DECA Entrepreneurship and Small Business Management Exam In Depth

1.A business that fails to protect its employees from unnecessary risk or health hazards on the job may be

sued for

C. Negligence. A business might be sued for negligence if it does not take reasonable precautions to protect workers from risks or health hazards on the job.

2.What requirement of a legally enforceable contract requires that both of the parties who are entering into

the contract are sane, sober, and of legal age?

C. Capacity. Certain conditions must be met for a contract to be legally enforceable.

3.The owner receives all of the profits of the business and can act quickly in making business decisions

when the form of business ownership is a

D. Sole proprietorship. Other advantages of a sole proprietorship are that it is easy to start, it has certain tax advantages, and the details of the business can be kept private.

4.Which of the following is the type of tax that businesses are required to collect from customers when they

purchase certain goods or services:

C. Sales. Sales taxes are monies charged on sales of certain goods and services by state and/or local governments.

5.Which of the following is a condition that must exist for channels to be effective:

D. They must be properly managed. To be effective, channels must be properly managed.

6.Which of the following is a marketing function that can be performed by channel intermediaries:

A. Promoting products. Channel intermediaries are persons or businesses that perform channel functions in an indirect channel of distribution.

7. A manufacturer of dishwashing soap has just invented a new type of soap that cleans better. The

manufacturer should choose to distribute the soap through __ distribution.

A. Intensive. Producers of consumer goods, such as dishwashing soap or candy, should use intensive

distribution in order to make their product as available to consumers as possible.

8.What type of information does a well-written proposal include?

B. Specific benefits. A proposal is an informational document that presents the reader with a call to action. A proposal often suggests ways to solve a problem or to obtain information by taking a specific course of action.

9.There are several auto repair shops in town, but Patricia's stands out. Her auto repair shop does great work, but what really sets her shop apart is the customer service. Every customer is greeted by a friendly employee, and s/he is given snacks and drinks while s/he waits for the repairs to be completed. The great customer service that people can expect from Patricia's business is considered her

C.Brand promise. A business's brand promise is its (spoken or unspoken) agreement with its customers that it will consistently meet their expectations. When Patricia's customers visit her business, they know they'll receive outstanding customer service every time.

10. Financial loss from investing time and money to comply with accounting standards is an example of which strategic risk:

C. Regulatory and political issues. Revenues and profits are affected by what governments require.

11.The government's mandating the use of unleaded gas in new cars is an example of

B. Protecting the environment. Unleaded gas is less harmful to the environment than leaded gas. Specific businesses are protected through subsidies or price supports.

12. What type of business usually experiences economies of scale due to expanded operations?

A. Large manufacturing plant. Economies of scale is the concept that increasing the scale of production will lead to a decrease in the cost of production while increasing the output.

13. Business people who respect the unique customs and habits of their foreign customers are exhibiting

C. Cultural sensitivity. Culture is the customs, habits, and traditions of a particular group of people. The way that different people interact with one another is an expression of their culture.

14. "Yes, you'll save money instantly" is an example of a statement with

C. Persuasive words. "Yes, you'll save money instantly" uses several persuasive words. It is also directed to the person you're speaking with, instead of being an impersonal message.

15. Which of the following is a characteristic of a self-confident leader:

C. S/He is decisive, even in uncertain circumstances. Self-confidence is a positive belief in your own talents, skills, and objectives.

16. Why is it important for team members to feel a sense of "ownership" and engagement in the vision?

A.It's the only way they will become committed to it. It's difficult to get people excited about a vision they don't really feel a part of. But when that vision is shared by the whole team, each member can feel personally invested in its success.

17. Which of the following statements is true regarding stakeholder expectations:

A. Each group of stakeholders has different needs and expectations. Stakeholders are people who are affected by a project's or business's success or failure.

18. Julio is starting a new business, and he has formed relationships with several successful local business owners. Which of the following is the best way to leverage these relationships to help his own business succeed:

D. Sharing those businesses' content on social media. One way to leverage business relationships is to show other businesses how your business can provide value to them.

19. Hazel started her own childcare network where she connects families to available babysitters at her

school. Hazel could be described as a(n)

D.Entrepreneur. An entrepreneur is anyone who creates, launches, organizes, and manages a new

business and takes on the risk of that business.

20. An entrepreneurial business owner must

D. Have an adventurous spirit. Entrepreneurs must have an adventurous spirit because they assume a lot of risk and uncertainty, as well as experience excitement and spontaneity.

21. What is one reason that it is easier than ever for small businesses to engage in international trade?

B. Technological advances. Due to the prevalence of the Internet and other technologies, it is easier for businesses of any size to engage in international trade.

22. Which of the following is a global trend that might encourage an entrepreneur to consider international

business opportunities:

B. Lower tariffs. A business opportunity is a circumstance that presents itself to provide a good or service.

23.Mara is facilitating a group brainstorming session to generate new product ideas for the company. Which

of the following attitudes is important for Mara to demonstrate?

B. Neutral. The goal of a group brainstorming session is to generate as many ideas as possible within a set amount of time. It is important for the facilitator to remain neutral or objective when group members share their ideas.

