeeping services.

C) What training programs will be provided.

D) How and how much employees will be compensated.

12) The first steps in planning for personnel is to determine al the following except: A) the number of jobs or tasks to be done.

B) the shift schedules.

C) the level of expertise required.

D) when coffee breaks should be.

13) The second step in personnel planning is to integrate tasks and employees so that the owner

can visualize how the different parts of the plan will work together. This formalized plan is commonly called an ______ A) HR plan.

B) organizational chart.

C) people person plan D) management chart.

14) Job descriptions should include A) job titles, pay scales, and pension arrangements.

B) a questionnaire to determine an employee's thinking.

C) a history of why previous personnel have failed in the position.

D) what is to be done, how it is to be done, and why it is to be done.

15) According to a CFIB study, the most common methods of recruitment for small businesses

were A) referrals from friends and employees.

B) hiring from other businesses.

C) media ads.

D) government agencies.

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Chapter 11 16) For most organizations the most common course of action when filling vacancy is to

recruit______.

A) via employee referrals B) via social media C) from within D) using employment agencies

17) Which is not an advantage of hiring workers from educational institutions?

A) Bring new ideas B) Are innovative C) Have lots of experience D) Help identify new opportunities

18) Checking of references for job applicants is considered A) to be a screening device.

B) to be an invasion of privacy.

C) to be generally unreliable.

D) to be a waste of time.

19) A helpful tool in employment interviewing is A) reference checking.

B) an interview guide.

C) an application form.

D) employment tests.

20) Offers of employment should include A) a request for a convenient start date from the employee's point of view.

B) an advance on salary.

C) terms and conditions associated with the job.

D) a request for vacation dates.

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Chapter 11 21) Don't assume that a candidate is telling the truth; a major HR firm notes that _____ percent

of job applications contain a major falsehood.

A) 15 B) 20 C) 25 D) 35

22) All the following should be done for new employees except: A) introduced to co-workers.

B) shown the locations of employee facilities.

C) discouraged to ask for additional information as needed.

D) informed of any company regulations.

23) Most employers find it advantageous to use a probationary period of _____ for new

employees.

A) two to three months B) two weeks C) three to six months D) six to twelve months

24) ______ is the most frequently used method by small businesses.

A) Formal classroom training B) On-the-job training C) Just-in-time (jit) training D) Informal classroom training

25) Leadership experts claim that A) good leaders put their own interests first in order to be fully dedicated.

B) leaders are born and cannot be taught.

C) leadership can be learned.

D) experienced leaders are careful not to give away decision making to others.

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Chapter 11 26) Time management in a small business is difficult because A) owner managers have personal obligations as well as their business obligations.

B) there are many operating crises in the normal course of a day.

C) there are no basic time management concepts to be applied.

D) most owner managers really don't care too much about time management.

27) _____culture is the blend of values, attitudes, behaviours, dress, and communication styles

that make one business different from another.

A) Organizational B) Entrepreneurial C) Management D) Institutional

28) If an employee is engaged, they do all the following except: A) work hard.

B) are creative.

C) enjoy their work.

D) hardy work.

29) Small business owners face ______ competition from large companies and even government

in paying employee wages.

A) some B) stiff C) little D) not much

30) Examples of fringe benefits include all the following except: A) bonuses B) profit sharing C) stock options D) salary

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Chapter 11 31) The components of the PRICE system of employee evaluation include A) pinpoint, coach, and evaluate.

B) perform, report, and implement.

C) involve, create, and evaluate.

D) perfect, reexamine, and illustrate.

32) All of the following are principles for effective grievance management except: A) Implement a precise method whereby employees can express grievances.

B) There should be a maximum amount of red tape in processing complaints.

C) Owner-managers need to understand that some employees may be hesitant to raise a

concern directly.

D) Employees need assurance that expressing their concerns will not jeopardize nor prejudice their relationship with the employer.

33) Which is not required when terminating an employee?

A) Justifiable reasons for the termination provided B) Notice of two weeks provided C) Appropriate severance and vacation pay provided D) Documentation completed such as record of employment

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Chapter 11

Answer Key Test name: Chapter 11 1) B 2) A 3) D 4) B 5) D 6) C 7) C 8) B 9) A 10) B 11) B 12) D 13) B 14) D 15) A 16) C 17) C 18) A 19) B 20) C 21) C 22) C 23) C 24) B 25) C 26) B 27) A 28) D 29) B 30) D 31) A 32) B 33) B

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Chapter 12

Student name:__________ 1) In Canada, employment standards are established A) by self-managed industries.

