Question 1

Which of the following is a disadvantage of buying a franchise?

Accepted Answer

A)   It is more expensive than starting a new business.
B)   You give up creative control and have greater reliance on your parent company's financial status.
C)   You compete with the franchise company itself.
D)   You receive no training and management support.E) None of the above
F) A) and B)

Question 2

One disadvantage of purchasing an existing business is that it requires more cash outlay than creating a start-up.

Accepted Answer

A) True 
 B)False

Question 3

The absolute lowest price that a buyer would be willing to pay is called the 'point of indifference' in the negotiation process.

Accepted Answer

A) True 
 B)False

Question 4

The primary advantage to a buyout is its:

Accepted Answer

A)   hands-off approach.
B)   significantly less cost.
C)   simplicity.
D)   employee stock option plan.E) C) and D)
F) All of the above

Question 5

Due diligence is the process of investigating to determine the full and complete implications of buying a business.

Accepted Answer

A) True 
 B)False

Question 6

Key resource acquisitions,also called bulk asset purchases,are the only way a sole proprietorship may be purchased.

Accepted Answer

A) True 
 B)False  True

Question 7

In a _____,the buyer seizes control of the business without the permission of all owners.

Accepted Answer

A)   takeover
B)   joint venture
C)   spin-off
D)   mergerE) C) and D)
F) All of the above

Question 8

The purchase of substantially less than 100 percent of a business is called a(n) :

Accepted Answer

A)   takeover.
B)   buy-in.
C)   spin-off.
D)   earn-out.E) All of the above
F) A) and C) B

Question 9

Which of the following is one important advantage of key resource allocation?

Accepted Answer

A)   It has a financial plan for the future,based on a single level of operations; a quantitative expression of the use of resources necessary to achieve a business's strategic goals.
B)   As only assets are acquired,a subsequent business,regardless of its legal form,is not responsible for any of the acts or transactions made prior to purchasing the business.
C)   It has an agreement between two or more entities to pool resources in order to complete a project.
D)   It specifies the time that is required for a business to acquire resources,convert them into product,sell the product,and receive cash from the sale.E) A) and D)
F) None of the above

Question 10

In the case of a family business,how can family members avoid intra-family strife?

Accepted Answer

To avoid having the diversity of values,...

Question 11

A combination in which the whole is greater than the sum of its component parts refers to:

Accepted Answer

A)   revolving credit.
B)   synergy.
C)   microinventory.
D)   spin-off.E) All of the above
F) A) and D) B

Question 12

Which of the following is accomplished by a small business when it secures outside investment?

Accepted Answer

A)   Business can be started by a sole individual.
B)   Founders take part in a mentoring program.
C)   It indicates a level of belief in the business and the owner.
D)   Business can be started by an individual without prior experience.E) C) and D)
F) B) and C)

Question 13

All entrepreneurs have at least four sets of resources: access to capital; their own skills and abilities; their own knowledge; and their network of friends and business associates.

Accepted Answer

A) True 
 B)False

Question 14

The three principles of reasoning which are absolutely critical in the process of effectual reasoning are: affordable loss,strategic partnerships,and leveraging contingencies.

Accepted Answer

A) True 
 B)False

Question 15

_____ analysis is based on the concept that the longer you have to wait to receive money,the less valuable it is right now.

Accepted Answer

A)   Discounted cash flow
B)   Replacement value cash flow
C)   Free cash flow
D)   Book value cash flowE) A) and B)
F) A) and C)

Question 16

Seizing of control of a business by purchasing its stock to be able to select the board of directors refers to a(n) :

Accepted Answer

A)   buy-in.
B)   takeover.
C)   merger.
D)   earn-out.E) A) and C)
F) B) and C)

Question 17

Which of the following is most likely to be the best indicator of successful start-ups?

Accepted Answer

A)   Level of experience of the founders
B)   Social background of the founders
C)   Financial background of the founders
D)   Specific educational courses taken by the founderE) A) and B)
F) A) and C)

Question 18

Sam used his management skills to start a loans advising website.He started seeing clients at his home before it grew into a well-established company in the next ten years.Which of the following entrepreneurial methods did he use in the beginning,to reduce the financial risk of his start-up?

Accepted Answer

A)   Franchise
B)   Consignment
C)   Lean method
D)   LiquidationE) All of the above
F) A) and B)

Question 19

For small businesses,professional management is an issue of education,titles,and credentials.

Accepted Answer

A) True 
 B)False

Question 20

A new business that has begun from scratch is called a:

Accepted Answer

A)   buyout.
B)   franchise.
C)   start-up.
D)   buy-in.E) B) and C)
F) A) and D)

Exam 6: Small Business Entry: Paths to Full-Time Entrepreneurship

Which of the following is a disadvantage of buying a franchise?

Correct AnswerverifiedShow Answer

One disadvantage of purchasing an existing business is that it requires more cash outlay than creating a start-up.

Correct AnswerverifiedShow Answer

The absolute lowest price that a buyer would be willing to pay is called the 'point of indifference' in the negotiation process.

Correct AnswerverifiedShow Answer

The primary advantage to a buyout is its:

Correct AnswerverifiedShow Answer

Due diligence is the process of investigating to determine the full and complete implications of buying a business.

Correct AnswerverifiedShow Answer

Key resource acquisitions,also called bulk asset purchases,are the only way a sole proprietorship may be purchased.

Correct AnswerverifiedTrue

In a _____,the buyer seizes control of the business without the permission of all owners.

Correct AnswerverifiedShow Answer

The purchase of substantially less than 100 percent of a business is called a(n) :

Correct AnswerverifiedB

Which of the following is one important advantage of key resource allocation?

Correct AnswerverifiedShow Answer

In the case of a family business,how can family members avoid intra-family strife?

Correct AnswerverifiedTo avoid having the diversity of values,...View AnswerShow Answer

A combination in which the whole is greater than the sum of its component parts refers to:

Correct AnswerverifiedB

Which of the following is accomplished by a small business when it secures outside investment?

Correct AnswerverifiedShow Answer

All entrepreneurs have at least four sets of resources: access to capital; their own skills and abilities; their own knowledge; and their network of friends and business associates.

Correct AnswerverifiedShow Answer

The three principles of reasoning which are absolutely critical in the process of effectual reasoning are: affordable loss,strategic partnerships,and leveraging contingencies.

Correct AnswerverifiedShow Answer

_____ analysis is based on the concept that the longer you have to wait to receive money,the less valuable it is right now.

Correct AnswerverifiedShow Answer

Seizing of control of a business by purchasing its stock to be able to select the board of directors refers to a(n) :

Correct AnswerverifiedShow Answer

Which of the following is most likely to be the best indicator of successful start-ups?

Correct AnswerverifiedShow Answer

Sam used his management skills to start a loans advising website.He started seeing clients at his home before it grew into a well-established company in the next ten years.Which of the following entrepreneurial methods did he use in the beginning,to reduce the financial risk of his start-up?

Correct AnswerverifiedShow Answer

For small businesses,professional management is an issue of education,titles,and credentials.

Correct AnswerverifiedShow Answer

A new business that has begun from scratch is called a:

Correct AnswerverifiedShow Answer

Correct Answer
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True

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B

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To avoid having the diversity of values,...
View Answer

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B

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