Who are angels?

1.   ?    Non-professional investors who provide funds to a business whose ownership is female
2.   ?    Professional investors who prepare business plans and financial records
3.   ?    Professional investors who spend money to make money
4.   ?    Wealthy individuals functioning as non-professional investors who are willing to invest in local businesses

What is a trade credit?

1.   ?    A form of credit that allows the borrower to repay the debt anytime he/she has the money
2.   ?    A form of long-term, low interest credit through a financial institution
3.   ?    A form of short-term financing from within the industry
4.   ?    An agreement between the vendor and the borrower to exchange products in repayment of a debt.

What are start-up costs?

1.   ?    Fees paid to support television, magazine, or other advertising of a franchise
2.   ?    Money left over at the end of the first year of operation to be used to begin the next year.
3.   ?    One-time expenses incurred by the entrepreneur when beginning a business
4.   ?    Payments made at the beginning of each month

One factor that affects start-up costs of a new business is:

1.   ?    Market share.
2.   ?    Personal living expenses for the entrepreneur.
3.   ?    The number of customers who make a purchase on opening day.
4.   ?    Whether the business is a retail or wholesale organization.

A local doughnut shop incurs a number of expenses during the month to keep the business running. Which is an expense that will change from week to week or month to month?

1.   ?    Cost of baking ingredients
2.   ?    Insurance fees
3.   ?    Office salaries
4.   ?    Rent payments

As she prepared to open her new flower shop, Jamesia made several trips to talk with an accountant. The fees paid for those consultations would be classified as:

1.   ?    Fixed costs.
2.   ?    Office expense.
3.   ?    Start-up costs.
4.   ?    Wages and salary.

Which is NOT a factor that affects start-up costs?

1.   ?    Nature of the business
2.   ?    Number of customers who purchase goods/services on opening day
3.   ?    Opening expenses that must be paid before cash is received from the sales
4.   ?    Size of the business

When seeking a loan, an entrepreneur who has capacity:

1.   ?    Considers environmental conditions before applying for the loan.
2.   ?    Demonstrates the ability to repay the debt.
3.   ?    Has insurance to cover business losses.
4.   ?    Has made a personal investment in the business.

One advantage of entering into a partnership with people or with other companies having compatible goods is that a partnership:

1.   ?    Increases the borrowing power of the business.
2.   ?    Provides tax savings over a proprietorship.
3.   ?    Provides unlimited liability.
4.   ?    Reduces the amount of interest on loans.

An advantage of using family and friends as a source of funding is:

1.   ?    The availability of money with little or no restriction.
2.   ?    The personal sacrifice required.
3.   ?    The restrictions and formality of the loan arrangements.
4.   ?    The unlimited liability provided.

A government agency that uses a commercial bank to make loans to businesses and then guarantee up to 90% of the loan if the business fails is the:

1.   ?    FTC.
2.   ?    HUD.
3.   ?    IRS.
4.   ?    SBA.

Deposits paid prior to opening the business to connect utility services for a new business are considered:

1.   ?    Fixed costs.
2.   ?    Living expenses.
3.   ?    Start-up costs.
4.   ?    Variable expenses.

Miscellaneous expenses incurred by the entrepreneur for clothing, travel, and entertainment are:

1.   ?    Fixed costs.
2.   ?    Income.
3.   ?    Personal expenses.
4.   ?    Start-up expenses.

A line of credit is:

1.   ?    A prearranged loan at a an established rate available whenever the business owner needs it.
2.   ?    An interest-free loan.
3.   ?    An unsecured loan.
4.   ?    Funding that requires no collateral.

State-sponsored venture capital funds are provided to entrepreneurs by the state to encourage economic development and:

1.   ?    Create jobs.
2.   ?    Control the business operation.
3.   ?    Increase tax revenue.
4.   ?    Reduce business debts.

