Question 1

Development financing is often provided by&#10;A)venture capitalist&#10;B)tax incentive programs&#10;C)provincial government aid programs&#10;D)social networking

Accepted Answer

A

Question 2

Cash is king refers to the need to&#10;A)fund promotional events&#10;B)hire competent employees&#10;C)market effectively&#10;D)pay bills as they come due

Accepted Answer

"Cash is king" means that having enough cash on hand to pay bills as they come due is the most important aspect of running a successful business. It doesn't pertain to A, B, or C, as promotional events, competent employees, and effective marketing can all be important, but if a business doesn't have enough cash flow to pay its bills, it won't be able to stay afloat.

Question 3

Investors are most likely to want to know&#10;A)the owners' vacation plans&#10;B)the identity of key employees&#10;C)how much money is needed by the business&#10;D)the product price structure of key competitors

Accepted Answer

Investors are primarily concerned with the financial aspects of the business, such as how much money is needed and how it will be used. They want to know if their investment will be profitable and if there are clear plans for growth and expansion. The other options may be important for different reasons, but they are not the top priority for investors.

Question 4

Financing difficulties of small business are often&#10;A)due to bias against entrepreneurs&#10;B)a symptom of management problems&#10;C)because there are too many small businesses&#10;D)a symptom of small business as a cause of unemployment

Accepted Answer

Financing difficulties of small businesses are generally linked to management problems such as a lack of financial planning, poor accounting records, inadequate cash flow management, and inadequate collateral. Small businesses have trouble getting financing not because there are too many small businesses or due to bias against entrepreneurs, but because of their inability to demonstrate creditworthiness and sound management practices. Small businesses are important drivers of economic growth and job creation, and financing difficulties can hinder their ability to grow and create jobs.

Question 5

A common financial problem in a small business is&#10;A)an excess of personal funds&#10;B)punitive conditions in government grants&#10;C)lack of knowledge of financing sources&#10;D)taxation of profits

Accepted Answer

Many small business owners lack knowledge about the different financing sources available to them. This can lead to difficulties in securing funds for business operations and growth, which can ultimately affect the financial health of the business. It is important for small business owners to research and understand their financing options, including loans, grants, and angel investors, to ensure they have access to the funding they need to succeed.

Question 6

CYBF refers to&#10;A)Cover Your Business Faults&#10;B)Canadian Young Business Founders&#10;C)Canadian Youth Business Foundation&#10;D)Critical Youth Balanced Funding

Accepted Answer

CYBF stands for Canadian Youth Business Foundation, which is a national nonprofit organization that helps young entrepreneurs (aged 18-39) in Canada launch and grow successful businesses.

Question 7

Small businesses need financing&#10;A)to fund start-up and as capital for ongoing operations&#10;B)to reduce the risk of losing their personal funds&#10;C)in order to support price competition&#10;D)to keep their administrative offices modern looking

Accepted Answer

Small businesses often require financing to get started and to keep operating smoothly. This includes covering initial startup costs as well as ongoing expenses like payroll, rent, inventory, and marketing. Financing can also help reduce the risk of business owners losing their personal funds, which can be especially important for entrepreneurs who may have invested all their savings into their new venture. While having modern offices may be desirable, it is not typically a top priority for small business financing. Supporting price competition may be a consideration, but it is not a primary reason for seeking financing.

Question 8

The majority of new businesses in Canada rely on&#10;A)government grant programs&#10;B)small business funding from a chartered bank&#10;C)supplier credit&#10;D)self funding

Accepted Answer

According to statistics, the most common source of funding for new businesses in Canada is personal savings and investments (self funding). This is followed by loans from friends and family, with chartered bank small business funding being a distant third. Government grant programs and supplier credit are not as commonly relied upon as self funding.