B) by public referendum.

C) by common practice.

D) at the Federal, Provincial and Territorial level.

2) What level of government offers the following training and employment programs? Job entry

and innovation programs A) Federal B) Provincial C) Both Provincial and Federal D) Territorial

3) What is the employee accident and disability program required under provincial or territorial

law?

A) Wage Subsidy Program B) Workers' Compensation C) Employment Standards D) Code of Human Rights

4) What level of government is responsible for such areas as licensing, zoning, hours of

operation, and building codes?

A) Federal B) Provincial C) Territorial D) Municipal

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Chapter 12 5) Employers deduct government required amounts from employees and A) hold them in trust until the employee leaves their employment.

B) invest these funds in a deferred profit-sharing plan.

C) must then remit these amounts to the government (Receiver General) on a prescribed

form.

D) disburse the total withheld from each employee prior to the employee's annual vacation.

6) Owner-managers collect income tax on behalf of the government and remit them to A) Canada Revenue Agency.

B) their auditors.

C) the Receiver General.

D) Canada Pension Plan.

7) At the end of each calendar year, employers must issue a _____ to each employee.

A) T1 B) T2 C) T3 D) T4

8) An increasing number of small businesses have found it cost effective to hire another firm to

handle the payroll function. This process is called A) outsourcing.

B) employee leasing.

C) right-sizing.

D) supply chain management.

9) Contract employees are A) not employees of the company.

B) employees of the company.

C) the same cost as regular employees.

D) not a legal option for manufacturing concerns.

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Chapter 12 10) Compared to business and property taxes, income taxes A) can be more complicated.

B) are less subject to interpretation.

C) only have a minimal impact on cash flow.

D) are straightforward to calculate.

11) For tax purposes a business's income refers to A) the business's total cash receipts.

B) profits the business makes.

C) total sales by the business.

D) the owners' salaries.

12) Tax planning will address the issue of A) executive loans.

B) cash flow.

C) bank borrowing.

D) inadequate sales.

13) One of many factors concerning small businesses is A) total tax burden.

B) provincial labour laws.

C) workers' compensation.

D) government debt.

14) When a business has no tax liability, this means that it is A) making large profits.

B) claiming more deductions than it should.

C) losing money.

D) not filing income taxes regularly.

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Chapter 12 15) Which province or territory does the textbook indicate that they collect their own corporate

taxes?

A) Alberta B) Manitoba C) Nova Scotia D) Nunavut

16) The following are fundamental areas of tax management A) tax deferral, continual tax planning, and legal liability.

B) personal world income, depreciation, and marginal tax rates.

C) income splitting, marginal tax rates, and deductibles.

D) tax funding, owners' equity, and total external debt.

17) The following are fundamental areas of tax management A) tax deferral, continual tax planning, and legal liability.

B) personal world income, depreciation, and marginal tax rates.

C) capital gains, marginal tax rates, and GST or PST and HST. D) tax funding, owners' equity, and total external debt.

18) Individuals operating proprietorships and partnerships are required to remit _____

instalments for the taxes they incur.

A) monthly B) quarterly C) semi-annual D) annual

19) Tax deferrals are A) an unwritten rule of tax management.

B) considered illegal.

C) a sign of poor corporate citizenship.

D) considered unethical but legal.

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Chapter 12 20) The tax system for individuals in Canada is a(n) _____ system whereby a higher taxable

income results in a higher percentage tax liability.

A) unfair B) regressive C) progressive D) stable

21) What allows the owner-manager to calculate the after-tax effects of extra income and

expenses?

A) Total tax rate B) Tax deferral C) Deductibles D) Marginal tax rate

22) Entrepreneurs often purchase club memberships in order to meet customers.

A) Such memberships are deductible as "business entertaining."

B) Such memberships are not deductible.

C) It is illegal to meet customers in a private club.

D) It is better to buy such memberships for good customers.

23) SBD stands for A) Small Business Development Act. B) Small Business Directors' Liability Program.

