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Study Resources (Business Management)

  111) It is much wiser to carry too little inventory rather than too much because there are no costs associated with carrying too little inventory. 112) Cash and quantity discounts allow business owners to receive a price break in the goods they purchase. 113) Bartering-exchanging goods and services for other goods and.
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  70) Management consulting firm McKinsey and Company claims that ________ of the pricing problems on new products are the result of companies setting prices that are too low. A) 10 to 20 percent B) 40 to 50 percent C) 60 to 70 percent D) 80 to 90 percent 71) Market penetration.
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  41) If the accounting period is one year with credit sales totaling $2,500,000 and accounts receivable totaling $200,000, what is the average collection period ratio? A) 29.2 days B) 365 days C) 119.3 days D) Cannot be determined from the information provided 42) For the most meaningful interpretation, the small business owner should compare his.
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  21) The fact that the cash budget illustrates the flow of cash in a business helps the owner to: A) accelerate accounts payable payments. B) get a seasonal line of credit rather than an annual line of credit. C) slow accounts receivable payments. D) track the effects of depreciation and bad debts. 22) By planning.
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  20) Management consulting firm McKinsey and Company states that more than ________ percent of the pricing problems on new products are the result of companies setting prices that are too low. A) 20 B) 40 C) 60 D) 80 21) When pricing a new product, a small business owner should strive to always satisfy.
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  21) Analyzing financial ratios could alert a business owner to which of these problems? A) Excessive inventory B) Overextending credit C) Too much debt D) All of the above 22) Which of the following is not a liquidity ratio? A) Current ratio B) Total asset turnover ratio C) Quick ratio D) None of the above 23) The ________ ratio is.
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  51) Port Royal's net profit-to-equity ratio is: A) 23.8 percent. B) 37.4 percent. C) 16.1 percent. D) 232.7 percent. 52) A business should provide the owner with a reasonable rate of return based upon: A) the time and money invested in the business. B) industry averages. C) the capital borrowed from the bank. D) an acceptable annual salary. 53) Ideally,.
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  31) To encourage credit customers to pay invoices promptly, a business owner should: A) ensure that all invoices are clear, accurate, and timely. B) state clearly a description of the goods or services purchased and an account number. C) include a telephone number and a contact person in case the customer has a.
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  50) A customer who purchases a television from Ace Appliance Store and pays for it in 36 monthly payments is most likely using: A) trade credit. B) charge account credit. C) installment credit. D) debit card credit. 51) One of the requirements to be able to offer ________ is to make certain that the firms'.
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  1) Solid cash management enables a business owner to: A) adequately meet the cash demands of the business. B) avoid retaining unnecessarily large cash balances. C) stretch the profit-generating power of each dollar the business owns. D) All of the above 2) ________ is the most important, yet least productive, asset that a small business.
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  136) How are sales forecasts developed for an established business? How are sales forecasts developed for a new business enterprise? 137) Identify the "big three" of cash management. As a small business consultant, what would you recommend your clients do to control the "big three" more effectively? 138) What steps can a.
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  101) Communication in a timely and professional manner is key to effective collection activities. 102) Proper cash management techniques call for a small business owner to pay invoices as soon the invoices arrive. 103) Efficient cash managers set up a payment calendar each month, which allows them to pay their bills.
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  31) The ________ ratio measures the percentage of total assets financed by a small company's creditors compared to its owners. A) debt B) times-interest-earned C) net sales to total assets D) total asset turnover 32) A high debt ratio: A) means that creditors provide a large percentage of the company's total financing. B) gives a small business.
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  111) The net-sales-to-total assets ratio is also referred to as the total asset turnover. 112) The net-sales-to-total assets ratio measures a company's ability to generate sales in relation to its asset base. 113) Float is the net number of days of cash flowing into or out of a company. 114) The net.
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  101) Operating ratios measure the extent to which an entrepreneur relies on debt capital rather than equity capital to finance the business. 102) The average inventory turnover ratio measures the number of times a company's inventory is sold out during the accounting period. 103) An inventory turnover ratio above the industry average.
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  132) Why is cash a unique asset? What are the advantages of efficient cash management? 133) Your friend Jake owns a business that is achieving phenomenal growth. Explain why it is said that: "Fast-growing companies are most likely to experience cash shortages." 134) The profits your small business is generating are high;.
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  121) Companies lose billions of dollars each year due to employee theft. 122) Rather than build the current year's budget on increases from the previous year's budget, zero-based budgeting starts from a budget of zero and evaluates the necessity of every item. 123) In order to deter employee theft, it is best.
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  104) What does it mean to "focus on value" in relationship to establishing a price? In your response, discuss how customers recognize and evaluate value. 105) Name and explain the three basic pricing strategies a small business owner has in establishing a new product's price. 106) Describe two situations; one where.
