Small Business Management Entrepreneurship And Beyond, 6th Edition by Timothy S. Hatten - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. Existing businesses do not have to be scrutinized carefully to determine whether they are a worthwhile investment of time and money. a. …
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Small Business Management Entrepreneurship And Beyond, 6th Edition by Timothy S. Hatten – Test Bank
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Sample Questions Are Posted Below
1. Existing businesses do not have to be scrutinized carefully to determine whether they are a worthwhile investment of time and money.
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2. The fact that a business’s image is difficult to change is a distinct advantage when taking over an existing business.
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3. Buying an existing business is becoming a more popular way to own a small business.
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4. A major advantage of purchasing an existing business is that the customers are familiar with the location.
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5. If an existing business is purchased, the buyer may be potentially liable for past business contracts.
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6. Having an established supplier relationship is an advantage of buying an existing business.
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7. When the owner of a business decides to sell, the reasons the owner tells prospective buyers may be somewhat different than the actual reasons.
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8. Word-of-mouth information through friends and family may turn up business opportunities that do not appear through formal channels.
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9. Real estate brokers may be a good source of potential businesses for sale since their listings may include business real estate.
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10. Asking the owner of a business where you have been a regular customer whether the business is for sale may be one source of finding a potential new business.
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11. You should never ask the owners of a business where you are a customer whether they are interested in selling their business.
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12. Brokers take classes and pass examinations to become certified business intermediaries.
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13. It is important not to let emotions cloud judgment when making business purchase decisions.
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14. Due diligence is the process of fact finding to determine the total condition of a business being considered for purchase.
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15. When discussing the purchase of an existing business, it is not necessary to get verbal understandings in writing from the seller.
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16. When analyzing the financial statements of the business, it is important to rely most heavily on the most recent year of operation.
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17. There are not as many factors that could contribute to the sale of a business as there are reasons for business liquidations.
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18. Industry averages exist comparing expenses to sales for every size and type of business.
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19. Determining the price offered for a business should begin by adding the value of the tangible and intangible assets with the sales potential of the business.
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20. A key factor in business valuation is review of what other companies in the industry have sold for.
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21. Goodwill is an example of a tangible asset.
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22. Inventory is an example of a tangible asset.
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23. When purchasing a business, the people working there can be disregarded since they will probably not stick around after the business is in new hands.
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24. An income statement method of business valuation focuses more on cash flow than asset value.
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25. Discounted cash-flow analysis consists of projecting future cash flows after debts are subtracted and before taxes are paid.
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26. Goodwill is the term used to describe the difference between the purchase price of a company and the net value of the tangible assets.
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27. The value of a business’s intangible assets is easy to determine.
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28. Tangible assets are the product of a firm’s past earnings and the basis on which future earnings are projected.
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29. Family businesses make up 80 percent of all businesses in the United States and comprise nearly 50 percent of the nation’s GNP.
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30. The amount paid for goodwill should be small enough to be recovered with new profits in a reasonably short time period.
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31. When running a family business, there are four overlapping perspectives on its operations: family, management, ownership, and sales.
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32. About half of all family businesses survive through the second generation.
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33. When a family member enters the family business, he or she is immediately accepted by nonfamily employees due to his/her position.
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34. To avoid animosity from nonfamily employees in a family owned business, which of the following policies are recommended in the text?
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35. All of the following are options for getting started as a business owner except
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36. Buying an existing business looks appealing to the potential business owner for which of the following reasons?
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37. A disadvantage to buying an existing business is which of the following?
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38. An advantage in purchasing an existing business is which of the following?
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39. Which of the following is not an advantage to buying an existing business?
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40. According to the text, at any given time, there are____ thousands of small businesses for sale at any given time.
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41. Benjamin has recently received a large estate settlement, and he is eager to use the money towards the purchase of a successful business that is already in operation. Which of the following should be discouraged as a source for finding businesses for sale?
