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411 - WRC Entrepreneurship


     2005 ARIZONA FBLA

1. Complete the information requested on the answer sheet.
      Check the label on the top right hand side of the sheet to make sure that your name
       and event are correct. If your school name is not on your label, write it under your
       label. Use complete school name (not NHS).
      On the top left hand corner of the answer sheet, enter the nine digit number from
       your label. Start on line 1 and enter the numbers going down. The last number will
       be left blank. Darken each circle carefully and completely.

2. All answers must be recorded on the answer sheet.
3. Read each question carefully before answering. When you have decided which answer
   is correct, find the space on the answer sheet following the number of the problem.
   With a pencil, BLACK THE ENTIRE SPACE in the proper column. Do not make any
   other marks on the answer sheet, as the scoring machine will reject it.
4. If you are given True/False questions, answer True questions in the “A” column and
   False questions in the “B” column.
5. Do not fold your answer sheet or bend the corners.
6. Be sure to use a #2 pencil. Erase any unwanted answers completely. Two answers
   for one question will be rejected by the scoring machine.
7. You are allowed 45 minutes for completing the test. You will be given a starting signal
   and a warning when 10 minutes and 5 minutes are remaining. If you finish your test
   early, return your test and answer sheet to the test administrators.
8. If you have any questions during the test, please raise your hand, and someone will
   come to help you.
9. Test administrators will write the “time” on the top of your test when you finish.
       #411 Entrepreneurship                                                                     2005 FBLA WRC

WRC 2005--Entrepreneurship

Indicate whether the sentence or statement is true or false.

____    1. Running your own business is difficult, and many companies started by entrepreneurs go out of business.
____    2. Performing a self-assessment can help you determine if entrepreneurship is right for you.
____    3. Multiplication can be used to figure how much profit is earned on a specific item.
____    4. Successful entrepreneurs use logical problem-solving methods to make effective decisions.
____    5. In a problem-solving model, information is gathered to help identify different alternatives.
____    6. Redistributing income by the government is widely agreed to be a positive action that reduces the chance of
           social problems due to low income.
____    7. Redistributing income by the government is widely agreed to be unnecessary and causes an undue burden on
____    8. The start-up costs for a franchise include renting a facility and purchasing inventory.
____    9. The difference between an S corporation and a regular corporation is that an S corporation is not taxed as a
____ 10. Although franchise owners have an established product or service, they are dependent on the performance of
         other franchises in the chain.
____ 11. In a partnership, all the partners are legally liable for the errors of one partner.
____ 12. The difference between an S corporation and a regular corporation is that an S corporation must lose money
         in the early years.
____ 13. A business plan is helpful not only in the initial stages of your company but also in future decision making.
____ 14. Using psychographic and demographic data can help you identify the target market for your product or
____ 15. Primary data, information collected to fit a specific purpose, can help identify and understand the target
____ 16. Large businesses, which are often indirect competitors of entrepreneurs, face less risk because they have only
         one product line.
____ 17. Market research is a system for collecting, recording, and analyzing information about customers,
         competitors, goods, and services.
____ 18. Although some questions in a survey may be difficult for respondents to answer, they should be included if
         they are important.
____ 19. Workers' compensation consists of payments to workers who are injured on the job, and businesses are
         required by law to provide it.
____ 20. Property insurance covers normal risks, including fire, robbery, and storm damage, but does not cover floods
         or earthquakes.
____ 21. Home-based businesses cannot deduct their offices as a business expense even if the office is limited to
         business use.

      #411 Entrepreneurship                                                                       2005 FBLA WRC