Question 9

The informal risk-capital market refers to&#10;A)low risk high return business ventures&#10;B)handshake borrowing&#10;C)other businesses who will help a new entry into the market&#10;D)business angels

Accepted Answer

The informal risk-capital market refers to business angels who provide funding for high-risk ventures in exchange for equity in the company. This type of funding is informal because it is not provided by traditional financial institutions and is often based on personal connections and relationships. Choices A, B, and C do not accurately describe the informal risk-capital market.

Question 10

&#34;Burn rate&#34; refers to&#10;A)the rate at which inventory is being sold&#10;B)how much money is being spent each month&#10;C)employee turnover&#10;D)the frequency with which new businesses in the industry fail

Accepted Answer

"Burn rate" refers to how much money a company is spending each month, typically in relation to how much revenue it is generating. It is used to calculate how long a company can continue to operate before it runs out of cash. Option A is related to inventory turnover, option C is related to employee management, and option D is related to industry failure rates, none of which directly relates to burn rate.

Question 11

a business should provide a lender with the following&#10;A)sample products for the lenders own use&#10;B)gifts to show their appreciation&#10;C)up to date information&#10;D)personal information about employees

Accepted Answer

The answer of a business should provide a lender with...

Question 12

Trade credit is a form of&#10;A)cost cutting&#10;B)debt financing&#10;C)equity financing&#10;D)interest payment

Accepted Answer

The answer of Trade credit is a form of&#10;A)cost cutting&#10;B)debt...

Question 13

A personal net worth and capability statement&#10;A)is noone's business&#10;B)will usually justify borrowing&#10;C)is more descriptive than numeric&#10;D)is similar to a business balance sheet

Accepted Answer

The answer of A personal net worth and capability statement&#10;A)is...

Question 14

Choosing a particular lender may be most influenced by&#10;A)friendliness and understanding of the lender&#10;B)the entrepreneurs experiences in a previous venture&#10;C)the need for privacy&#10;D)length of the term and the use of the funds

Accepted Answer

The answer of Choosing a particular lender may be most...

Question 15

&#34;Collateral&#34; refers to&#10;A)other business being done with the lender&#10;B)security given for a loan&#10;C)alternative sources of funding&#10;D)the benefits received form dealing with a particular lender

Accepted Answer

The answer of &#34;Collateral&#34; refers to&#10;A)other business being done with...

Question 16

The start up phase financing period will generally be&#10;A)two to six months&#10;B)one to two years&#10;C)one to three months&#10;D)two months

Accepted Answer

The answer of The start up phase financing period will...

Question 17

Small business owners sometimes use personal credit cards to&#10;A)repay bank borrowing&#10;B)finance the start-up phase&#10;C)pay employees&#10;D)control interest expense

Accepted Answer

The answer of Small business owners sometimes use personal credit...

Question 18

The type of financing sought is likely to be dictated by&#10;A)the entrepreneur's commitment to the venture&#10;B)the strength of competition&#10;C)the type of opportunity a business is pursuing&#10;D)the nature of the target market

Accepted Answer

The answer of The type of financing sought is likely...

Question 19

Demand loans are usually most appropriate for&#10;A)funding inventory&#10;B)delivery equipment&#10;C)when cash flow is a problem&#10;D)situations where lenders and borrowers are good friends

Accepted Answer

The answer of Demand loans are usually most appropriate for&#10;A)funding...

Question 20

A disadvantage of equity financing is&#10;A)dilution of ownership interest&#10;B)the pressure to pay dividends&#10;C)the appearance of failure&#10;D)interest expense

Accepted Answer

The answer of A disadvantage of equity financing is&#10;A)dilution of...

Question 21

A lender will want to know the following in order to assess an applicant's management ability&#10;A)the applicant's level of knowledge about the business&#10;B)the applicant's personal interests and hobbies&#10;C)how well liked the applicant is by their employees&#10;D)performance evaluations received by the applicant when they were employed

Accepted Answer

The answer of A lender will want to know the...

Deck 6: Financing the Small Business