24. Landon wants to start a home-based T-shirt printing business. Which of the following are the most critical

equipment and supplies that Landon will need to get his business up and running?

D. T-shirts, printing machine, and artwork. The requirements (e.g., time, money, and supplies) that a person needs to start a business differ and usually depend on the nature of the business.

25. A small-business owner might register for trademark protection for the company's

D. Logo. A trademark is legal protection granted by the government to the owner, usually a business, of a distinctive symbol, mark, name, or motto.

26. Evan does not want the legal obligation of repaying a loan and is willing to share profits with others. Which of the following options is Evan most likely to select to fund a new venture:

A. Private equity. When a start-up business owner obtains money in a way that s/he does not have debt, it is called private equity.

27. What is a primary factor that small-business owners should consider when deciding to hire additional

staff members?

B. Payroll expenses. Payroll tends to be the largest expense for a business, so the small-business owner must determine how much or if s/he can afford to pay an employee

28. Al is thinking about moving his company's headquarters to another city, which would be expensive but

closer to the raw materials needed for manufacturing. The benefit in moving is

B. Proximity. Resources are the items or people that a business uses to accomplish a goal or to make a product.

29. All of a firm's activities and how they function in relation to one another are known as

A. Business operations. Business operations are all of the functions that keep a business running.

30. Because the MBC Company has one location that services the eastern part of the country and another

location that services the western part of the country, the company's work flow is organized by

D. Territory. Work flow is the order in which information is shared, tasks are performed, and decisions are made in relation to activities that keep a business running.

31. Looking at problems from various points of view helps a small-business owner develop

B. Creative solutions. Creative problem solving is the process of finding solutions to issues or obstacles (problems) by generating unique ideas or approaches.

32. Ellen wants to step back from the day-to-day activities of running her company. She decides to take the

company to another level by selling public stock. One way Ellen can stay involved in the company is by

C. Serving on the board of directors. By taking the company "public," Ellen is beginning the "IPO" (initial public offering) process. IPO means that the business owner is selling stock to the public and giving up control of some or all of the business; over time, the venture becomes a public corporation.

33. Which of the following categories of information are found on a balance sheet:

B. Assets, liabilities, owner's equity. A balance sheet is a financial statement that captures the financial

condition of the business at that particular moment.

34. The balance sheet has a close relationship with the company's

B. Income statement. The balance sheet has a close relationship with the company's income statement. Changes to the income statement directly affect the numbers on the balance sheet.

35. Which of the following phrases effectively describes a business's income statement:

D. Financial picture. A business's income statement summarizes where the business's money came from and where it went.

36. Managerial accounting differs from financial accounting because managerial accounting

A. Helps people within a business rather than outside of the organization. Managerial accounting is focused on providing financial information for internal organizational use.

37. One reason why banks might be reluctant to lend money to a start-up business is because the business

C. Has no record of repaying loans. Banks look at many factors to determine if a business is worthy of credit. Start-up businesses borrow money based on the entrepreneur's past record of loan repayment because the business is new and has no previous debt repayment record.

38. When a business has been running successfully for several years, what would be a probable next

financial step?

A. Purchasing a second location. If a business has been running successfully for several years, it may be in the expansion stage of its life cycle. This could mean that the company would consider purchasing a second location.

39. Marginal analysis is a cost/benefit decision process that seeks to determine

D. Profit-maximizing quantity of output. Marginal analysis compares marginal cost and marginal revenue to determine the amount of output that produces the greatest profits.

40. What sales forecasting technique creates accurate forecasts for individual products?

A. Sales force composite. More accurate forecasts for individual products can usually be obtained because sales personnel have first-hand knowledge about demand for certain products as a result of their constant contact with customers

41. An example of an operating expense that is included in a business's income statement is

C. Commissions. Commission is a percentage of the total sale amount paid to the individual who makes the sale.

42. Which of the following financial analysis methods is used to show the relationship of each component to

the total within a single financial statement:

D. Vertical analysis. Vertical analysis is often used to show the relationship of each component to the total within a single financial statement.

43. What staffing activity involves seeking out and attracting qualified potential job candidates?

B. Recruiting. The part of staffing that involves seeking out and attracting qualified potential job candidates is called recruiting.

44. To screen job applications and employment resumes, a business might use computer software that

conducts text searches to scan for

D. Key words. Many large businesses must handle several hundred applications and resumes.

45. Which of the following is a benefit of hiring the right employee for a job:

D. Decreased cost of selection. Careful selection of employees can save money through reduced costs associated with hiring and training and through increased levels of productivity.

46. One of the advantages to businesses of training staff is that it tends to increase

A. Employee satisfaction. An advantage of training staff is that it tends to increase employee satisfaction.Employees who have the training to do their jobs correctly usually perform well on the job and are satisfied with their situation.

47. Which of the following is an example of an employee complaint that is related to a coworker:

C. Ann tells her boss that Brad talks loudly on the phone and distracts her ability to focus on work.

Employees complain about a variety of different things in the workplace. Sometimes, a coworker's habits are an issue with employees.

