ENTR 206 Principles of EntrepreneurshipSecond Semester October 18, 2012- February 22, 2013 Study Guide chapters 10-15 Chapter 15 1) Approximately how many people were honored as Ashoka Fellows between 1981 and 2009? A. Around 10,000 B. Over 1,000 C. Nearly 3,000 D. One quarter of one percent of the world’s population E. About 30 per year (Answer – B) 2) Who was the original founder of Ashoka? A. Mohandas Gandhi B. Wilt Chamberlain C. Klaus Schwab D. Bill Drayton E. Mother Theresa (Answer – D) 3) Which of the following federally tax-exempt organizations are not required to file an IRS Form 990? A. Private educational institutions B. Scientific research centers C. Churches D. Private foundations E. The National Football League (Answer – C) 4) The Grameen Bank is an example of a social business because it ________ . A. Is a nonprofit organization B. Serves the poor C. Includes the government as an investor D. Does not need to repay its investors E. Directs profits back into serving the poor (Answer – E) 5) What is the least innovative form of social entrepreneurship venture? A. Imitative B. Innovative C. Hybrid D. Double bottom line E. Nonprofit organization (Answer – A) 6) Why is a Cooperative a form of social entrepreneurship? A. It creates both social and economic value. B. It is able to make a profit. C. It competes with for-profit companies. D. Schumpeter created the first model. E. It can be organized anywhere worldwide. (Answer – A) 7) Which of the following is essential in order to undertake a social venture? A. An existing organizational model. ENTR 206 Principles of Entrepreneurship Page 1 of 23 Study guide for final exam B. Receiving funding from a foundation. C. Recognizing an opportunity. D. Identifying a paying customer. E. All of the above. (Answer – C) 8) Which of the following elements is least likely to be teachable in a course? A. Identifying social values that motivate the social entrepreneur B. Identifying opportunities C. Determining a viable economic model D. Motivating the social entrepreneur E. Evaluating a social venture (Answer – D) 9) What is necessary to become tax-exempt at the Federal level? A. Operating without making a profit. B. Proving that a social need is being served. C. Registration with the state attorney general. D. Avoiding distribution of profits to private entities. E. A determination letter from the IRS. (Answer – E) 10) What is the difference between outputs and outcomes? A. Outcomes precede outputs B. Outputs are usually tangible C. Outcomes are defined in the logic model D. There is no difference E. Outcomes are defined in the theory of change (Answer – B) 11) What experience best qualified Sarah Usdin to start New Schools for New Orleans? A. Hurricane Katrina B. Preparing a business plan C. Her exposure to Muhammad Yunus D. Her prior knowledge of charter schools E. Her studies in social entrepreneurship (Answer – D) 12) What most inspired Vanessa Kirsch to found New Profit? A. That social entrepreneurship could be better evaluated B. Her prior experience in establishing nonprofit organizations C. The world of venture capital D. The opportunity for growth E. That foundations fail to sustain the organizations they fund (Answer – E) 13) Which example would probably not be considered a social entrepreneur? A. John Mackey of Whole Foods B. Linda Rottenberg of Endeavor C. Rebecca Onie of Project HEALTH D. Muhammad Yunus of Grameen Bank E. Dan O’Neill of Mercy Corps (Answer – A) 14) Which of the following would not be an allowable form of earnings by a social entrepreneur in a 501-c-3 organization? A. Benefits that are more generous than those received by other employees B. A salary of over $5 million ENTR 206 Principles of Entrepreneurship Page 2 of 23 Study guide for final exam B. Closing down the enterprise D. Qualitative and quantitative measures. A long period of performance. A market-level benefits package E. His focus on entrepreneurship C. Its presence in developing countries. E.C. His description of the pursuit of opportunity D. Finding partners B. Stock options D. Some criterion for judgment C. Applicable case studies. (Answer – E) 19) What makes Dees’ definition of “social entrepreneurship” most useful? A. its assets must be distributed proportionally by salary C. C. _____________________ . C. A positive social impact (Answer – B) 18) What would make the evaluation of a social venture more decisive? A. it assets must be converted into a for-profit company D. its assets must be redirected to other nonprofit organizations B. The predominance of family businesses in certain countries. Funding for evaluation B. B. All of the above. Identifying the opportunity E. The initial guidance of a venture capitalist. (Answer – C) ENTR 206 Principles of Entrepreneurship Page 3 of 23 Study guide for final exam . Getting funding (Answer – D) 16) When a nonprofit organization is closing. His inclusion of both social value and social change E. its debts must be paid off (Answer – A) 17) What