C) Small Business Design Initiative.

D) Small Business Deduction.

24) Payments into deferred profit-sharing plans A) represent an alternative to vacation pay.

B) are not deductible to the company.

C) are taxable to the employee only when received.

D) can include dividends declared but not yet paid.

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Chapter 12 25) Which is not a tax deferral program?

A) Registered retirement savings plan B) Bonus deferral C) Tax-free savings account D) Capital gains

26) An increased depreciation rate is A) not allowed.

B) available to start-up businesses when needed to reduce income taxes owing.

C) only available in an election year.

D) allowed under a government accelerated capital cost allowance program.

27) The federal tax rate for incorporated businesses is A) 16% on the first $50,000 of profit.

B) about 11%.

C) always the same as an individual's personal tax rate.

D) a deterrent to new ventures.

28) In a proprietorship or partnership, payment to the owner is treated as A) salary expense for the business.

B) bonus payments to the owner.

C) a corporate dividend.

D) a drawing from the business and is not a deductible expense.

29) Currently, CRA allows how much of a lifetime capital gains exemption on the shares of a

small business corporation?

A) $500,000 B) $750,000 C) $800,000 D) $1,000,000

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Chapter 12 30) If the small business has sales of less than _____ per annum, no GST or HST collection and

remittance is required.

A) $25,000 B) $30,000 C) $50,000 D) $100,00

31) Value added taxes A) are levied on sales revenue.

B) are levied on profits.

C) are of little worry to small businesses.

D) are based on customer credit terms.

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Chapter 12

Answer Key Test name: Chapter 12 1) D 2) C 3) B 4) A 5) C 6) C 7) D 8) A 9) A 10) A 11) B 12) B 13) A 14) C 15) A 16) C 17) C 18) B 19) A 20) C 21) D 22) B 23) D 24) C 25) D 26) D 27) B 28) D 29) C 30) B 31) A

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Chapter 13

Student name:__________ 1) Success and growth can A) make a business more difficult to manage.

B) lead to streamlining and simplifying the management of a business.

C) help to overcome complexity.

D) make life as an owner manager simpler and more enjoyable.

2) Effective planning for the future of a business requires A) total sales revenue equal to equity invested times a factor of ten.

B) an understanding of the life cycle of the business.

C) the use of regional development plans for the business's market area.

D) connection with lenders.

3) An acknowledged advantage of a larger growing business is A) more influence in the industry.

B) more social contacts in the owner's community.

C) more comfortable corporate offices.

D) earning potential of the growth business is much more significant

4) Two distinctions between a small and large business are A) employee morale and customer satisfaction.

B) more attractive window displays and speedier delivery of merchandise.

C) higher volume and larger transactions.

D) quality of life for employees and technology infrastructure.

5) Which is not what owner-managers should do to try to ensure long-term viability early in the

life of the business?

A) Need to understand the life cycle of the business B) Be aware of some of the more common growth problems a business is likely to face C) Take specific steps in planning for growth of the business D) Ensure the location infrastructure is suitable for long-term needs of the business

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Chapter 13 6) Which is not a challenge of growing a business?

A) Requiring more time and energy of the owner to manage the business B) Raising capital more C) Attracting and retaining quality employees D) Building an asset out of the business that can be sold for lessmoney

7) To avoid the pitfalls of growth and changes in the market, which of these is NOT suggested

that owner-managers do to ensure long-term viability early in the life of the business?

A) Owner-managers need to understand the life cycle of the business to effectively plan for the future.

B) Owner-managers should find creative ways to avoid paying taxes to suppliers and the government.

C) Owner-managers should be aware of some of the more common growth problems a business is likely to face.

D) Owner-managers should take specific steps in planning for the growth of the business.

8) The business cycle and the product life cycle A) are similar to one another.

B) are always different.

C) are never determinable.

D) are of little value to know.

9) Which of the following statements is false regarding the Business Cycle?

A) The vertical axis represents the growth index, usually measured by gross sales,

market share, or profitability.

B) The vertical axis represents the growth index, usually measured by gross sales, market share, or profitability.

C) Many small businesses take several years to move through the life cycle, while others pass through all four stages within a couple of years.

D) A longer life cycle is common in high-technology industries.

