BA109 Chapter 4 - Practice Exam 2023 with complete
solution
T/F The executive summary of a business plan should summarize all of the
relevant points of the proposed venture and should be concise-no more than two
pages.
True
T/F The executive summary serves as the thesis statement for the entire business
plan.
False
T/F The higher a small business scores on the 5 C's of credit, the greater its
chances will be of receiving a loan.
True
T/F To get external financing, an entrepreneur's business plan must pass the
reality test, the competitive test, and the value test with potential lenders and
investors.
True
T/F An entrepreneur should prepare a single set of "most likely" financial
forecasts for one year into the future as part of the business plan.
False
T/F The plan of operation section of the business plan should address how the
business plans to retain key managers and employees.
True
T/F After presenting the business plan to a group of potential lenders and
investors, an entrepreneur should sit back and wait to hear from those who might
be interested in the venture.
False
T/F The most common reasons banks give for rejecting small business loan
applications are undercapitalization and too much debt.
True
T/F The "two-thirds rule" says that only two-thirds of the entrepreneurs with a
sound new business venture will get financing, that they will get only two-thirds
of what they need, and that it will take them two-thirds longer to get it than they
anticipated.
True
T/F Capital requirements, estimate earnings, and return on investment are three
aspects of the financial feasibility analysis.
True
T/F Because the entrepreneur is the driving force behind a business idea, he or
she should also be the driving force behind the business plan.
True
T/F The loan proposal portion of the business plan should include a realistic
timetable for repayment or for investors to exit.
True
, ________ are broad, long-range statements of what a company plans to achieve
in the future that guide its overall direction and addresses the question, "Why am
I in business?"
Goals
T/F Before presenting a business plan to potential lenders and investors, an
entrepreneur must be well informed and well prepared.
True
T/F The competitive test that a business plan must pass in order to attract
financing for lenders and investors involves proving to them that the venture
offers a high probability of repayment or an attractive rate of return.
False
T/F The "C" of the 5 C's of Credit that is synonymous with cash flow is capital.
False
The ________ serves as the "thesis statement" for the entire business plan and is
the broadest expression of a company's purpose and defines the direction in
which it will move.
mission statement
T/F In a business plan, both company goals and objectives should relate to the
company's mission.
True
Proving that a profitable market exists involves:
proving that customers in the marketplace need or want the good or service and are
willing to pay for it and documenting claims about market size and growth rates with as
much factual information as possible only
Which of the following is true about the preparation of a business plan?
The elements of the plan may be standard, but the content should reflect the unique
aspects of the business and the excitement of the entrepreneur.
A synonym for capacity is:
cash flow.
The higher a small business scores on the 5 C's of credit, the greater its chances
will be of receiving a loan.
True
A business plan that fails to assess a company's competitors realistically makes
the entrepreneur appear to be poorly prepared.
True
The business and industry profile section of the business plan should cover
existing and anticipated profitability of firms in the targeted market segment and
any significant entry or exit of firms.
True
The second essential purpose for creating a business plan is:
to attract lenders and investors.
In the business and industry profile section of the business plan, the
entrepreneur should provide information on the size of the market, growth trends,
and the relative economic and competitive strength of the industry's major
players.
True
solution
T/F The executive summary of a business plan should summarize all of the
relevant points of the proposed venture and should be concise-no more than two
pages.
True
T/F The executive summary serves as the thesis statement for the entire business
plan.
False
T/F The higher a small business scores on the 5 C's of credit, the greater its
chances will be of receiving a loan.
True
T/F To get external financing, an entrepreneur's business plan must pass the
reality test, the competitive test, and the value test with potential lenders and
investors.
True
T/F An entrepreneur should prepare a single set of "most likely" financial
forecasts for one year into the future as part of the business plan.
False
T/F The plan of operation section of the business plan should address how the
business plans to retain key managers and employees.
True
T/F After presenting the business plan to a group of potential lenders and
investors, an entrepreneur should sit back and wait to hear from those who might
be interested in the venture.
False
T/F The most common reasons banks give for rejecting small business loan
applications are undercapitalization and too much debt.
True
T/F The "two-thirds rule" says that only two-thirds of the entrepreneurs with a
sound new business venture will get financing, that they will get only two-thirds
of what they need, and that it will take them two-thirds longer to get it than they
anticipated.
True
T/F Capital requirements, estimate earnings, and return on investment are three
aspects of the financial feasibility analysis.
True
T/F Because the entrepreneur is the driving force behind a business idea, he or
she should also be the driving force behind the business plan.
True
T/F The loan proposal portion of the business plan should include a realistic
timetable for repayment or for investors to exit.
True
, ________ are broad, long-range statements of what a company plans to achieve
in the future that guide its overall direction and addresses the question, "Why am
I in business?"
Goals
T/F Before presenting a business plan to potential lenders and investors, an
entrepreneur must be well informed and well prepared.
True
T/F The competitive test that a business plan must pass in order to attract
financing for lenders and investors involves proving to them that the venture
offers a high probability of repayment or an attractive rate of return.
False
T/F The "C" of the 5 C's of Credit that is synonymous with cash flow is capital.
False
The ________ serves as the "thesis statement" for the entire business plan and is
the broadest expression of a company's purpose and defines the direction in
which it will move.
mission statement
T/F In a business plan, both company goals and objectives should relate to the
company's mission.
True
Proving that a profitable market exists involves:
proving that customers in the marketplace need or want the good or service and are
willing to pay for it and documenting claims about market size and growth rates with as
much factual information as possible only
Which of the following is true about the preparation of a business plan?
The elements of the plan may be standard, but the content should reflect the unique
aspects of the business and the excitement of the entrepreneur.
A synonym for capacity is:
cash flow.
The higher a small business scores on the 5 C's of credit, the greater its chances
will be of receiving a loan.
True
A business plan that fails to assess a company's competitors realistically makes
the entrepreneur appear to be poorly prepared.
True
The business and industry profile section of the business plan should cover
existing and anticipated profitability of firms in the targeted market segment and
any significant entry or exit of firms.
True
The second essential purpose for creating a business plan is:
to attract lenders and investors.
In the business and industry profile section of the business plan, the
entrepreneur should provide information on the size of the market, growth trends,
and the relative economic and competitive strength of the industry's major
players.
True