is necessary to evaluate a social venture? A. The use of a nonprofit model to create jobs. E. a foundation must take possession of its assets E. D. Deciding the best form of organization C. His composite reference to several sources (Answer – D) 20) What most distinguishes Endeavor as a social venture? A. His emphasis on social value B. The absence of venture capital in certain countries. D. A systematic way to collect assessment data D. At least a few years of performance E. (Answer – C) 15) What is usually the easiest step in social entrepreneurship? A. A. A control group. A severance package. Going to scale by going international E. E) A management team. The Body Shop E. As a government-funded startup. None of the suggestions ensured financial sustainability. C. E. All of the ideas required acting like a for-profit company. What is the least likely to lead to a failure in growth management? A) Having limited time and resources to spend on organization building B) Spending too much time on day-to-day operations C) Chasing many opportunities D) Spending time on planning E) Not having a strong management team (Answer – D) 3. Diversification of funding sources D. Ben and Jerry’s B. D. Building funds from a combination of private support and foundations C.21) Why did Rottenberg reject the best advice of her chief financial officer? A. D) Opportunity. C) Venture capital. As a research study. B. D. Focusing on a single source of funding B. B) A loan. None of the suggestions ensured the needed income. (Answer – B) 23) Which of the following ventures that create some social value has the greatest revenues? A. C. What skills become increasingly important at later stages of development for a company? ENTR 206 Principles of Entrepreneurship Page 4 of 23 Study guide for final exam . The World Bank E. As an Ashoka Fellow. Standard & Poor's D. E. (Answer – A) 22) How did Muhammad Yunus first start the Grameen Bank? A. None of the suggestions inspired trust. Millennium Development Goals B. Combining foundation and government funding (Answer – A) Chapter 14 1. B. As an alternative to his day job as professor. The CFO had a poor background for social entrepreneurship. What does entrepreneurship begin with? A) Leadership. United Nations specialized agencies (Answer – C) 25) What strategy is most likely to lead to growth for a nonprofit organization? A. As a foundation-funded startup. Ashoka C. Mondragón (Answer – E) 24) Where are you least likely to find opportunities for social entrepreneurship? A. (Answer – D) 2. Ocean Spray D. Endeavor C. Which of the following is not a part of the driving forces in the growth stages? A) Leadership B) The opportunity domain C) Resources and capabilities D) Execution E) The entrepreneur (Answer – E) 5. (Answer – B) 9. C) 1/4 of the price. What is NOT an option an entrepreneur must consider beyond startup? A) Leaving the venture B) Selling the venture C) Maintaining the venture D) Growing the venture E) All of them are options (Answer – A) 6. according to the chapter. B) 1/3 of the price. What option does the entrepreneur have if he or she decides to maintain a business? A) Become an entrepreneurial leader B) Take alternate position in the firm C) Become a manager D) Seek other employment E) None of the above (Answer – C) ENTR 206 Principles of Entrepreneurship Page 5 of 23 Study guide for final exam . According to the chapter. What fraction of firms started today. In a typical acquisition deal. E) 1/6 of the price.A) Marketing B) Managerial C) Technical D) Entrepreneurial E) Opportunity identification (Answer – B) 4. 50% of businesses started today will not exist in how many years? A) 2 B) 3 C) 5 D) 6 E) 8 (Answer – E) 7. what portion of the selling price does the entrepreneur receive in cash? A) 1/2 of the price. will still be growing and profitable in eight years? A) 1/5 B) 1/6 C) 1/7 D) 1/8 E) 1/9 (Answer – C) 8. D) 1/5 of the price. What is the core of the growth model? A) Leadership B) Resources and capabilities C) The opportunity domain D) The entrepreneur E) Execution (Answer – E) 11. Which of the following is not mentioned in the chapter as a key objective for a control system? A) To create culture B) To institute control C) To manage cash D) To track performance E) All of the above are mentioned (Answer – A) 15. The chapter warns that which of the following can lead to poor coordination between different activities within the company? A) Overdue collections B) Inventory outages C) Uncontrolled growth D) Diminishing cash flows E) None of the above (Answer – C) 14. C) If the marketing expenditures are hard to predict. B) If the changes in your company are not result of changes in your policies. What should an entrepreneur focus on during early growth? A) Expansion B) Strategy C) Operations D) Accounting E) Networking (Answer – B) 13. After tracking key metrics in your company’s performance. what should alert you that it may be time to consider making adjustments in your policies? A) If your