Question 1

The business operating cycle for a traditional manufacturer begins with the purchase of raw materials and ends with collections from the customer.

Accepted Answer

A) True 
 B)False

Question 2

The magnitude of a company's accounts receivable obviously depends upon a number of factors, except _________.

Accepted Answer

A)  the level and the pattern of sales 
B)  the breakdown between cash and credit sales 
C)  the difference between current assets and current liabilities 
D)  the nominal credit terms offered 
E)  the enforcement of credit terms 
A)  the level and the pattern of sales 
B)  the breakdown between cash and credit sales 
C)  the difference between current assets and current liabilities 
D)  the nominal credit terms offered 
E)  the enforcement of credit terms

Question 3

Which of the following is a method of pursuing payment from a customer whom the entrepreneur believes able to pay?

Accepted Answer

A)  Refusing any further supplies, or supplying only for cash 
B)  Threatening legal action 
C)  Actually undertaking legal proceedings, using a specialized collection agency 
D)  All of the above 
E)  None of the above 
A)  Refusing any further supplies, or supplying only for cash 
B)  Threatening legal action 
C)  Actually undertaking legal proceedings, using a specialized collection agency 
D)  All of the above 
E)  None of the above

Question 4

The relative proportions of cash sales and credit sales make an important difference to which of the following?

Accepted Answer

A)  Expected sales. 
B)  Expected cost. 
C)  Expected inventory. 
D)  Expected cash flows. 
E)  Expected accounts receivable. 
A)  Expected sales. 
B)  Expected cost. 
C)  Expected inventory. 
D)  Expected cash flows. 
E)  Expected accounts receivable.

Question 5

Which of the following is NOT a factor that influences the interest borrowers pay?

Accepted Answer

A)  the dollar amount of the loan 
B)  the length of time involved 
C)  the nominal rate of interest 
D)  the repayment location 
E)  the method used to calculate the interest 
A)  the dollar amount of the loan 
B)  the length of time involved 
C)  the nominal rate of interest 
D)  the repayment location 
E)  the method used to calculate the interest

Question 6

By paying bills more slowly, an entrepreneur will hurt his or her business.

Accepted Answer

A) True 
 B)False

Question 7

Typically, a company can borrow what percent of its accounts receivable's face value if it has a good credit rating and its customers have excellent credit ratings.

Accepted Answer

A)  15% to 25% 
B)  25% to 50% 
C)  50% to 75% 
D)  75% to 90% 
E)  90%to 100% 
A)  15% to 25% 
B)  25% to 50% 
C)  50% to 75% 
D)  75% to 90% 
E)  90%to 100%

Question 8

The basis of all receivables and collections is actual net sales, which is equal to ______.

Accepted Answer

A)  sales minus any returns. 
B)  sales plus any returns. 
C)  sales minus returns only if they are 90 days late. 
D)  sales plus returns only if they are 90 days late. 
E)  None of the above 
A)  sales minus any returns. 
B)  sales plus any returns. 
C)  sales minus returns only if they are 90 days late. 
D)  sales plus returns only if they are 90 days late. 
E)  None of the above

Question 9

Home equity lines of credit are the only way in which entrepreneurs provide funding for their businesses.

Accepted Answer

A) True 
 B)False

Question 10

The ______ of receivables collection and payment of accounts payable are key determinants in whether a firm is cash rich or cash poor.

Accepted Answer

A)  quantity 
B)  cost 
C)  difference 
D)  interest 
E)  timing 
A)  quantity 
B)  cost 
C)  difference 
D)  interest 
E)  timing

Question 11

Which of the following is NOT one of the Five Cs of credit?

Accepted Answer

A)  Character 
B)  Capacity 
C)  Capital 
D)  Collateral 
E)  Customers 
A)  Character 
B)  Capacity 
C)  Capital 
D)  Collateral 
E)  Customers

Question 12

When using a public warehousing arrangement for a bank loan, the entrepreneur surrenders access to his/her inventory.

Accepted Answer

A) True 
 B)False

Question 13

Although the opportunity costs for accounts receivable may be quite large, the largest current asset balances are usually in______.

Accepted Answer

A)  cash 
B)  accounts receivable 
C)  inventories 
D)  property, plant, and equipment 
E)  short-term investments 
A)  cash 
B)  accounts receivable 
C)  inventories 
D)  property, plant, and equipment 
E)  short-term investments

Question 14

From a microeconomic perspective, a company operating below its optimal output should always offer generous credit terms in order to stimulate demand.

Accepted Answer

A) True 
 B)False

Question 15

Corporate insolvency usually results when the firm fails to service its debt obligations on time.

Accepted Answer

A) True 
 B)False

Question 16

What does a trade-credit effectively amount to?