____ 22. The most important factors in the layout for a retail business are attracting customers and making their
         experience a pleasant one.
____ 23. In a manufacturing business, safety is an important factor in positioning equipment and machinery.
____ 24. Manufacturers prefer to distribute their products very broadly and always use all possible channels of
____ 25. Different products and services within the same category serve different customer needs.
____ 26. In addition to identifying the different products and services to sell, a business will have to select the product
____ 27. Mentoring is a training technique in which one employee teams up with another more experienced employee
         to learn a job.
____ 28. The paycheck for a person earning a wage will be the same each pay period regardless of the number of hours
         the employee works.
____ 29. Certified public accountants must pass a series of accounting examinations and are licensed by the state in
         which they work.
____ 30. If the stock turnover rate for your industry is 3, you should keep three months’ worth of inventory in stock at
         all times.
____ 31. Many businesses have cash flow problems because they start off with too little capital.
____ 32. To determine your net income after taxes, you must calculate gross profit, net income from operations, and
         net income before taxes.
____ 33. Gross profit is found by subtracting operating expenses and cost of goods sold from net sales.
____ 34. If you have cash flow problems, you can reduce your disbursements by holding less inventory.
____ 35. Comparing the profit ratio for your business to the average profit ratio in your industry can help you set profit
____ 36. In selecting a financial advisor, you should consider choosing someone who charges a commission rather than
         a fee for services.
____ 37. A disadvantage of laptop computers is that you can only access the computer when the battery pack is
____ 38. A goal on a technology plan might be to purchase a spreadsheet program to analyze the profitability of
         various products.
____ 39. Computer consultants make sure all the parts of your system are compatible and that the equipment you buy
         meets your needs.
____ 40. A disadvantage of laptop computers is that they may be more expensive than desktop computers.
____ 41. In a database program, a collection of fields about a particular customer is known as a record.
____ 42. If your business targets only customers who live near you, you probably should have a web site.
____ 43. Business owners should respond to changes in the workplace by enforcing policies that do not allow changes
         in employees' hours.
____ 44. In a dispute with a supplier, you should try to work out a solution that is fair to both you and your investors.

      #411 Entrepreneurship                                                                    2005 FBLA WRC

____ 45. The Sherman Act makes it illegal for competitors to get together and set prices on the products or services
         they sell.
____ 46. The Clayton Act bans false or misleading advertising.
____ 47. The Consumer Product Safety Act sets safety standards for products other than food and drugs.
____ 48. Market penetration and geographic relocation are two strategies that you can use to increase your sales.
____ 49. Unlike the United States, most governments do not establish trade barriers to keep foreign businesses from
         competing with domestic producers.
____ 50. To develop good business relationships with people from different cultures, an entrepreneur should try to
         understand other cultural viewpoints.

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 51. An assessment of your interests is
         a. self-discipline
         b. an advantage of entrepreneurship
         c. helpful in deciding what business is right for you
         d. a non-financial goal
____ 52. An employee
         a. sets non-financial goals for a business
         b. takes the risk of a business venture
         c. sets financial goals for a business
         d. works for someone else
____ 53. Information about business opportunities is available from
         a. the Postal Service
         b. most banks
         c. the Small Business Administration
         d. none of these
____ 54. Which of the following loans has the lowest yearly interest?
         a. $30,000 loan at a rate of 7.25%
         b. $25,000 loan at a rate of 8.5%
         c. $40,000 loan at a rate of 6%
         d. $35,000 loan at a rate of 8%
____ 55. Which of the following loans has the lowest yearly interest?
         a. $30,000 loan at a rate of 6.25%
         b. $25,000 loan at a rate of 8.25%
         c. $40,000 loan at a rate of 7%
         d. $20,000 loan at a rate of 9.5%
____ 56. Demand, an individual's need or desire for a product or service at a given price,
         a. increases as price decreases
         b. is not affected by price
         c. increases as price increases
         d. decreases as price decreases

      #411 Entrepreneurship                                                                     2005 FBLA WRC

____ 57. In a market economy,
         a. individuals are usually able to obtain exactly what they want
         b. there is very little choice in what is available
         c. production decisions are made by the government
         d. scarcity does not exist
____ 58. Supply, the quantity of a good or service a producer is willing to produce at different prices,
         a. decreases as price increases
         b. increases as price increases
         c. is not affected by price
         d. increases as price decreases
____ 59. When buying a business, you should do all of the following except
         a. have a lawyer draw up the sales contract
         b. analyze financial reports for at least the past seven years
         c. determine how to finance the business
         d. write specific objectives about the kind of business you want to buy
____ 60. Entrepreneurs who work for their family businesses
         a. must contribute a large amount of money
         b. must be prepared to compromise
         c. can make all decisions themselves
         d. none of these
____ 61. There is limited liability for businesses that are
         a. corporations or S corporations
         b. partnerships or corporations
         c. sole proprietorships or partnerships
         d. sole proprietorships or S corporations
____ 62. Without a business plan, you will not be able to
         a. manage your business
         b. obtain a business loan
         c. make sales projections
         d. find a location for your business
____ 63. In researching all the parts of your business, you can
         a. learn a great deal about running a business
         b. find specific ideas for starting up your company
         c. find information through trade associations
         d. all of these
____ 64. The appendix includes supporting evidence such as
         a. current financial statements
         b. newspaper articles
         c. letters of recommendation
         d. loan requirements
____ 65. The products or services section of your plan should
         a. explain how your product or service differs from those already on the market
         b. describe the market for your product or service
         c. list your company's advantages over the competition
         d. explain how you plan to enter the market