metrics are below your expectations. An effective control system includes all of following except: A) Account payables policies B) Accounts receivables and collections policies C) Assessment of performance and expenditures D) An inventory management system E) A risk-assessment ratios tracking (Answer – E) 16. ENTR 206 Principles of Entrepreneurship Page 6 of 23 Study guide for final exam .10. E) If receivables collection period is more than 30 days. Who or what has the largest impact on a firm’s growth potential? A) Stakeholders B) Uncertainty C) Environmental conditions D) Technology changes E) Competitors (Answer – A) 12. D) If your metrics require in-depth analysis. E) None of the above. C) Ways to shift your core business. D) Resource draining side projects. E) All of the above. A series of steps showing the activities and entities that we need to coordinate in order for the company to execute its product or service is called: A) Customer value delivery B) Value chain C) STEP D) Customer value proposition E) Attributes model (Answer – B) 20. C) To change brand names of existing products. C) Time between purchase of supplies and collection of accounts receivable generated in the sale of a product. What do customers usually want the company to do with its products? A) To improve the products they know best. (Answer – A) 21. (Answer – D) 23. D) How quickly you sell and replace your inventory over a period. What does cash cycle ratio show? A) Number of dollars available to pay your short-term liabilities. What best characterizes an entrepreneur? A) Resource driven B) Maintains consistency and predictability C) Implements the business D) Opportunity driven E) Enhances efficiency of organization ENTR 206 Principles of Entrepreneurship Page 7 of 23 Study guide for final exam . A positive cash conversion period means that: A) You have an inefficient receivables control system B) You are getting cash in before you deliver products/services C) You have a very efficient receivables control system D) You are receiving cash after you deliver products/services E) Customers pay you before you provide them products/services (Answer – D) 19. B) To introduce new products. (Answer – C) 18. Which of the following is not a source of financing for early growth? A) Angel investors B) Founder loans C) Investment from key management D) Equipment leases E) All of them are sources (Answer – E) 22. E) Degree to which a company is using borrowed money. What can identifying your firm’s range of value chain activities help you to detect? A) New markets. B) Legal liabilities.(Answer – B) 17. D) To produce products inside the country. B) How quickly you get your receivables paid. Exhibitions C. names. design E. Use by the inventor himself D. According to the Driving Forces of Growth Model. (Answer – B) 25. literary and artistic works C. E) To represent suppliers. All of the above E. designs used in commerce E. trade secrets C. appearance C. opportunity domain interacts with which of the following? A) Stakeholders B) Environmental conditions C) Profitability D) Coordination E) Organizational capabilities (Answer – E) Chapter 13 1) ______can be considered a public use of an invention. Market testing B. A. inventions B.(Answer – D) 24. D) Credit lending. trademarks D. product branding (ANSWER-A) 3) Which of the following is not referred to as intellectual property creations of the mind? A. value D. C) Operating. symbols. patents B. and images D. A. None of the above (ANSWER-D) 2) The basic requirement for a utility patent is that the ______ be different in some way from what came before. copyrights E. B) Strategic. What purpose should the board of directors serve as a company professionalizes? A) Mentorship. idea B. budget for a certain project (ANSWER-E) 4) Which one of the following is within the range of Intellectual Property protection? A. sufficient to activate the one-year period. all of the above ENTR 206 Principles of Entrepreneurship Page 8 of 23 Study guide for final exam . Brochures B. Words used descriptively E. Employment contracts Consultant contracts Confidential disclosure agreements All of the above None of the above ENTR 206 Principles of Entrepreneurship Page 9 of 23 Study guide for final exam . the appearance of the product B. Trademark E. a nonexclusive license D. all of the above E. A. Video presentations D. an assignment B. B and C E. B. Copyright (ANSWER-D) 9) Copyrights cover many forms of writing. Utility patent B. the idea of the product C. the rarity of the product (ANSWER-A) 7) Which of the following could NOT be protected as a common form of trademarks? A. an exclusive usage agreement C. A. B. D. (ANSWER-E) 11) A. the functionality of the product E. Technique patent C. none of the above (ANSWER-D) 6) The design patent covers only______. A. including______. Design patent D. Natural shapes C. and C. ______ should be put in writing and signed before the business relationship begins. one or more claims—hybrid legal and technical language that “captures” the invention in words D. the underlying concept of the product D. drawings showing an embodiment of the invention B. including: ____________. Combinations of shapes and colors D. Photographs C. a written description of the invention referring to the drawings akin to an engineering specification C. Geometric shapes B. C. Colors (ANSWER-D) 8) People can establish which of the following without any formal governmental procedure? A. Biological materials (ANSWER-E) 10) The term license typically refers to a number of different types of contracts covering intellectual property. E. A. Architectural designs E. however. they will not cover which of the following? A.