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Chapter 13 10) The start-up stage of a business is known for its A) expansion of product lines.

B) growth characteristics.

C) level sales results.

D) low profits.

11) The owner's role tends to be more technical and entrepreneurial in this stage of the business

cycle.

A) Introduction B) Growth C) Maturity D) Decline

12) Which of the following statements is false, regarding the Introduction Stage of the Business

Cycle?

A) It is characterized by expenditures made for both product development and

introductory promotion.

B) Stage 1 also usually includes a narrow market, a very limited product line.

C) The owner’s role tends to be less technical and entrepreneurial in this stage.

D) Stage 1 usually includes involvement in most aspects of the business by the ownermanager.

13) Most high-growth firms indicate that this is the stage of the business cycle at which the most

severe cash flow problems occur in.

A) Introduction B) Growth C) Maturity D) Decline

14) At the end of a growth stage A) a business will need to make changes in its business strategy.

B) a business will have significant cash balances on hand.

C) a business will be able to coast along without entering a decline stage.

D) a business will not have any competition.

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Chapter 13 15) A business can become more competitive by A) improving its factory decor.

B) adding new products or expanding to new markets.

C) lowering cost prices in order to increase sales.

D) firing employees.

16) Which of the following statements is false regarding the Growth Stage of the Business

Cycle?

A) Growth, is usually characterized by the establishment of a market share.

B) Growth, is usually characterized by expansion of the product line or markets.

C) During this period, sales grow at an decreasing rate.

D) Growth may also take the form of internal or external expansion, such as a merger or

franchising.

17) Which of the following statements is false regarding the Maturity Stage of the Business

Cycle?

A) Stage 3 is characterized by a levelling of sales because of increased competition B) Stage 3 is characterized by a levelling of sales because of an increase in demand.

C) Out of necessity the strategy of the business is to become more competitive.

D) At this stage the business may expand to new markets, or adjusts or improve existing

products in some way.

18) In what stage of the business life cycle does the owner's responsibility become much more

managerial?

A) Introduction B) Growth C) Maturity D) Decline

19) In the decline stage of a business A) sales may decline but profits usually remain constant.

B) involves a decrease in both sales and profits.

C) sales may increase for a while but profits decline steadily.

D) nothing can be done to halt the decline.

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Chapter 13 20) A business can become more competitive by A) improving its factory decor.

B) adding new products or expanding to new markets.

C) lowering cost prices in order to increase sales.

D) firing employees.

21) Which of the following is NOT part of the reflection required to see if the business can

grow?

A) A preliminary step in dealing with the question of growth is to evaluate whether the

product or business is one that can grow.

B) Restricted markets or products that have volume production restrictions are easy to break out of and therefore may offer limited opportunities for expansion.

C) A main factor in ascertaining growth potential in rapidly changing industries is the ability of the entrepreneur to be able to understand changing circumstances, recognize what course they must follow to avoid obsolescence D) Can make the required changes so that they not only continue to meet the needs of their current customers, but also attract the new market required for growth.

22) Before choosing to grow it is important to determine A) whether the product can grow in sales.

B) if competitors will permit the business to grow.

C) how much it will cost to terminate employees if growth doesn't happen.

D) if customers will support the initiative.

23) The owner-manager should assess whether all the following factors are needed except _____

to deal effectively with growth.

A) capital B) labour C) expertise D) suppliers

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Chapter 13 24) The owner-manager should assess whether the needed _____ can be obtained to deal

effectively with growth.

A) cash, interest, and products B) capital, labour, and expertise C) time, energy, and commitment D) inputs and outputs

25) All the following ways can help the owner-manager pursue growth except: A) Pursue new markets for the product or service.

B) Decrease sales of existing products or services by increasing the frequency of use.

C) Add new products or services or modify existing ones to increase sales.

D) Find new uses for the product or service and promote these uses to the market.

26) Which is not a common strategy for pursuing growth?

A) Find existing uses for the product or service B) Add new products or services C) Acquire other small companies D) Increase sales of existing products or services

27) All the following statements are true regarding planning for growth except: A) A growth or strategic plan is a blueprint of future actions.

B) Planning is an essential but often overlooked part of management.

C) Some small business owners want to expand but don’t create a full plan or completely

understand the market, learning as they go instead.