A source of funding that requires money borrowed to be paid back with interest is referred to as:

1.   ?    Collateral.
2.   ?    Debt.
3.   ?    Equity.
4.   ?    Revenue.

One disadvantage of using personal savings as a source of funding is that it:

1.   ?    Allows the owner to retain all of the profit.
2.   ?    Provides larger amounts of money than other sources.
3.   ?    Provides quick sources of funding.
4.   ?    Provides unlimited liability.

What is collateral?

1.   ?    Evidence of a good financial plan.
2.   ?    Responsibility shown by repaying bills in the past.
3.   ?    Short term financing.
4.   ?    Something of value that the leader can claim if the debt is not repaid.

When an entrepreneur visits a bank to apply for a loan, he/she should be ready to:

1.   ?    Argue with the loan officer.
2.   ?    Discuss his/her business plan.
3.   ?    Provide shares of stock in the business for collateral.
4.   ?    Write a check to cover interest on the loan.

A loan that is granted to a bank's most credit-worthy customers and is not guaranteed by collateral is a/an:

1.   ?    Grant.
2.   ?    Long-term loan.
3.   ?    Secured loan.
4.   ?    Unsecured loan.

A federal agency that provides grants to cities for loans to private developers to help improve impoverished areas is:

1.   ?    HUD.
2.   ?    IRS.
3.   ?    SBA.
4.   ?    SCORE.

Availability and willingness to invest personally in a business venture satisfies the credit requirement for:

1.   ?    Capacity.
2.   ?    Capital.
3.   ?    Character.
4.   ?    Condition.

Buoy's Restaurant sets aside $400 a month to cover unexpected expenses. This represents a/an:

1.   ?    Contingency fund.
2.   ?    Inventory account.
3.   ?    Personal savings account.
4.   ?    Start-up fund.

Expenses that do NOT remain the same from month to month are:

1.   ?    Fixed costs.
2.   ?    Fixed revenue.
3.   ?    Variable costs.
4.   ?    Variable sales.

Expenses that are NOT affected by sales volume are called:

1.   ?    Fixed costs.
2.   ?    Fixed Revenue.
3.   ?    Variable costs.
4.   ?    Variable sales.

Initial inventory for the business is which type of cost?

1.   ?    Fixed cost
2.   ?    Personal cost
3.   ?    Start-up cost
4.   ?    Variable cost

A short-term loan is repayable in:

1.   ?    One year.
2.   ?    Two years.
3.   ?    Five years.
4.   ?    Twenty-five years.

Advertising and promotion expenses for an ongoing business are:

1.   ?    Fixed costs.
2.   ?    Sales revenue.
3.   ?    Start up costs.
4.   ?    Variable costs.

Funding that is borrowed from family or friends is sometimes called:

1.   ?    Collateral.
2.   ?    Debt funding.
3.   ?    Free money.
4.   ?    Love money.

What is a disadvantage of using a partnership as a source of funding?

1.   ?    Increased borrowing power
2.   ?    Loss of some of the control and ownership.
3.   ?    Risks and responsibilities are shared
4.   ?    Tax deductions for interest and related costs.

The most common source of business financing is a:

1.   ?    Bank.
2.   ?    Credit union.
3.   ?    Family member.
4.   ?    Government agency.

The repayment of a long-term loan is expected to take:

1.   ?    Six months.
2.   ?    Less than one year.
3.   ?    More than one year.
4.   ?    At least ten years.

Money invested in a business by private investors is:

1.   ?    Capital gain.
2.   ?    Debt funding.
3.   ?    Equity funding.
4.   ?    Income.

Capital contributed by the owner(s) of a business is:

1.   ?    Debt.
2.   ?    Equity.
3.   ?    Income.
4.   ?    Revenue.

One advantage of using personal savings to fund a sole proprietorship is that:

1.   ?    Investments are tax deductible.
2.   ?    The chances of personal loss decrease.
3.   ?    The owner has unlimited liability.
4.   ?    The owner retains all the profits.