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  71) Assets represent what a business owns, while liabilities represent the claims creditors have against a company's assets. 72) The income statement is based on the fundamental accounting equation: 73) On the income statement, the cost of goods sold represents the total cost, excluding shipping, of the merchandise sold during the year. 74).
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  30) Although many retailers must match competitors' prices on identical items, maintaining a ________ pricing policy may not be healthy for a small business because it robs the company of the opportunity to create a distinctive image in its customers' eyes. A) markup B) follow-the-leader C) below-market D) matching 31) A technique offering customers.
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  61) What is the return on net worth ratio for Meters, Inc.? A) 8.5 percent B) 1.91:1 C) 21.8 percent D) 29.3 percent Regarding Gunther's Emporium, refer to the following to answer the question(s) below :   Gunther's Emporium expects net sales of $2,396,919 for the upcoming year, with variable expenses totaling $1,813,443 and fixed expenses of.
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  130) Were the bankers correct? Do you think Jim should expand the business? 131) What level of sales would Birmingham's have to achieve if it wanted to make a $25,000 profit? 132) Construct a break-even chart for Birmingham's. 133) Compute a break-even point in dollars. 134) Suppose that the manufacturer desires a profit of.
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  90) Most stores find it most practical to use a flexible markup, which assigns various markup percentages to different types of products. 91) Below-market pricing strategies can be risky for small companies because they require businesses to constantly achieve high sales volume to remain competitive. 92) Even though cost-plus pricing is.
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  1) Setting prices for products and services requires entrepreneurs to balance a multitude of complex forces as entrepreneurs determine prices for their goods and services that will draw customers and: A) position prices lower than all competitors. B) produce a profit. C) effectively compete with online alternatives. D) have high volume/high margin sales. 2) Which.
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  1) In order to reach profit objectives, entrepreneurs must be aware of their firms': A) current ratio and liabilities. B) fixed assets and owner's equity. C) assets and liabilities. D) overall financial position and any changes in the financial status. 2) The ________ shows what assets the business owns and what claims creditors and owners.
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  141) From the information given, prepare a monthly cash budget for the next quarter (October through December) for the Laurens Corporation. 142) How much would Rent-A-Nerd have to borrow if its desired minimum cash balance is $4,000? a.$2,224 in Month 3 b.Nothing. Rent-A-Nerd's end of the month cash balance is below $4,000. c.$2,598 in.
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  40) Which of the following is/are true regarding cost-plus pricing? A) It encourages the manufacturer to operate efficiently. B) It fails to consider competitors' prices appropriately. C) It fails to guarantee the manufacturer a desired profit margin. D) Only A and C 41) A reliable cost accounting system is necessary for accurate pricing. The traditional.
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  71) There is concern over the future of entrepreneurship because so few high school and college students want to start their own companies. 72) The shift to a service economy has not had a significant impact on entrepreneurial opportunities. 73) Cloud computing allows businesses to use a variety of applications and.
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  91) Forty percent of industrial and wholesale sales are on credit, and 90 percent of retail sales are on account. 92) Most small businesses conduct a thorough credit investigation before selling to a new customer. 93) The first line of defense against bad debt losses is to have a financial institution extend.
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  11) Which of the following is not a step in creating a cash budget? A) Determining an adequate minimum cash balance B) Forecasting profits C) Forecasting cash receipts D) Forecasting cash disbursements 12) A cash budget is based on the cash method of accounting, meaning that cash receipts and cash disbursements are recorded in the.
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  136) Calculate Harry's break-even point. 137) Create a break-even chart for Harry. 138) If Harry's profit target is $15,000, what level of sales must be achieved? 139) Suppose that a market survey indicates that Anthony's proposed business is likely to generate only $190,000 in sales. What net profit should Anthony expect to earn? 140).
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  61) Serial entrepreneurs repeatedly start businesses and grow them to a sustainable size before striking out again. 62) Surveys show that small business owners believe that, as entrepreneurs, they work harder, earn more money, and are happier than if they worked for a large company. 63) The opportunity to reap impressive profits.
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  81) Since even the best sales forecast will be wrong, the small business owner should prepare three forecasts-optimistic, pessimistic, and most likely. 82) A sale to a customer is not really a sale until the business owner actually collects the money from it. 83) To project cash receipts, an entrepreneur must analyze.
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  11) On a company's statement of cash flows, depreciation is: A) the difference between the total sources available to the owner and the total uses of those assets. B) listed as a source of funds because it is a noncash expense, already deducted as a cost of doing business. C) the owner's total.
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  108) Explain the difference between absorption costing and variable (or direct) costing. Which one is more useful when establishing prices? Why? 109) Explain the different kinds of credit a small business can offer its customers and the impact each has on pricing. 110) Explain the advantages and the disadvantages of a small.
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