D) Planning can be easy when most small business owners feel snowed under by the daily operations and often think planning is a nuisance.

28) When it comes to growth, management often A) injects their personal funds to finance growth.

B) puts more merchandise on the shelves and hopes for the best.

C) seeks guidance from suppliers for growth strategies.

D) overlooks the importance of planning.

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Chapter 13 29) Which of the following statements is incorrect regarding a business’s expansion plan?

A) The first step in the planning process is to set the objectives the business is to

accomplish.

B) The second step includes identifying possible strategies to achieve the objectives.

C) The third step is reviewing alternatives. The alternative selected should have a view toward long-term success.

D) When setting objectives, objectives need not be specific.

30) Which is not a step in the expansion plan?

A) Set Objectives B) Select the Best Alternatives C) Implementation D) Determine Alternatives

31) One of the biggest challenges facing growth companies is A) financial planning.

B) marketing.

C) human resources.

D) technology.

32) Human resource needs of growth can be addressed by A) paying higher wages than competitors.

B) purchasing technology to control increased operations.

C) training subordinates to handle some of the managerial responsibilities.

D) advertising new job openings.

33) The aim of this requirement of growth is to reduce the owner's span of control, allow

managers the space to make decisions, and let owners focus on planning and long-term strategy development of the business.

A) Organizational Change B) Intelligent Expansion C) Implementing Managerial Controls D) Additional Capital

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Chapter 13 34) As a business grows A) various aspects of the business may become specialized and less integrated within the

overall operation.

B) it becomes easier to control.

C) control becomes a less significant concern.

D) it is better able to afford outsourcing managerial control.

35) Which is not one of the major problems created by growth of businesses indicated in the

textbook?

A) Lack of communication B) Low Profitability C) Too much Information D) Owner Lifestyle

36) Which of the following is NOT a problem created by growth?

A) Human Resources Problems B) Lack of Communication C) Owner-Manager Fatigue and Stress D) Increase Sales

37) Which of the following is NOT a problem created by growth?

A) High Profitability B) Shortage of Cash C) Lack of Coordination D) Human Resources Problems

38) Which of the following is NOT a problem created by growth?

A) Owner Lifestyle B) Abundance of Information C) Breakdowns in Production Efficiency D) Low Profitability

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Chapter 13 39) Before using someone as an adviser, an entrepreneur A) should ensure that the person is independently well-off.

B) should develop a social relationship with them.

C) should assess or interview the person.

D) should get feedback from their own employees about the business having an adviser.

40) The major desirable characteristic of a mentor is that they A) have time available to work with a business.

B) have experience in the role and offers advice and guidance.

C) work for no charge.

D) are close to the age of the entrepreneur.

41) One of the identified functions of a board of advisers is A) keeping the business's employees focused on their personal goals.

B) to raise capital for the business.

C) sharing their own marketing research.

D) supporting day-to-day activities of the business.

42) A common mistake for entrepreneurs is to work with A) whatever mentor is easy to find. The entrepreneur thins it’s a “one size fits all”

proposition.

B) a mentor that specializes in business start-ups.

C) a mentor that is most inexpensive.

D) a mentor that is prepared to provide unlimited time.

43) The board of advisors may serve a number of functions. What is not normally expected to be

provided by a board of advisors to a small business owner?

A) Supporting day-to-day activities B) Ensuring the proper use of assets C) Developing a network of information sources for the entrepreneur D) Provide funding for the business

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Chapter 13 44) A recent survey indicates that only ______ percent of entrepreneurs had a mentor in place

when they started their business.

A) 13 B) 22 C) 27 D) 32

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Chapter 13

Answer Key Test name: Chapter 13 1) A 2) B 3) D 4) C 5) D 6) D 7) B 8) A 9) D 10) D 11) A 12) C 13) B 14) A 15) B 16) C 17) B 18) C 19) B 20) B 21) B 22) A 23) D 24) B 25) B 26) A 27) D 28) D 29) D 30) C 31) C 32) C 33) A 34) A 35) C 36) D 37) A

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Chapter 13 38) B 39) C 40) B 41) D 42) A 43) D 44) B

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Chapter 14

Student name:__________ 1) Which of the following statements is false regarding Long-Range Panning A) To ensure the continuity for the business, owner-managers need to plan early for the

time when they will no longer be in charge.

