Question 1: The basic ideas forming the foundation of customer loyalty for small firms include the notion that:

A.superior customer service will almost always lead directly to customer satisfaction.

B.customer satisfaction demands customer loyalty.

C.small firms possess great potential for providing superior customer service.

D.customer satisfaction is "the name of the game" for such businesses.

Question 2: Groups that an individual allows to influence his or her behavior are known as:

A.reference groups.

B.referral groups.

C.perceptual groups.

D.associate groups.

Question 3: Every new product must be carefully analyzed in terms of financial considerations in the _____ stage of the product development process.

A.business analysis

B.idea accumulation

C.product testing

D.total product development

Question 4: Costs incurred by a firm in actually producing a product (e.g., materials, machinery, etc.) are considered to be a part of

A.general overhead expenses.

B.costs of manufacturing.

C.cost of goods sold.

D.manufacturing overhead expenses.

Question 5: Within the framework of a break-even analysis, an examination of _____ is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.

A.costs

B.revenues

C.sales forecasts

D.costs and revenue

Question 6: A widely dispersed market favors which of the promotional methods?

A.Personal selling

B.Sales promotion

C.Personal promotion

D.Advertising

Question 7: The two basic types of advertising are _____, which makes potential customers aware of products and their need for them, and _____, which conveys an idea about the firm that produces the product.

A.institutional, product

B.product, institutional

C.product, publicity

D.specialty, publicity

Question 8: A bank loan officer believes that a particular small business loan applicant is a typical entrepreneur and, therefore, is

A.skilled in general management.

B.lacking in managerial expertise.

C.strongly oriented toward careful planning.

D.focused on financial management.

Question 9: Frequent and flagrant disregard of the chain of command undermines the position of the

A.founder.

B.operative employee.

C.staff specialist.

D.bypassed manager.

Question 10: A survey of time usage has been recommended to a small business owner by a management consultant. This will provide the owner with a basis for improving the business by

A.classifying time spent according to functional areas of the business.

B.avoiding procrastination.

C.focusing attention on the most crucial tasks.

D.minimizing use of meetings.

Question 11: A small business owner wishes to persuade a highly qualified applicant (a business school graduate) to consider a position with his firm carefully, even though the applicant has also had offers from large corporations. The owner should most strongly emphasize the

A.family atmosphere.

B.retirement program.

C.potential for greater freedom of personnel to structure their job duties.

D.long history of the firm.

Question 12: When employer-employee relationships in a small firm are compared with those in a large firm, it is found that

A.the relationships are less formal in the large firm.

B.the large firm concentrates more on production and the small firm is more interested in personnel.

C.the small firm makes less use of formal personnel policies.

D.personnel policy changes are implemented more quickly in the large firm than in the small firm.

Question 13: After attending a total quality management (TQM) seminar, a small business owner decides that her firm has a good customer focus and adequate tools and techniques. To be assured of a really strong quality program, however, she knows that she must now establish the proper

A.statistical quality control.

B.benchmarking.

C.marketing research.

D.organizational culture.

Question 14: The primary purpose of reengineering is to

A.find the proper time required for each work activity.

B.establish the standard cost for each work activity.

C.increase the quality level of products.

D.create substantial improvements in operations.

Question 15: Activities easily outsourced by small businesses include

A.payroll administration.

B.research and development.

C.quality control.

D.top-level decision making.

Question 16: Small firms are likely to be tempted to act unethically because

A.founders or owners of small businesses are usually crooked.

B.breaking the rules often seems to be the only way to make a profit and survive.

C.small businesses are exempt from federal regulations.

D.Better Business Bureaus don't deal with small businesses.

Question 17: In drawing up a code of ethics, a small business owner should adopt a code

A.provided by the Ethics Resource Center of Washington, D.C.

B.that outlines ethical principles and gives examples.

C.that outlines ethical principles but avoids examples.

D.suggested by the Better Business Bureau.

Question 18: Consumerism affects small businesses most directly in the area of

A.worker's compensation.

B.product safety.

C.environmental pollution.

D.manufacturing costs.

Question 19: Which of the following shows the original cost of each asset and depreciation taken to date, along with other information such as the condition of the asset?

A.Accounts payable records

B.Accounts receivable records

C.Cash records

D.Fixed asset records

Question 20: Which of the following accounting methods/systems recognizes revenue and expenses only when cash is received or payment is made?

A.Single-entry system

B.Double-entry system

C.Accrual method

D.Cash method

Question 21: The use of debt can

A.increase a firm's return on equity.

B.reduce a firm's risk.

C.improve a firm's inventory turnover ratio.

D.enhance market response to a firm's performance.

Question 22: Rapid growth that soaks up cash more rapidly than cash is generated creates

A.a net loss.

B.a reduction in rate of inventory turnover.

C.a growth trap.

D.bankruptcy.

Question 23: The rate of return a firm could earn on another investment of similar risk is

A.cost of capital.

B.internal rate of return.

C.opportunity cost.

D.accounting return on investment.

Question 24: Evaluation and review is an important step in the risk management process because

A.it is difficult to select an effective method to manage risks.

B.conditions change.

C.it is nearly impossible to evaluate risk effectively.

D.entrepreneurs find it challenging to identify the major risks that they face.

Question 25: Regarding partners in a small business, statistics reveal that the risk of disability is __________ the risk of death.

A.greater than

B.less than

C.about the same as

D.correlated with