     #411 Entrepreneurship                                                                    2005 FBLA WRC

____ 66. A business that makes most of its money selling the same or similar products or services as another business
         a. indirect competition
         b. direct competition
         c. secondary competition
         d. primary competition
____ 67. To keep customers, you will need to
         a. identify your target market
         b. respond to their concerns
         c. lease space in a mall
         d. segment your target market
____ 68. Which of the following is not a financial statement needed for potential lenders and investors?
         a. cash flow statement
         b. balance sheet
         c. loss statement
         d. income statement
____ 69. Money loaned to a business with the understanding that the money will be repaid, with interest, in a certain
         time period is
         a. equity capital
         b. a loan guarantee
         c. venture capital
         d. debt capital
____ 70. All businesses face the risk of
         a. credit card fraud
         b. robbery
         c. shoplifting
         d. employee theft
____ 71. Money loaned to a business with the understanding that the money will be repaid, with interest, in a certain
         time period is
         a. debt capital
         b. equity capital
         c. venture capital
         d. guaranteed capital
____ 72. An important factor in determining where an industrial business locates is
         a. availability of parking
         b. convenience
         c. on-site business
         d. low cost
____ 73. You should mark all of the following on your trade area map except
         a. all your competitors
         b. all locations that might be appropriate for your business
         c. all businesses for sale
         d. all businesses that do not compete with you but that may attract the same kind of customer
____ 74. A possible location for a business has rent of $1,200 per month and projected traffic of 11,500 customers per
         month. Rent per customer is
         a. $0.10
         b. $0.09
         c. $0.11
         d. $0.58

      #411 Entrepreneurship                                                                    2005 FBLA WRC

____ 75. The level of a reorder point depends on
         a. how long it takes to get merchandise
         b. your monthly sales
         c. how important it is not to be out of stock
         d. all of these
____ 76. Businesses should always set their prices
         a. high enough to make a profit
         b. the same as their competitors' prices
         c. to attract customers
         d. by using demand-based pricing
____ 77. Advertising can be very important for new businesses because it
         a. helps set up a network of reliable distributors
         b. lets potential customers know what kinds of products or services you offer
         c. is a free form of promotion
         d. provides an incentive to customers
____ 78. An advantage of radio advertising is that
         a. you can communicate through both sight and sound
         b. it reaches large numbers of people
         c. you can select a station whose listeners share the same demographics as your target market
         d. it is very inexpensive
____ 79. Alternatives to hiring permanent employees include
         a. freelancers
         b. interns
         c. temporary workers
         d. all of these
____ 80. An advantage of computerized record keeping is that
         a. computers prevent all mistakes
         b. copies of files can be kept on floppy disks
         c. computers can create reports that help a business owner make decisions
         d. the computer automatically adds an item to inventory when a sale is made
____ 81. Social security and Medicare contributions by employees are shown
         a. in a sales journal
         b. on a voucher check statement
         c. on a bank statement
         d. in an accounts receivable ledger
____ 82. If a customer receives goods that will be paid for later, the transaction should be recorded in a
         a. sales journal
         b. cash payments journal
         c. cash receipts journal
         d. purchases journal
____ 83. To identify categories of expenditures you may want to increase or decrease, you can use your
         a. income statement
         b. bank statement
         c. cash flow statement
         d. balance sheet

     #411 Entrepreneurship                                                                 2005 FBLA WRC