(ANSWER-E) 5) The form of all patents contains the same basic sections. Patent and Trademark Office examines the application and determines that the mark could to be registered. the applicant must show actual use within how many months? A. Anytime before the contract expires or is renegotiated. similar trademarks.000 D. how much does a typical search and registration for a trademark cost per mark? A. (ANSWER-A) ENTR 206 Principles of Entrepreneurship Page 10 of 23 Study guide for final exam .000 B. At the first product shipment.000 . $10. E. All of the above. the quality control of that product or service.000 . D. and copyrights. What the consultant is expected to assign to the company in the way of innovations. D. E. B.S. Failed avenues of development D. C.S.$6. Before negotiations begin. (ANSWER-E) 14) An often overlooked area in a consultant contract is ______.000 . B. D. inventions. 1 month. The ownership of notes B.$3.$9. the length of the patent protection on the trademark.(ANSWER-D) 12) At what stage in a business relationship should you ask the other party to sign a confidentiality agreement? A.. $1. During the negotiation process. All of the above E.$12. patents.000 . What the consultant is expected to do What the consultant may be exposed to in the way of company trade secrets and confidential and proprietary information. whether or not the trademark has already been licensed to a competitor.$15.000 E. 6 months. $4. C. E.000 . 24 months. $7. E. What prior work the consultant has done for competitors. B.000 C. the owner of a mark should be mindful of ______. B. C. When the contracts are executed. The ownership of memos C. A.000 (ANSWER-A) 17) If licensing a mark for use with a product or service. (ANSWER-A) 13) A. $13. C. None of the above (ANSWER-D) 15) After the U. Which of the following is not necessarily included in a consultant contract? Why the consultant is hired. D. (ANSWER-C) 16) In the U. 12 months. A. 3 months. to use the simpler approach of a minimum royalty D. the registration is easy to obtain B. before any production. 20 or 30 months and an additional 8 or 18 months C. most other countries require that the patent application be filed ______. 24 or 36 months and an additional 8 or 18 months D. (ANSWER-B) 21) By filing a special PCT patent application in a specially designated PCT office within one year of U. C. the cost limit C. protection lasts a long time C. the cost is low D. E. A. none of the above (ANSWER-D) 19) Different countries have different conditions that entrepreneurs must meet to obtain any patent protection. before any public disclosure. 40 or 50 months and an additional 28 or 38 months E. A. before any commercial promotion. 50 or 60 months and an additional 48 or 58 months (ANSWER-B) 22) Many licensees prefer a______. sub-exclusive license C. filing. A. and by designating certain countries. D. the term of protection limit D. B.18) The benefit of a copyright registration is _______. filing date. the subject matter limit E. to compel certain achievements by the licensee C. that will provide ______for test marketing the product. common license E. nonexclusive license D. 1 or 10 months and an additional 8 or 18 months B. exclusive license B. A. all of the above E. none of the above (ANSWER-D) 24) What type of clause evicts the licensee and returns control to the licenser in the event of unmet goals? ENTR 206 Principles of Entrepreneurship Page 11 of 23 Study guide for final exam .S. the value limit (ANSWER-A) 20) Whereas the United States allows a business one full year to test market its new product. primary license (ANSWER-A) 23) Licensors generally seek ______ to ensure that the licensee will use its best efforts to exploit the property and maximize the licensor's income. before any product test. before any private disclosure.S. companies can preserve their right to file in those countries without further expense for ___ after the U. all of the above E. the time limit B. to add a clause in which the licensee promises to use its “best efforts” B. A. A. the first and most important restriction is______. because they want a clear playing field with no competitors in order to maximize their revenue from the property and justify the license cost. If you decided to leave your current employer and establish your