ENT 2113 PRACTICE EXAM QUESTIONS
WITH 100% CORRECT ANSWERS
A small business owner may want to exit the business because- - Answer- All of these
choices are correct (the business has done well but the future does not hold the same
potential for similar success; it is difficult to pursue other opportunities; it is not
enjoyable as it requires a lot of personal commitment)
A business that is declining due to operations problems struggles with- - Answer- both
not selling enough products or services and not being efficient in producing the product
Which of the following statements is true of the fast-track version of chapter-11
bankruptcy? - Answer- It shows how back taxes will be brought current over a five-year
period
A small business founder needs to plan for the type of sale that will _____ their returns.
- Answer- Maximize
In the context of a business valuation, which of the following methods best works for
firms with hard resources and not an internet business? - Answer- Asset-based
valuation
Which of the following is the most widely accepted and the most insightful method of
valuation? - Answer- Discounted future net cash flow
A firm sets up a low level of salary but offers to share a percentage of its profits at the
end of the year. What is this called? - Answer- Profit sharing
A program that allows employees to contribute to their retirement on a tax-free basis is-
- Answer- 401(k)
________ is a type of insurance in which a business is covered if the workers cause
any damage to the performance of the work. - Answer- Bonding
ADA stands for the Americans with Disabilities Act. - Answer- True
Industry associations have extensive data on their industry, and are usually quite willing
to share that with a public. - Answer- True
, Title VII of the Civil Rights Act currently applies to firms with more than 10 employees. -
Answer- False - it applies to firms with more than 15 employees
In a C Corporation, it is possible to have double taxation situation. - Answer- True
A business can obtain liability insurance, which helps protect the business against
lawsuit judgements. - Answer- True
In the context of business licenses, a business is required to pay a business license tax
that is determined by the number of employees it has. - Answer- False - it's based on
company sales
Fragmented markets are markets where no one competitor has a majority share of the
market. - Answer- True
Whether hiring for a line worker or a first line manager, an owner should devote the
same amount of time in checking references. - Answer- False - it should be a balanced
check of references based on the nature of the job
Accrual-based accounting is a system where expenses and revenues are recorded
when they occur. - Answer- True
Debt, a source of non-equity funding, allows a new business to handle the disparity
between when goods must be purchased and when money will be received from a
customer to pay for those goods. - Answer- True
One form of funding for new small businesses is grants from governmental and private
foundation sources. - Answer- True
Accepting an equity stake from an investor makes the owner accountable to that
investor when founding and managing a business. - Answer- True
The founders of an entrepreneurial business must avoid personally lending money to
the business, as such debts are considered to be unsecured investments that need not
to be paid back, should the business fail. - Answer- False
Which one of the following is a key report that a new business owner should be
prepared to generate? - Answer- All of the answers are correct (a check register, chart
of accounts, and expense accounts)
Accepting ________ ties a firm to the supplier and usually stops the firm from shopping
around for a lower price. - Answer- Supplier credit
A bank provides John money for the necessary hamburger maker for his business. This
is called ________. - Answer- Asset-based lending
WITH 100% CORRECT ANSWERS
A small business owner may want to exit the business because- - Answer- All of these
choices are correct (the business has done well but the future does not hold the same
potential for similar success; it is difficult to pursue other opportunities; it is not
enjoyable as it requires a lot of personal commitment)
A business that is declining due to operations problems struggles with- - Answer- both
not selling enough products or services and not being efficient in producing the product
Which of the following statements is true of the fast-track version of chapter-11
bankruptcy? - Answer- It shows how back taxes will be brought current over a five-year
period
A small business founder needs to plan for the type of sale that will _____ their returns.
- Answer- Maximize
In the context of a business valuation, which of the following methods best works for
firms with hard resources and not an internet business? - Answer- Asset-based
valuation
Which of the following is the most widely accepted and the most insightful method of
valuation? - Answer- Discounted future net cash flow
A firm sets up a low level of salary but offers to share a percentage of its profits at the
end of the year. What is this called? - Answer- Profit sharing
A program that allows employees to contribute to their retirement on a tax-free basis is-
- Answer- 401(k)
________ is a type of insurance in which a business is covered if the workers cause
any damage to the performance of the work. - Answer- Bonding
ADA stands for the Americans with Disabilities Act. - Answer- True
Industry associations have extensive data on their industry, and are usually quite willing
to share that with a public. - Answer- True
, Title VII of the Civil Rights Act currently applies to firms with more than 10 employees. -
Answer- False - it applies to firms with more than 15 employees
In a C Corporation, it is possible to have double taxation situation. - Answer- True
A business can obtain liability insurance, which helps protect the business against
lawsuit judgements. - Answer- True
In the context of business licenses, a business is required to pay a business license tax
that is determined by the number of employees it has. - Answer- False - it's based on
company sales
Fragmented markets are markets where no one competitor has a majority share of the
market. - Answer- True
Whether hiring for a line worker or a first line manager, an owner should devote the
same amount of time in checking references. - Answer- False - it should be a balanced
check of references based on the nature of the job
Accrual-based accounting is a system where expenses and revenues are recorded
when they occur. - Answer- True
Debt, a source of non-equity funding, allows a new business to handle the disparity
between when goods must be purchased and when money will be received from a
customer to pay for those goods. - Answer- True
One form of funding for new small businesses is grants from governmental and private
foundation sources. - Answer- True
Accepting an equity stake from an investor makes the owner accountable to that
investor when founding and managing a business. - Answer- True
The founders of an entrepreneurial business must avoid personally lending money to
the business, as such debts are considered to be unsecured investments that need not
to be paid back, should the business fail. - Answer- False
Which one of the following is a key report that a new business owner should be
prepared to generate? - Answer- All of the answers are correct (a check register, chart
of accounts, and expense accounts)
Accepting ________ ties a firm to the supplier and usually stops the firm from shopping
around for a lower price. - Answer- Supplier credit
A bank provides John money for the necessary hamburger maker for his business. This
is called ________. - Answer- Asset-based lending