B) Many small business owners procrastinate, avoiding the issue of long-range planning until shortly before the transfer of ownership becomes a necessity.

C) Most owner-managers engage in formal long-range planning.

D) Currently, there is a short-term shortage of small businesses for sale in Canada, causing an unexpected rise in valuations.

2) When an owner-manager wishes to retire, they generally want the business to continue to

prosper and grow and hope to realize a financial gain. This is referred to as A) winning.

B) harvesting.

C) giving up.

D) capitulating.

3) Due to the number of firms hitting the marketplace at the same time, this could be

devastating to entrepreneurs looking to cash in on the sale of their firm. Brent Boyd forecasts that _____ percent of firms will not actually find a buyer.

A) 50 to 60 B) 60 to 70 C) 70 to 80 D) 80 to 90

4) One of the four possible "outcomes" for a business identified by the text is A) sell the business to an employee.

B) merge with another business.

C) go global.

D) change its product line.

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Chapter 14 5) Which of these is not an option identified in the textbook for owner-managers who wish to

retire and no longer run their business?

A) Transferring ownership to family members B) Selling the business to an employee C) Capturing as much cash as possible by not paying suppliers and taxes D) Closing down the business or declaring bankruptcy

6) Which of the following statements is false regarding the possible outcomes for the business: A) The owner can transfer ownership to family members.

B) Before transferring ownership of a business, they should do everything possible to get

the business in a condition to minimize the value of the firm.

C) The owner can declare bankruptcy.

D) The owner can sell the business to an employee.

7) Owners who intend to sell their business should ensure that A) the business is in a mature stage.

B) it can run without them.

C) they don't saturate the market.

D) there is lots of cash in the bank.

8) A big shock is usually in store for entrepreneurs when A) competitors become aggressive.

B) banks require monthly interest payments on their loan.

C) key employees ask for a raise.

D) they receive the first offer for their business.

9) Prospective buyers are very interested in businesses that A) have a friendly work atmosphere.

B) have established themselves as price leaders.

C) have consistent revenue.

D) don't rely on technology instead of people.

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Chapter 14 10) Which is not a suggested tactic for owners in succession planning?

A) Start to prepare financial statements B) Grow stable revenue C) Get an evaluation of the firm D) Ensure you are an irreplaceable aspect of the business

11) Which of the following is not a step in succession planning?

A) Plan Early and Plan for the Unexpected B) Start to Gradually Remove Yourself from the Business C) Divest in the Firm D) Start to Prepare Financial Statements

12) Which of the following is not a step in succession planning?

A) Get an Evaluation of the Firm B) Consider Hiring Professionals C) Grow Unstable Revenue D) Continue to Invest in the Firm

13) In a recent survey, ______ family businesses had no formal succession plans.

A) 80 percent of B) very few C) second generation D) less than 25 percent of well-established

14) Some generally recognized ways to transfer a family-owned business to family members are A) close the doors, walk away, and let the children assume operations.

B) through a gifting program or joint ownership.

C) by selling it to a third party who will guarantee to include the children as top

executives.

D) to hire the children as CEO's and let them assume management.

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Chapter 14 15) Family-owned business leaders often represent the greatest risk to the business when they A) get out of touch with modern business practices.

B) become disabled or even die.

C) become too comfortable in their life style.

D) don't share authority.

16) Two principles of success for family-owned businesses are A) recognize the importance of objectivity and provide incentives for non-family

employees.

B) remember that family comes first and roles should be clearly defined.

C) meet regularly to discuss financial details of the business with family members who are involved in the business and use capable managers even if they are not family.

D) clarify the objectives of the business and make sure that suppliers deal only with family members.

17) Which is not a common method of transferring the business to family members?

A) Will B) Joint ownership C) Life line D) Purchase and sale of the business

18) One specific tax consequence of transfers of business ownership within a family is A) making more profit.

B) making less profit.

C) losing customers.

D) capital gains.

19) Which is not a principle of success for family businesses?