own venture.A. E. A reverter clause. A competition clause. C. must the employer do to make its employees not compete with the company for a year after they quit the job? A) Issue an internal order B) Does not have to do anything – the obligation is imposed on any employee by statutes C) Obtain a court order D) Have the employees sign a non-competition agreement E) It cannot be done (Answer – D) ENTR 206 Principles of Entrepreneurship Page 12 of 23 Study guide for final exam . The broad underlying concept of an algorithm E. what actions will decrease the likelihood of being sued for convincing other employees from the company to leave with you? A) Working in the Human Resources department of the employer B) Talking to them after the business hours C) Talking to them over e-mail or/phone D) Offering them better working conditions in the new company E) None of the above (Answer – B) 3. A non-competition clause. B. if possible. Under what condition will the law consider the company to have taken reasonable protection of its information? A) If the company made its employees sign non-disclosure agreements B) If the company successfully kept the information confidential C) If the company protected the information through copyright laws D) If the company protected the information by registering patents E) All of the above (Answer – E) 4. A royalty clause. The user interface and menus of the program D. The structure and organization C. (ANSWER-C) 25) Which of the following is NOT included in the scope of patent protection for new computer software? A. What. The manner of writings (ANSWER-E) Chapter 12 1. D. A confidential disclosure clause. What concept requires that an employee does not knowingly take action designed to harm the employer's business? A) Reasonable protection B) Employee’s obligation C) Duty of loyalty D) Corporate tact E) Generally accepted protection principle (Answer – C) 2. The coding or routines B. which is a very long process E) They violate the rights of minority shareholders (Answer – A) 6. Which form of legal entity is the easiest to understand from the viewpoint of tax issues? A) Limited liability company B) Sole proprietorship C) Limited partnership D) S corporation E) Not-for-profit (Answer – B) 11. Which of the following cannot be considered non-profit entities? A) Social welfare organizations B) Educational institutions C) Churches D) Limited liability corporations E) Industry associations (Answer – D) 10. Why are restraining orders dangerous for a startup? A) They paralyze the company until the court battle is resolved B) They forbid the company to go public C) It’s a first step of bankruptcy D) The board of directors has to be reelected.5. What is the advantage of hiring a local attorney for a startup? A) Usually good at suing multinationals B) Will gladly accept equity as the fee C) May agree upon installment payments D) May substitute expensive software at the early stage E) Good at representing your national interests (Answer – C) 7. An S corporation can be distinguished from other types of corporations in: A) Tax status B) Number of employees C) Areas of expertise D) Geographic location E) Annual income (Answer – A) 8. The minimum number of owners in a general partnership is equal to: A) 1 B) 2 C) 4 D) 5 E) 6 (Answer – B) 9. The business is not recognized as a legal entity separate from its owners under which form? F) Professional corporation A) Limited Liability Company B) Partnership C) S corporation D) Non-profit ENTR 206 Principles of Entrepreneurship Page 13 of 23 Study guide for final exam . All of the following forms of legal entities must file an annual report with the state government in addition to their tax return except: A) General partnerships B) Limited liability companies C) Limited partnerships D) Corporations E) Limited liability partnerships (Answer – A) 15. E) None of the above. such as inventory or marketable securities. in which: A) The business owns insurance policies on the owners and is obligated to use the proceeds to purchase each stockholder’s equity upon his or her death. Which state is famous for its management-friendly corporate laws? A) Ohio B) Massachusetts C) New Mexico D) California E) Delaware (Answer – E) 16. The doctrine of vicarious liability states that: A) The employer’s liability for the employee’s actions is limited to a specific amount of money (the amount differs from state to state) B) The employer is responsible for any contract signed by the employee. D) Internal Revenue Service allows installment tax payments to be received within 2 years after an owner’s death. C) Business assets. B) Each owner is required to take out insurance on the others and to buy a proportional amount of the deceased's equity. ENTR 206 Principles of Entrepreneurship Page 14 of 23 Study guide for final exam . As can be learned from the chapter. equal to the value of owner’s share of the equity in the company will be transferred to relatives upon his or her death.