Entrepreneurship Midterm Study

A breakeven analysis can determine:

• how many units the company will need to sell to pay for a new piece of equipment

• the identity of future loan guarantors

• when a company must pay its bills to avoid bankruptcy

• how many customers a new business will need to secure to meet its revenue projections

A business plan has the following purpose

• serves as collateral that a company can take to a bank to secure guaranteed loans

• serves as a required filing with the Internal Revenue Service

• describes in detail how the company's product or service will be differentiated versus its competition

• describes in detail how the company will set up its headquarters office

A company balance sheet is the single report that best indicates:

• company quarterly cash flow

• company assets and liabilities

• company financial projections

• monthly debt payments and outstanding debt obligations

A conflict of interest is:

• when business partners have an honest disagreement about their next advertising campaign

• when an accountant disagrees with the IRS on how much a company owes in income taxes

• a situation in which an individual might take an action to his/her advantage that would be to the disadvantage of a person or company that believe this individual is serving them

• naturally occurring whenever there is competition between small businesses

A guarantor:

• must be a business or individual located in-state

• assumes no legal responsibilities

• has limited liquidity

• is a credit-worthy individual or business responsible for repaying a loan if the debtholder cannot

A payment made to an insurance company to cover the costs of an insurance policy is called:

• a policy

• a premium

• a dividend

• a beneficiary

Advertising can be important for a new business because it:

• communicates a differentiated message to your target customers

• is a free form of promotion

• allows the new business to set up a network of distributors

• is a low-cost method to increase revenues

Amari has had a frustrating week. One of the new employees hired just last week showed up late her first two days, and another didn't even show up one of his scheduled days. Amari talked patiently with both of them in the hope that they could turn their situation around and become valuable team members. Unfortunately, at the same time the bank returned the credit application that took Amari hours to fill out with requests for additional information. Amari had to find the time to find that information and send the application back to the bank. Finally, Amari really wanted to watch the The Voice on television tonight, but decided to stay in the store until closing because the store is short-staffed. The type of entrepreneurial behavior that Amari has been exhibiting can best be described as:

• comfort engaging with strangers

• financial literacy

• self-discipline

• pessimism

An example of a fixed cost is:

• cost of goods sold

• hourly labor

• office supplies

• monthly rent

An example of a variable cost is:

• overhead salaries

• cost of goods sold

• the salary of the Finance Vice President

• monthly rent