48. XYZ Company is interested in developing, producing, and selling a new product. Before it does so, the

company spends six months conducting marketing research. What are the primary advantages of this

course of action?

D. To determine customer preferences and minimize losses. Businesses obtain marketing information in order to develop a product that customers want and need.

49. Which of the following is essential to all marketing research:

C. Accuracy. Accuracy is absolutely essential in gathering, recording, and analyzing marketing-research data if the data are to be of value to the business.

50. The marketing function that helps marketers make decisions about what and to whom to sell is

A. Marketing-information management. This function involves gathering, accessing, synthesizing, evaluating, and disseminating information for use in making business decisions.

51. A neighborhood grocery store has added a bakery. What element of marketing should the store use to

attract customers from surrounding areas?

D. Promotion. The promotion element of marketing refers to the various types of strategies that marketers use to communicate information about goods, services, images, and/or ideas to achieve a desired outcome.

52. In order for a market to exist, consumers must have an unfulfilled desire for a product and

C. Have financial resources. A market is a customer or a potential customer who has an unfulfilled desire and is financially able and willing to satisfy that desire.

53. An important criterion to consider when identifying market segments is the __ of the market

B. Size. When identifying market segments, it is necessary to consider various criteria.

54. What is a potential weakness a manager might identify in a SWOT analysis?

B. Lack of management depth. A SWOT analysis identifies possible strengths, weaknesses, opportunities, and threats.

55. As part of their marketing plans, what do businesses develop first that are intended to lead to increased

sales and revenue?

A. Objectives. Objectives are goals the business wants the marketing plan to reach.

56. Which of the following is a specification that a business might establish for selecting spreadsheet

software programs:

B. Graphically display financial information. Businesses establish specifications for selecting spreadsheet software in order to obtain the type of programs that will meet their needs.

57. How long are businesses required to keep their records?

B. Varies greatly. The length of time that businesses use and store their records can vary greatly.

58. Businesses often conduct environmental scans to determine if they should

B. Expand into other markets. An environmental scan is a study of the external forces that influence a business's success.

59. What is a benefit to a tour operator who makes business decisions by analyzing statistical information?

A. Improved performance. Statistics are information presented in numerical form.

60. Because operations managers control so much of a business's money, they must focus on

A. Keeping costs low. Because operations managers control so much of a business's money, they must focus on keeping costs low.

61. Obtaining goods that will satisfy the needs and wants of a business's customers is a function of

D. Purchasing. Purchasing is a business function which involves the planning and procedures necessary to obtain goods and services for use in the business or for resale.

62. Why is it important for businesses to have efficient production?

A. To be competitive. Businesses must have efficient production in order to be competitive.

63. What do managers need to do to develop and maintain the level of quality that customers expect?

B. Monitor all aspects of the business. It is important for a business's management team to monitor all aspects of the business so it can maintain or exceed the quality level that its customers expect.

64. Expenses such as payroll and rent that are necessary to the running of a business are called __ expenses.

A. Operating. Operating expenses include variable and fixed expenses

65. A business negotiates a two-year lease on 2,250 square feet of space for $2.60 per square foot with an option on a third year at a 5% increase in rent. What will the monthly rent be if the business extends the lease for a third year?

5. D. $6,142.50. Businesses often negotiate leases for a certain amount of square feet and for a certain number of years with an option to renew.

66. Most company budgets are based on

C. Sales. Once the company has predicted its ability to generate sales, individual budgets are then prepared for other activities such as advertising, merchandising, purchasing, administration, and labor.

67. Which of the following situations would supply chain managers encounter during the final stage of supply chain management:

A. A customer returns a defective product. In the final stage of supply chain management, customers may return defective products.

68. What is Claire doing when she reviews a report that compares the purchase transactions of the company's four largest customers?

A. Conducting a sales analysis. Businesses collect information to analyze all of their business functions.

69. Business process thinking is meant to help companies

A. Achieve goals and serve customers. Business process thinking is meant to help a company work more efficiently and achieve goals.

70. When bottlenecks in business processes develop that cause a company to miss deadlines and waste resources, an effective manager would most likely choose to

B. Redesign the business processes. When bottlenecks in business processes develop, an effective manager would most likely redesign the business processes to eliminate the bottlenecks.

71. One of the main external factors that may cause a firm to change its business processes is

B. Competition. Competition is one of the main external factors that may cause a firm to change its

businesses processes.

72. Sandra is a manager at a distribution plant. Lately, her customers have been complaining about timely deliveries. Which area of the business does Sandra need to focus on to ensure on-time delivery?

C. Supply chain management. Supply chain management is a career area in which employees supervise the complete process of getting products into the marketplace—a career field in which employees are responsible for the flow of goods from the manufacturer to the end user.

73. Which step of the decision-making model involves identifying what you want to do?

D. Pinpointing your objective. When you identify what you want to do, you are pinpointing your objective.This is the first step of the decision-making model.

74. Which of the following is a benefit of corporate governance:

A. It encourages transparency. Corporate governance creates a more transparent business environment, which can increase investor confidence, create a defined brand, and minimize corruption.