(Answer – C) 12. (Answer –A ) 17. In the context of this chapter. a redemption agreement is the covenant. How long does an organization have to file for and secure non-profit status? A) 14 weeks B) 1 year C) 18 months D) 2 years E) 26 months (Answer – C) 14. IRC stands for: A) Investment Recovery Center B) International Residential Code C) International Relations Center D) Initial Ready Company E) Internal Revenue Code (Answer – E) 13. An employer may not discriminate against anyone for any of the following characteristics. D) Liability insurance. (Answer – C) 23. What type of insurance can a typical startup not afford? A) Health insurance for employees. According to the chapter.C) The employer is responsible for any actions of the employee occurring within the scope of his/her employment D) The employee always answers for the consequences of his/her criminal actions without transferring the responsibility to the employer E) Employees can be held criminally liable if they contribute to the unlawful actions of an employer and should have reasonably understood the consequences. except for: A) Religion B) Age C) National origin D) Sexual orientation E) Disability (Answer – D) 19. and health insurance policies tax-free and deduct the costs of premiums? A) S corporation B) Partnership C) C corporation D) LLC E) All of the above (Answer – C) ENTR 206 Principles of Entrepreneurship Page 15 of 23 Study guide for final exam . what type of insurance should an entrepreneur purchase first? A) Health insurance for employees. A tax-friendly form of stock option is called a _______ . A) pension B) incentive stock option C) phantom stock D) municipal stock option E) None of the above. E) Property insurance. (Answer – B) 21. (Answer – C) 18. (Answer – E) 22. E) Property insurance. D) Liability insurance. What is the main attraction of an employment agreement for the employee? A) Social benefits B) Protection against firing without cause C) Guaranteed promotion on a regular basis D) Fewer responsibilities E) Higher wages (Answer – B) 20. disability. B) Key person insurance. C) Business interruption insurance. B) Key person insurance. What type of business can always provide group life. C) Business interruption insurance. Inventories D. Capital D. Which of the following criteria must a deal meet in order for it to be eligible for intra-state securities offering exemption from registration? A) Buyers and offerees of the securities have to be residents of one state B) The company must be incorporated under the laws of that state C) The company offering the securities must have most of its assets in the same state D) The company must do the most of its business in the same state E) All of the above.000. A. A. cost C.000 C) $1. Capacity C. the largest current asset balances are usually in______. inventories D. accounts receivable C. Property. short-term investments (ANSWER-C) 28) Which of the following assets represents the most important current asset of many manufacturing companies. property.000 B) $500. Collateral E. and equipment E.000 (Answer – C) Chapter 11 26) A. plant.000.24. plant. timing (ANSWER-E) ENTR 206 Principles of Entrepreneurship Page 16 of 23 Study guide for final exam . What is the maximum dollar amount of a securities offering for it to still qualify for private placement exemption? A) $100. Accounts receivable C. interest E. Cash B.000 E) $5. Character B. and equipment E. Customers (ANSWER-E) Which of the following is NOT one of the Five Cs of credit? 27) Although the opportunity costs for accounts receivable may be quite large.000. difference D. cash B. quantity B. (Answer – E) 25. A. Short-term investments (ANSWER-C) 29) The ______ of receivables collection and payment of accounts payable are key determinants in whether a firm is cash rich or cash poor.000 D) $2. Elasticity of demand B. All of the above E. Actually undertaking legal proceedings. the other group is more concerned with forecasting ______ for individual industries and products. Expected cash flows. Margin of profit D. sales B. None of above (ANSWER-A) 35) Which of the following is a method of pursuing payment from a customer whom the entrepreneur believes able to pay? A. Expected cost. except _________. weather patterns E. using a specialized collection agency D. One group is primarily concerned with forecasting the future performance of the economy as a whole. None of the above (ANSWER-A) 32) Methods of forecasting environmental change fall into two broad groups. Threatening legal action C. A. Expected sales. the enforcement of credit terms (ANSWER-C) 31) The basis of all receivables and collections is actual net sales. C. A.30) The magnitude of a company's accounts receivable obviously depends upon a number of factors. ENTR 206 Principles of Entrepreneurship Page 17 of 23 Study guide for final exam . D. sales minus returns only if they are 90 days late. the level and the pattern of sales B. Expected accounts receivable. A. None of above (ANSWER-A) 33) The relative