Question 1

Internet ventures have unique metrics because they typically start with three types of "customers": visitors, contributors, and

Accepted Answer

The answer of Internet ventures have unique metrics because they...

Question 2

_____ is an amount of cash that is often based on the sales and collection cycle of a business.

Accepted Answer

The answer of _____ is an amount of cash that...

Question 3

For feasibility purposes, a(n) _____ statement, essentially a cash budget or sources and uses statement, is used so that cash inflows  and outflows are easy to identify and examine.

Accepted Answer

A direct cash flow statement is specifically designed to show cash inflows and outflows, making it easier to identify and examine them for feasibility purposes.

Question 4

Which of the following is NOT an example of a direct selling expense?

Accepted Answer

Direct selling expenses are costs directly linked to the sale of products or services, such as commissions, sales salaries, and travel expenses. Telephone expenses, however, are considered indirect selling expenses because they are not directly tied to the sale of specific products or services.

Question 5

Entrepreneurs can reach a price that can be tested in a market by considering costs, any competitor pricing, and

Accepted Answer

Feedback from customers and value chain partners helps entrepreneurs understand market demand and perceived value, allowing them to set a price that can be tested in the market.

Question 6

Entrepreneurs need to remember that _____ costs are the biggest costs a business will bear because of all the associated taxes and any benefits offered.

Accepted Answer

Employee costs are often the biggest expenses for a business due to taxes, benefits, salaries, and other associated costs.

Question 7

In manufacturing businesses, forecasting expenditures is a bit more complex than in wholesale businesses because _____ must be derived first.

Accepted Answer

In manufacturing businesses, the cost of goods sold (COGS) must be derived first to accurately forecast expenditures. This is because COGS directly influences the production costs, including raw materials, labor, and overhead, making it a critical factor in budgeting and financial planning.

Question 8

The _____ represents how a startup uses its cash to cover its overhead before it generates a positive cash flow from operations.

Accepted Answer

The monthly burn rate represents how a startup uses its cash to cover its overhead before it generates a positive cash flow from operations. It indicates the rate at which a company is spending its capital to finance overheads before reaching profitability.

Question 9

In service businesses, the cost of goods sold is equivalent to the time expended to _____ and _____ the service.

Accepted Answer

In service businesses, the cost of goods sold (COGS) primarily involves the costs associated with producing and delivering the service to the customer. This includes labor, materials, and overhead directly involved in service provision.

Question 10

Which of the following common pricing strategies is a company using when it creates a complex pricing structure by combining multiple products and services into one package?

Accepted Answer

The answer of Which of the following common pricing strategies...

Question 11

When creating a timeline, the lead times with respect to milestones that indicate a change in the current revenue pattern are known as

Accepted Answer

Triggers are events or milestones that indicate a change in the current revenue pattern, prompting adjustments in planning or operations.

Question 12

Which of the following is NOT a strategy that can help entrepreneurs arrive at a realistic forecast of demand for their product or service?

Accepted Answer

Preparing revenue budgets is more about planning how to manage income and expenses rather than forecasting demand for a product or service. Forecasting demand typically involves understanding market needs, customer interests, and potential sales volume, which is different from budgeting activities.

Question 13

For _____ companies, the actual delivery costs must be based initially on information gathered from other companies in the industry.

Accepted Answer

The answer of For _____ companies, the actual delivery costs...

Question 14

With regard to pricing models, _____ products are defined as those whose price is transparent, easily identified, and most subject to downward pricing pressure.

Accepted Answer

The answer of With regard to pricing models, _____ products...

Question 15

The best way, and sometimes the only way, to accurately gauge customer demand is to

Accepted Answer

Going into business in a limited way allows for real-world testing of customer demand, providing practical insights that other methods may not fully capture.

Question 16

Which of the following is an example of an indirect selling expense?

Accepted Answer

The answer of Which of the following is an example...

Question 17

_____ is a strategy in which a company starts with a high price to capture uniqueness and competitive advantage, and then drops the price as competitors enter the market in order to stay ahead of competition.

Accepted Answer

Price skimming is a pricing strategy where a firm charges a high initial price for a product, then gradually lowers the price over time. This approach is often used to recover the costs of development quickly, take advantage of a product's novelty and uniqueness, and segment the market based on price sensitivity before competitors enter the market.

Question 18

Which of the following metrics would Right Fit, an Internet-based business, most likely use to measure its financial success?

Accepted Answer

Qualified leads are potential customers who have expressed interest in a company's products or services. They are a key metric for Internet-based businesses because they can be used to track the effectiveness of marketing campaigns and to identify potential sales opportunities.

Question 19

In figuring _____, entrepreneurs must convert time to dollars and consider the opportunity cost.

Accepted Answer

Customer acquisition costs are the costs associated with acquiring new customers. These costs can include marketing, advertising, sales, and customer service. Entrepreneurs must convert time to dollars and consider the opportunity cost when figuring customer acquisition costs.

Question 20

_____ is found by subtracting variable costs from revenues and dividing the difference by revenues to yield a percentage.

Accepted Answer

Contribution margin is calculated by subtracting variable costs from revenues and then dividing the difference by revenues, resulting in a percentage that indicates the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs.

Quiz 9: Calculating Startup Capital Requirements