Accepted Answer

A)  Higher accounts payable. 
B)  Higher trust among companies in the same industry. 
C)  A loan to the entrepreneur's working capital. 
D)  Debt swaps. 
E)  None of the above 
A)  Higher accounts payable. 
B)  Higher trust among companies in the same industry. 
C)  A loan to the entrepreneur's working capital. 
D)  Debt swaps. 
E)  None of the above

Question 17

The credit terms of "10/15, net 30" mean that the payment is due within 15 days, but if paid within 10 days, there is a net 30% discount.

Accepted Answer

A) True 
 B)False

Question 18

An entrepreneur may only cash in his accounts receivable by going to a finance company for a loan.

Accepted Answer

A) True 
 B)False

Question 19

A method of reducing overdue accounts and limiting bad debts is setting limits to the credit allowed on______.

Accepted Answer

A)  corporate buyers 
B)  individual accounts 
C)  high-cost goods 
D)  low-cost goods 
E)  none of the above 
A)  corporate buyers 
B)  individual accounts 
C)  high-cost goods 
D)  low-cost goods 
E)  none of the above

Question 20

Which of the following requirements apply with an SBA loan

Accepted Answer

A)  The loan must purchase items made in the USA 
B)  The venture's debt to equity ratio must be less than or equal to 4:1 post loan 
C)  The loan cannot be used for leasehold improvements 
D)  None of the above. 
A)  The loan must purchase items made in the USA 
B)  The venture's debt to equity ratio must be less than or equal to 4:1 post loan 
C)  The loan cannot be used for leasehold improvements 
D)  None of the above.

The business operating cycle for a traditional manufacturer begins with the purchase of raw materials and ends with collections from the customer.

The magnitude of a company's accounts receivable obviously depends upon a number of factors, except _________.

Which of the following is a method of pursuing payment from a customer whom the entrepreneur believes able to pay?

The relative proportions of cash sales and credit sales make an important difference to which of the following?

Which of the following is NOT a factor that influences the interest borrowers pay?

By paying bills more slowly, an entrepreneur will hurt his or her business.

Typically, a company can borrow what percent of its accounts receivable's face value if it has a good credit rating and its customers have excellent credit ratings.

The basis of all receivables and collections is actual net sales, which is equal to ______.

Home equity lines of credit are the only way in which entrepreneurs provide funding for their businesses.

The ______ of receivables collection and payment of accounts payable are key determinants in whether a firm is cash rich or cash poor.

Which of the following is NOT one of the Five Cs of credit?

When using a public warehousing arrangement for a bank loan, the entrepreneur surrenders access to his/her inventory.

Although the opportunity costs for accounts receivable may be quite large, the largest current asset balances are usually in______.

From a microeconomic perspective, a company operating below its optimal output should always offer generous credit terms in order to stimulate demand.

Corporate insolvency usually results when the firm fails to service its debt obligations on time.

What does a trade-credit effectively amount to?

The credit terms of "10/15, net 30" mean that the payment is due within 15 days, but if paid within 10 days, there is a net 30% discount.

An entrepreneur may only cash in his accounts receivable by going to a finance company for a loan.

A method of reducing overdue accounts and limiting bad debts is setting limits to the credit allowed on______.

Which of the following requirements apply with an SBA loan

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Prototyping Your Ideas

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Building Your Pro Forma Financial Statements

Financing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship

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Exam 12: Debt and Other Forms of Financing

The business operating cycle for a traditional manufacturer begins with the purchase of raw materials and ends with collections from the customer.

The magnitude of a company's accounts receivable obviously depends upon a number of factors, except _________.

Which of the following is a method of pursuing payment from a customer whom the entrepreneur believes able to pay?

The relative proportions of cash sales and credit sales make an important difference to which of the following?

Which of the following is NOT a factor that influences the interest borrowers pay?

By paying bills more slowly, an entrepreneur will hurt his or her business.

Typically, a company can borrow what percent of its accounts receivable's face value if it has a good credit rating and its customers have excellent credit ratings.

The basis of all receivables and collections is actual net sales, which is equal to ______.

Home equity lines of credit are the only way in which entrepreneurs provide funding for their businesses.

The ______ of receivables collection and payment of accounts payable are key determinants in whether a firm is cash rich or cash poor.

Which of the following is NOT one of the Five Cs of credit?

When using a public warehousing arrangement for a bank loan, the entrepreneur surrenders access to his/her inventory.

Although the opportunity costs for accounts receivable may be quite large, the largest current asset balances are usually in______.

From a microeconomic perspective, a company operating below its optimal output should always offer generous credit terms in order to stimulate demand.

Corporate insolvency usually results when the firm fails to service its debt obligations on time.

What does a trade-credit effectively amount to?

The credit terms of "10/15, net 30" mean that the payment is due within 15 days, but if paid within 10 days, there is a net 30% discount.

An entrepreneur may only cash in his accounts receivable by going to a finance company for a loan.

A method of reducing overdue accounts and limiting bad debts is setting limits to the credit allowed on______.

Which of the following requirements apply with an SBA loan

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Prototyping Your Ideas

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Building Your Pro Forma Financial Statements

Financing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship

Filters