proportions of cash sales and credit sales make an important difference to which of the following? A. (ANSWER-D) 34) What economic factor concerning the entrepreneur’s product is the most significant for the company’s credit policy? A. Expected inventory. D. sales plus any returns. cost C. inventory D. C. E. the breakdown between cash and credit sales C. sales minus any returns. None of the above (ANSWER-D) 36) It’s safe to say that collection procedures are expensive and justifiable only when the expected results ______. the difference between current assets and current liabilities D. which is equal to ______. B. Margin of utility E. B. or supplying only for cash B. Refusing any further supplies. the nominal credit terms offered E. Elasticity of supply C. E. sales plus returns only if they are 90 days late. B. None of the above. Higher trust among companies in the same industry. None of the above. B. A loan to the entrepreneur’s working capital. E. individual accounts C. C. are at least 40% lower than the cost. corporate buyers B.A. Field warehousing. Especially bulky inventory. A floating lien. Outside project financing. the total amount as the inventory’s book value D. (ANSWER-E) 43) Which of the following is NOT a factor that influences the interest borrowers pay? ENTR 206 Principles of Entrepreneurship Page 18 of 23 Study guide for final exam . Especially valuable inventory. 25% to 50% C. C. 50% to 75% D. None of the above (ANSWER-C) 39) Which of the following is NOT a way to use inventory as security for a loan? A. D. E. (ANSWER-E) 40) Typically. a small fraction of the sales of the last year E. An inventory of chemicals E. D. D. B. 90%to 100% (ANSWER-D) 41) Banks and finance companies usually lend ______. low-cost goods E. C. A. C. are equal to the cost. 15% to 25% B. (ANSWER-B) 37) A method of reducing overdue accounts and limiting bad debts is setting limits to the credit allowed on______. Public warehousing. only a small fraction of the inventory's market value C. A. E. are lower than the cost. A. B. exceed the cost. Structural steel D. a company can borrow what percent of its accounts receivable’s face value if it has a good credit rating and its customers have excellent credit ratings. only a small fraction of the inventory’s book value B. A chattel mortgage. 75% to 90% E. high-cost goods D. Debt swaps. Higher accounts payable. a large fraction of the sales of the last year (ANSWER-B) 42) Which of the following is not suitable for using field warehousing? A. in writing a floating lien. none of the above (ANSWER-B) 38) What does a trade-credit effectively amount to? A. Replacement Value is a variation of: A) Market-Comparable Valuation Method B) Earning Capitalization Method C) Present Value of Future Cash Flows Method D) Market Capitalization Method E) Asset-based Valuation Method (Answer – E) 4. collateral appraisal E. the method used to calculate the interest (ANSWER-D) 44) The bank discount method is common in ______. All of the following is mentioned in the chapter as possible sources of funding that the entrepreneur should explore prior to soliciting investments from family and friends. insurance (ANSWER-A) Chapter 10 1. long-term business loans C. A. The equation for the value of a company with the earnings capitalization method is: A) Company Value = Gross Revenue ÷ Book Value B) Company Value = Net Income ÷ Capitalization Rate C) Company Value = Net Income × Market price of stocks D) Company Value = Sum of Cash Flow for the past five years E) Company Value = Price of one share × number of shares (Answer – B) 2. the dollar amount of the loan B. the nominal rate of interest D. financing from customer prepayments D. Which of the following must be added to Operating Income when calculating Free Cash Flow? A) Depreciation B) Principal Payments C) Interest Payments D) Capital Expenditures E) Tax Payments (Answer – A) 3. What percent of informal investment is directed to businesses founded by the investor’s relative? A) 25% ENTR 206 Principles of Entrepreneurship Page 19 of 23 Study guide for final exam . the length of time involved C.A. the repayment location E. except: A) Vendor financing B) Reduced rent from a landlord C) Selling infrastructural assets D) Customer financing E) Services at reduced rates (Answer – C) 5. short-term business loans B. The least desirable way for venture capitalist to harvest an investment is: A) IPO B) Acquisition C) Buyback D) Stock swap E) They are equally attractive (Answer – C) 10. According to the GEM study.15 billion C) $15 .20 billion D) $20 .60 billion (Answer – C) 8. Which of the following types of angels is usually a passive investor? A) Professional B) Entrepreneurial C) Corporate D) Micromanagement E) Enthusiast (Answer – E) 9.B) 35% C) 40% D) 50% E) 65% (Answer – D) 6. half of all informal investors are expecting their money to be returned within how many years? A) 1 year B) 2 years C) 3 years D) 4 years E) 5 years (Answer – B) 7. Venture capitalists will invest only if