BA109 Chapter 4 - Practice Exam
UPDATED Exam Questions and
CORRECT Answers
T/F The executive summary of a business plan should summarize all of the relevant points of
the proposed venture and should be concise-no more than two pages. - Correct Answer- True
T/F The executive summary serves as the thesis statement for the entire business plan. -
Correct Answer- False
T/F The higher a small business scores on the 5 C's of credit, the greater its chances will be of
receiving a loan. - Correct Answer- True
T/F To get external financing, an entrepreneur's business plan must pass the reality test, the
competitive test, and the value test with potential lenders and investors. - Correct Answer-
True
T/F An entrepreneur should prepare a single set of "most likely" financial forecasts for one
year into the future as part of the business plan. - Correct Answer- False
T/F The plan of operation section of the business plan should address how the business plans
to retain key managers and employees. - Correct Answer- True
T/F After presenting the business plan to a group of potential lenders and investors, an
entrepreneur should sit back and wait to hear from those who might be interested in the
venture. - Correct Answer- False
T/F The most common reasons banks give for rejecting small business loan applications are
undercapitalization and too much debt. - Correct Answer- True
T/F The "two-thirds rule" says that only two-thirds of the entrepreneurs with a sound new
business venture will get financing, that they will get only two-thirds of what they need, and
that it will take them two-thirds longer to get it than they anticipated. - Correct Answer- True
, T/F Capital requirements, estimate earnings, and return on investment are three aspects of the
financial feasibility analysis. - Correct Answer- True
T/F Because the entrepreneur is the driving force behind a business idea, he or she should
also be the driving force behind the business plan. - Correct Answer- True
T/F The loan proposal portion of the business plan should include a realistic timetable for
repayment or for investors to exit. - Correct Answer- True
________ are broad, long-range statements of what a company plans to achieve in the future
that guide its overall direction and addresses the question, "Why am I in business?" - Correct
Answer- Goals
T/F Before presenting a business plan to potential lenders and investors, an entrepreneur must
be well informed and well prepared. - Correct Answer- True
T/F The competitive test that a business plan must pass in order to attract financing for
lenders and investors involves proving to them that the venture offers a high probability of
repayment or an attractive rate of return. - Correct Answer- False
T/F The "C" of the 5 C's of Credit that is synonymous with cash flow is capital. - Correct
Answer- False
The ________ serves as the "thesis statement" for the entire business plan and is the broadest
expression of a company's purpose and defines the direction in which it will move. - Correct
Answer- mission statement
T/F In a business plan, both company goals and objectives should relate to the company's
mission. - Correct Answer- True
Proving that a profitable market exists involves: - Correct Answer- proving that customers in
the marketplace need or want the good or service and are willing to pay for it and
documenting claims about market size and growth rates with as much factual information as
possible only
UPDATED Exam Questions and
CORRECT Answers
T/F The executive summary of a business plan should summarize all of the relevant points of
the proposed venture and should be concise-no more than two pages. - Correct Answer- True
T/F The executive summary serves as the thesis statement for the entire business plan. -
Correct Answer- False
T/F The higher a small business scores on the 5 C's of credit, the greater its chances will be of
receiving a loan. - Correct Answer- True
T/F To get external financing, an entrepreneur's business plan must pass the reality test, the
competitive test, and the value test with potential lenders and investors. - Correct Answer-
True
T/F An entrepreneur should prepare a single set of "most likely" financial forecasts for one
year into the future as part of the business plan. - Correct Answer- False
T/F The plan of operation section of the business plan should address how the business plans
to retain key managers and employees. - Correct Answer- True
T/F After presenting the business plan to a group of potential lenders and investors, an
entrepreneur should sit back and wait to hear from those who might be interested in the
venture. - Correct Answer- False
T/F The most common reasons banks give for rejecting small business loan applications are
undercapitalization and too much debt. - Correct Answer- True
T/F The "two-thirds rule" says that only two-thirds of the entrepreneurs with a sound new
business venture will get financing, that they will get only two-thirds of what they need, and
that it will take them two-thirds longer to get it than they anticipated. - Correct Answer- True
, T/F Capital requirements, estimate earnings, and return on investment are three aspects of the
financial feasibility analysis. - Correct Answer- True
T/F Because the entrepreneur is the driving force behind a business idea, he or she should
also be the driving force behind the business plan. - Correct Answer- True
T/F The loan proposal portion of the business plan should include a realistic timetable for
repayment or for investors to exit. - Correct Answer- True
________ are broad, long-range statements of what a company plans to achieve in the future
that guide its overall direction and addresses the question, "Why am I in business?" - Correct
Answer- Goals
T/F Before presenting a business plan to potential lenders and investors, an entrepreneur must
be well informed and well prepared. - Correct Answer- True
T/F The competitive test that a business plan must pass in order to attract financing for
lenders and investors involves proving to them that the venture offers a high probability of
repayment or an attractive rate of return. - Correct Answer- False
T/F The "C" of the 5 C's of Credit that is synonymous with cash flow is capital. - Correct
Answer- False
The ________ serves as the "thesis statement" for the entire business plan and is the broadest
expression of a company's purpose and defines the direction in which it will move. - Correct
Answer- mission statement
T/F In a business plan, both company goals and objectives should relate to the company's
mission. - Correct Answer- True
Proving that a profitable market exists involves: - Correct Answer- proving that customers in
the marketplace need or want the good or service and are willing to pay for it and
documenting claims about market size and growth rates with as much factual information as
possible only