____ 84. You can improve your cash flow by
         a. increasing the number of hours employees work each week
         b. reducing some of your fixed expenses
         c. reducing your inventory
         d. all of these
____ 85. To improve your cash flow, you can
         a. decrease accounts payable
         b. increase accounts receivable
         c. decrease accounts receivable
         d. increase disbursements
____ 86. You can improve your cash flow by
         a. decreasing your cash receipts and increasing your disbursements
         b. decreasing the number of hours employees work each week
         c. reducing some of your fixed expenses
         d. increasing your inventory
____ 87. E-mail is a popular form of business communication because
         a. there is only a small charge for sending a message
         b. messages can be read at the recipient's convenience
         c. messages are received the next day
         d. messages are more formal than memos
____ 88. Your web site should
         a. list your products and services
         b. let customers know how they can place an order
         c. tell customers how to contact you through a toll-free number if they have questions
         d. all of these
____ 89. A technology plan can help you
         a. design a web site
         b. choose a computer consultant
         c. obtain financing
         d. avoid wasting money on technology you do not need
____ 90. To prepare budgets, measure performance, and create financial statements, you should use
         a. word processing software
         b. graphics software
         c. spreadsheet software
         d. database software
____ 91. Technology other than computer software and hardware
         a. allows you to design advertisements
         b. creates visually appealing presentations for business meetings
         c. allows you to project your computer screen onto a wall
         d. all of these
____ 92. All Internet service providers
         a. allow you to post a web site
         b. provide connections to the Internet
         c. are easy to connect with
         d. charge a flat rate

      #411 Entrepreneurship                                                                    2005 FBLA WRC

____ 93. E-mail is a popular form of business communication because
          a. messages can be saved
          b. there is only a small charge for sending a message
          c. messages are received the next day
          d. messages are more formal than letters
____ 94. The Consumer Product Safety Act sets safety standards for
          a. food and drugs
          b. products other than food and drugs
          c. licensed products
          d. businesses
____ 95. Regulations that protect employees involve
          a. discrimination in the workplace
          b. working conditions
          c. minimum wages
          d. all of these
____ 96. Regulations that protect employees involve all of the following except
          a. unsafe products
          b. time away from work
          c. minimum wages
          d. discrimination in the workplace
____ 97. Increasing market share for a product or service within a given area is
          a. geographic development
          b. geographic expansion
          c. market development
          d. market penetration
____ 98. As an entrepreneur, you need to appreciate different cultures for all of the following reasons except
          a. you will be able to market your business more effectively
          b. the United States is a multicultural society
          c. you may buy from and sell to people from different cultures
          d. people from different cultures have the same needs and wants
____ 99. A standard of quality an imported product must meet before it can be sold is a
          a. tariff
          b. qualitative restriction
          c. restrictive tax
          d. quota
____ 100. If you do business abroad, you will have to learn about the cultures of the countries in which you plan to do
          business because
          a. different cultures use different types of computers
          b. culture affects what people buy
          c. culture makes businesses more competitive
          d. different cultures have different currencies

#411 Entrepreneurship                              2005 FBLA WRC

                              Answer Key
  1.      A             26.   B     51.    C     76.   A
  2.      A             27.   A     52.    D     77.   B
  3.      A             28.   B     53.    C     78.   C
  4.      A             29.   A     54.    B     79.   D
  5.      A             30.   B     55.    A     80.   C
  6.      A             31.   A     56.    A     81.   B
  7.      B             32.   A     57.    A     82.   A
  8.      A             33.   B     58.    B     83.   A
  9.      A             34.   A     59.    B     84.   C
  10.     A             35.   A     60.    B     85.   C
  11.     A             36.   B     61.    A     86.   B
  12.     B             37.   B     62.    B     87.   B
  13.     A             38.   B     63.    D     88.   B
  14.     A             39.   A     64.    C     89.   D
  15.     A             40.   A     65.    A     90.   C
  16.     B             41.   A     66.    B     91.   C
  17.     A             42.   B     67.    B     92.   B
  18.     B             43.   B     68.    C     93.   A
  19.     A             44.   B     69.    D     94.   B
  20.     A             45.   A     70.    B     95.   D
  21.     B             46.   B     71.    A     96.   A
  22.     A             47.   A     72.    D     97.   D
  23.     A             48.   B     73.    C     98.   D
  24.     B             49.   B     74.    A    99.    B
  25.     A             50.   A     75.    D   100.    B


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