1. Return on sales is also known as:
a. ☐Return on investment
b. ☐Profit margin
c. ☐Cost of goods sold
d. ☐None of the above
2. One way for a business to raise the capital it needs to grow it finance with:
a. ☐Earnings
b. ☐Debt
c. ☐Equity
d. ☐All of the above
3. An example of a company where revenue is primarily from the production of a tangible product is:
a. ☐Ford Motor Company
b. ☐Ernst & Young
c. ☐Massage Envy
d. ☐Netflix
4. One disadvantage of corporations is that their profits are subject to double-taxation, taxed once on the corporate level and again when investors receive their share of profits.
a. ☐True
b. ☐False
5. Examples of variable costs include:
a. ☐Commissions
b. ☐Shipping
c. ☐Cost for materials
d. ☐All of the above
6. Payment of a percentage of the revenue generated by the sale of each unit is known as:
a. ☐Royalty
b. ☐Franchise
c. ☐Diversification
d. ☐Line extension
7. Which kind of company acts as a middleman, buying goods from a manufacturer and selling them on to a retailer?
a. ☐Retail
b. ☐Wholesale
c. ☐Manufacturing
d. ☐Service
8. A cash flow statement provides the same information as an income statement.
a. ☐True
b. ☐False
9. A company codifies its reason for existence in the form of a:
a. ☐Performance objective
b. ☐Mission statement
c. ☐Profit statement
d. ☐None of the above
10. What is the final step in the employee recruitment process?
a. ☐Salary negotiation
b. ☐Hiring
c. ☐Orientation
d. ☐None of the above
11. In 2013, Ken invested $20,000 in his company. In the same year, his net profits were $3,500. What was his annual ROI in 2013?
a. ☐17.5%
b. ☐5.7%
c. ☐1.75%
d. ☐57.1%
12. A free enterprise system is also known as:
a. ☐Economics
b. ☐Market system
c. ☐Production economy
d. ☐Free-trade system
13. The opposite of the skimming strategy of pricing is the:
a. ☐Penetration strategy
b. ☐Skimming strategy
c. ☐Meet-or-beat the competition
d. ☐Cost-plus
14. A reward for becoming an entrepreneur is:
a. ☐Control over time
b. ☐Control over compensation
c. ☐Control over working conditions
d. ☐All of the above
15. Lee has $255,000 in current assets and $175,000 in current liabilities. How much working capital does she have?
a. ☐$85,000
b. ☐$430,000
c. ☐$80,000
d. ☐None of the above
16. How often should you rebalance your investment portfolio?
a. ☐Monthly
b. ☐Bi-annually
c. ☐Annually
d. ☐Every three years
17. Net worth is also known as owner’s equity.
a. ☐True
b. ☐False
18. Franchising and licensing are examples of what kind of strategies?
a. ☐Harvest
b. ☐Diversification
c. ☐Replication
d. ☐None of the above
19. Which of the following telephone behaviors is NOT a hallmark of a successful salesperson?
a. ☐Waiting to offer solution or products until later in the call.
b. ☐Letting the customer talk less than you do.
c. ☐Asking the right questions.
d. ☐None of the above.
20. Using orders as a unit of sale is most commonly associated with which kind of business?
a. ☐Retail
b. ☐Wholesale
c. ☐Manufacturing
d. ☐Service
21. The giving of resources to charities in an effort to help solve a social or environmental problem is known as:
a. ☐Philosophy
b. ☐Mission
c. ☐Philanthropy
d. ☐Vision Statement
22. If furniture store buys a sofa from the wholesaler for $600 and sells it for $2,500, what is the retailer’s gross profit per unit?
a. ☐$3,100
b. ☐25%
c. ☐$1,900
d. ☐4.16
23. Four out of five small firms fail in the first five years of operation.
a. ☐True
b. ☐False
24. According to the principle of compounding interest, if you invest $1.00 at 10 percent over five years, how much will you have at the end of those five years?
a. ☐$1.50
b. ☐$1.61
c. ☐$1.51
d. ☐$1.10
25. Which one of the following is NOT one of the five roots of opportunity?
a. ☐Problems
b. ☐Inventions
c. ☐Competition
d. ☐None of the above