the company has the potential to return at least: ENTR 206 Principles of Entrepreneurship Page 20 of 23 Study guide for final exam .30 billion E) $50 . How much do business angels invest annually in the US? A) $5 . Which of the following is not one of the six top factors venture capitalists evaluate in analyzing a candidate for investment? A) Management team B) Business plan C) Product/service D) Investors’ recommendations E) Target market (Answer – D) 12.6 billion B) $10 . Which of the following is a non-financial reason for an angel to invest? A) A desire to mentor entrepreneurs B) Recreation C) To indirectly benefit society D) All of the above E) None of the above (Answer – D) 11. A) Seven times their investment in five years B) Four times their investment in three years C) Five times their investment in two years D) Ten times their investment in seven years E) Five times their investment in five years (Answer – A) 13. What are the most attractive companies that go public usually backed with? A) Angel capital. a venture capitalist should not sit on more than what number of portfolio company boards? A) 2 B) 5 C) 8 D) 10 E) 12 (Answer – B) 16. E) Sweat equity (Answer – B) 14. From a venture capitalist’s perspective. C) Positive cash flow. B) Venture capital. D) Investments from family members. an introduction to an entrepreneur through which of the following people is most worrisome? A) Other entrepreneurs B) Lawyers C) Finders D) Angels E) Bankers (Answer – C) 15. In general. What percent of all VC backed companies ever go public? A) <1% B) 5% C) 10% D) 25% E) 55% (Answer – B) ENTR 206 Principles of Entrepreneurship Page 21 of 23 Study guide for final exam . What will a VC usually receive in exchange for the money invested? A) Common stock B) Stock options C) Promissory notes D) Letter of deposit E) Convertible preferred stock (Answer – E) 17. What is the term for the event by which the investor realizes his or her investments? F) Crop A) Gain B) Exit C) Yield D) Cream (Answer – C) 18. The four Cs of entrepreneurship: Calling. For the entrepreneur advancing through the IPO process. Write in minimum 100 words for each C to explain these four Cs of entrepreneurship that guide the process of entrepreneurship. What is the term for the founder’s compensation to be paid a few years after the company is acquired. ENTR 206 Principles of Entrepreneurship Page 22 of 23 Study guide for final exam .5% B) ~3% C) ~5% D) ~7% E) ~10% (Answer – D) 21. what is the step that immediately follows the SEC’s approval of the preliminary prospectus? A) The “road-show” B) Filing the registration form with the SEC C) Agreeing upon the price of stocks D) Meeting with all key players E) Start seeking an underwriter for the IPO (Answer – A) 22. What is the underwriter’s standard commission for taking a company public? A) ~1. Confidence. The period when the prior shareholders are not permitted to sell any of their stock is called: A) Lockup period B) Blocking period C) Limited period D) Banning period E) None of the above (Answer – A) 20. if the company meets certain targets? A) Added value B) Plus value C) Money on the table D) Premium for excess E) Earn-out (Answer – E) Essay: 1.19. Character. Competence. Business Plan a.1. The plan must establish an opportunity worth exploiting and detail how to accomplish it.1. What did you learn about entrepreneurship as a result of doing the business plan? Suggested answer: The Business Planning Process The most important aspect of writing the business plan is the learning that goes on as you identify your concept and then research the concept. Start organizing information in a meaningful way after acquiring a critical mass of learning. The process undertaken in developing a tight. and customers.2 Table of Contents 7. The great benefit of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner.9 Critical Risks 7. What is the purpose of a business plan? b.2. Wisdom is realizing that the business plan is a “living document. the competitors.1.5 Company and Product Description 7. Essay 2 has four questions. Give a short summary of the business plan you worked on for this class.1. Your planning process will focus on critical aspects of your business model.1.* * * * * Praises to God for Asia-Pacific International University * * * * * ENTR 206 Principles of Entrepreneurship Page 23 of 23 Study guide for final exam .1.” THE BUSINESS PLAN 7. The business planning process raises critical questions about the feasibility of the venture.1 The Cover 7. THE PLANNING PROCESS Business planning literally starts when you start thinking about your new venture.3 Executive Summary 7. these critical aspects map well to the typical format of a business plan. the industry. Customer.12Appendices .8 Team 7.6 Marketing Plan 7.1. well written story is also very important. and Competitor Analysis 7.1.7 Development Plan 7. d.1.10Offering 7. and not coincidentally.1.4 Industry. What is included in the business plan? c.1.11Financial Plan 7.1.