A) Create flexible role structures B) Ensure competence C) Recognize the importance of objectivity D) Clarify objectives of family owners

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Chapter 14 20) All the following are principles of success, addressing difficulties that can arise in a family

business except: A) Recognize the Importance of Objectivity B) Create Clear Role Structures C) Provide Incentives for Non-family Employees D) Ensure Incompetence

21) All the following are principles of success, addressing difficulties that can arise in a family

business except: A) Keep Communication Lines Open B) Create Blurred Role Structures C) Establish a Dispute Resolution Process D) Clarify Objectives of Family Owners

22) Which is not a step that should be part of a succession plan that sells the business to an

employee?

A) Identify the timeframe and exit strategy B) Choose the successor C) Make yourself irreplaceable D) Find a way to fund the transition

23) An ESOP refers to an A) Earnings to Share Operating Procedure.

B) Employee Share Ownership Plan.

C) Elevated Standardized Operational Program.

D) Employer Stock Options Plan.

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Chapter 14 24) Which is not a step that should be part of a succession plan that sells the business to an

employee?

A) Develop a plan to minimize the value of the business and minimize the tax effects before the transfer date.

B) Make yourself replaceable. Install the procedures that will allow the company to grow without you.

C) Introduce the successor to clients, suppliers, and other contacts.

D) Manage the possible financial, fiscal, legal, and other impacts of the transition process, drawing on the support of professionals.

25) A common reason for selling a small business to an outsider is A) to be able to spend more time on other areas of interest.

B) to start another small business.

C) to maximize the owner's return on their investment of time and capital.

D) to avoid having to repay some of the business's debt.

26) Owners who have taken their small business public sometimes A) regret their choice of stock exchange.

B) end up losing their gains through poor investment decisions.

C) avoid paying taxes on their gains.

D) wish they had sold their shares privately.

27) When going public, a business owner is likely to make use of A) a business broker.

B) their industry or trade association.

C) an investment dealer.

D) a marketing firm.

28) Public ownership is a good way to A) raise a significant amount of capital.

B) engage a community.

C) increase sales.

D) share liabilities.

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Chapter 14 29) Going public is when an entrepreneur sells a percentage of their business to the public in an A) IPO (initial public offering).

B) IPO (imminent privatization objective).

C) IPO (imminent public objectivization).

D) IPO (initial privatization objective).

30) Which is not a characteristic that may indicate the small business is in a favourable position

to go public?

A) The company is in a popular, specialized market.

B) The company is in a below-average growth position.

C) The company has strong management.

D) The company has millions in annual revenues.

31) Which is not a characteristic that may indicate the small business is in a favourable position

to go public?

A) The business can and does generate a return on equity of at least 20 to 25 percent.

B) The company is in an above-average growth position.

C) The company has at least $50 million in annual revenues.

D) The company has reached the point at which it needs a substantial amount of capital for growth and expansion.

32) The business should address all the following issues if it is planning an IPO except: A) Improve the company’s overall capital structure and financial performance.

B) Review staff needs, including the need for a strong management team.

C) Plan for ineffective distribution of earnings.

D) Strengthen the organization through the purchase or sale of particular business units.

33) The least desirable outcomes for a small business include A) losing the respect of competitors.

B) prepaying income taxes.

C) losing a long-time employee.

D) closing down.

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Chapter 14 34) It is easier for ______ to close down.

A) a business that sells consumer products than a service business B) a limited company than a partnership business C) an unincorporated business than an incorporated business D) a manufacturing business than a service business

35) Bankruptcy is a form of A) saving money.

B) exiting a business.

C) avoiding liabilities.

D) dealing with excess cash.

36) Many small businesses close (go into bankruptcy) because A) of a lack of profitability.

B) creditors are unfriendly.

C) the owners are tired of managing.

D) competitors have become more aggressive.

37) When closing down a business, an incorporated company is required to file ______ and

notify government agencies.

A) bankruptcy paperwork B) dissolution forms C) receivership forms D) forms for tax relief

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Chapter 14

Answer Key Test name: Chapter 14 1) C 2) B 3) D 4) A 5) C 6) B 7) B 8) D 9) C 10) D 11) C 12) C 13) A 14) B 15) B 16) A 17) C 18) D 19) A 20) D 21) B 22) C 23) B 24) A 25) C 26) D 27) C 28) A 29) A 30) B 31) C 32) C 33) D 34) C 35) B 36) A 37) B

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