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42. Within his profession, Alex Wilson serves as an intermediary that brings sellers of businesses together with potential buyers. Alex can best be described as a/an
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43. Many good business opportunities are never formally advertised. Instead, that information is found through which of the following?
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44. Family, friends, the newspaper, the Small Business Administration (SBA), a local banker, and real estate brokers may all have information on
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45. A business that brings sellers of their businesses together with potential buyers is known as
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46. A list of liabilities of an existing business would include
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47. When gathering information about an existing business in order to evaluate its potential, all but which of the following questions should be asked?
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48. When gathering information about an existing business in order to evaluate its potential, all but which of the following questions should be asked?
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49. If the business that is being purchased involves inventory, the bulk sales provisions of the ____ need to be followed.
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50. Tabitha is considering the purchase of a seemingly successful retail establishment, but first she would like to gain an understanding of why the business is being sold. With whom should she speak?
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51. To determine the financial condition of an existing business, it is necessary to compare ____ with ____ to identify where costs can be reduced or more money is needed.
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52. What of these is used to indicate whether sales volume is increasing or decreasing?
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53. When analyzing financial statements, remember that profits can be increased and expenses can be decreased to make the records look better
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54. Before any serious discussion of purchasing a business occurs, a/an ____ should be conducted.
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55. To ensure that all back taxes have been paid, a potential buyer should inspect
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56. Financial information can be sensitive information. In order to allay the fears of the seller, a potential buyer could
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57. Industry-wide ____ ratios are calculated by most trade associations, many commercial banks, and accounting firms.
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58. The financial statements can provide access to ____, a very important piece of information for a prospective buyer to use in determining net profit.
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59. Industry averages for expense ratios comparing expenses to ____ exist for every size and type of business.
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60. Expense ratios are useful because they are
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61. To effectively use operating ratios, a prospective buyer should
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62. The prospective buyer should determine a price for the business by adding the value of tangible and intangible assets with the ____ potential.
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63. Assets that a business owns that can be seen and examined are known as
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64. Inventory, equipment, and building are examples of what kinds of assets?
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65. Trade names, customer lists, and goodwill are examples of which kinds of assets?
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66. Of all the tangible assets of a business, ____ and ____ should be examined most closely because they may be worth less than the seller is asking.
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67. Along with purchasing a successful ice cream shop, Wilma acquired the building, as well as ice cream making equipment and enough inventories to operate for a month. These are best known as what type of assets?
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68. In buying a business, if tangible assets include machinery that has no, or very little value, the buyer may wish to consider
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69. Aging accounts receivable refers to the process of
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70. When evaluating the worth of the inventory for purchasing purposes, the primary concern should be
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71. Which of the following by itself could be a reason a business owner wants to sell a business?
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72. Assets that have value to a business but are not visible are known as
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73. The intangible asset that allows a business to earn a higher return than a comparable business might generate with the same tangible assets is known as
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74. Few businesses that are for sale have a high amount of ____ value.
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75. Intellectual property is a valuable ____.
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76. Patents, copyrights, and trademarks protect against unauthorized use or infringements for which of the following time periods?
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77. A provision that restricts the seller from entering the same type of business within a specified area for a certain amount of time is known as
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78. Rob is selling a business with machinery that has been protected from unauthorized use or infringement for the next three years. What type of intangible asset does this involve?
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79. Any of the following may be included as an owner benefit of a small business except
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80. Samantha was in the final stages of selling her existing business, but she backed out of the deal at the last minute because the buyer asked her to sign a contract stating that she would not enter into a similar business within the state for at least 15 years. This is an example of
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81. Before buying a business, one should engage in a thorough analysis of the firm’s financial statement to see if any of them may be misleading. An example of that would be
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82. All but which of the following are important considerations when determining how much should be paid for an existing business?
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83. A method of determining the value of a business based on the worth of its assets is called
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84. A method of determining the value of a business based on its profit potential is known as a/an
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85. ____ is a current value for a company’s long-term future cash flows.
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86. The worth of tangible assets is determined using which of the following methods?
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87. The overall value of tangible assets is determined through all of the following except
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88. The most realistic approach for the buyer in determining the value of tangible assets is through
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89. Goodwill can be seen as compensation to the seller for which of the following?
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90. The difference between the purchase price of a company and the net value of the tangible assets is called
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91. The capitalization rate when figuring goodwill should be a figure assigned to show
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92. The most practical method of paying for a business is
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93. Using installment payments to finance a new business ensures that the business is paid for through
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94. When the buyer and the seller have agreed on the terms of the sale, the closing can be handled by
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95. A settlement attorney during a closing represents
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96. In purchasing an existing business, Alice has decided to lease the equipments and fixtures from the original owner rather than purchasing it outright to save money initially. This is an example of
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97. To protect yourself from unknown tax liabilities when buying the stock of a business, it makes sense to place part of the purchase price in an escrow account that is earmarked to pay for any corporate liabilities. This is referred to as
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98. Stan owns a body shop, and his cousin recently came to him desperate to get a job. Stan, who is not currently looking to hire anyone, is concerned about the effect of a new hire on profits. This concern stems from which family business perspective?
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99. Which of the following types of business are characterized by two or more members of the same family who control or are directly involved in and own a majority of the business?
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100. A unique factor in a family business that makes it different from all other businesses is
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101. Everyone involved in a family business has a different perspective. These perspectives include all but which of the following?
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102. Which of the following is a guideline that should be followed in a family business?
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103. All but which of the following policies can help prevent problems in employment policies when discussing family businesses?
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104. As seen in the Entre-Perspectives, what year was the oldest family business in the United States founded?
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105. What web site was discussed for buying and selling a business that offers a database of thousands of businesses?
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106. The longer it takes someone to pay their account receivable, the less likely they are to
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107. In the Entre-Perspectives, what product has the Zildjian family been making since 1623?
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| Scenario 6-1. Jerry Jones is a young entrepreneur straight out of college. After taking a course in Small Business Management, Jerry has decided that he would like to purchase an existing business and hopefully avoid some beginner’s errors. He spends some time looking and finally finds a business that appeals to him, a small sporting goods store. Jerry loves to fish and hunt. The store currently has a huge inventory in place. Jerry decides to pursue purchasing the business further. |
108. In Scenario 6-1 above, all but which of the following are places Jerry could have started looking for businesses that were for sale?
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109. In Scenario 6-1 above, which of the following would have been a good source of information on current businesses that are for sale that is often overlooked?
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110. In Scenario 6-1 above, all but which of the following factors should be considered by Jerry in his analysis of an existing business for sale?
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111. In Scenario 6-1 above, since the sporting goods store has a huge inventory, Jerry needs to be familiar with which of the following codes?
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| Scenario 6-2. Sally Jo is considering purchasing the small craft store that is currently located in the local mall. She loves to do crafts and is quite talented in this area. Her family and friends have all received many gifts over the years that she has created for them. Sally Jo has no business background and no experience in the area of business. Since you are the local Small Business Association (SBA) representative, she comes to you for advice. |
112. In Scenario 6-2 above, in order to analyze the financial condition of the business, Sally Jo should consider all but which of the following?
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113. In Scenario 6-2 above, the value of the craft store comes from all but which of the following?
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114. In Scenario 6-2 above, the tangible assets of the business would include all but which of the following?
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115. In Scenario 6-2 above, the intangible assets of the business would include all but which of the following?
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116. In Scenario 6-2 above, when considering how much she should pay, Sally Jo should consider all but which of the following?
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117. List and describe two advantages and two disadvantages of buying an existing business.
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118. Describe three places a potential small business owner might go when looking for a business for sale.
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119. Analyze three areas that should be researched when deciding whether or not to purchase an existing business.
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120. Discuss three major considerations when looking at the financial condition of an existing business.
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121. Compare and contrast tangible assets and intangible assets.
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122. Before serious bargaining can begin, it is necessary to determine the value of several key physical assets. List at least three of these assets.
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123. List at least three guidelines that should be followed in a family business.
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
