Bus 402 Wk 4 Quiz 3 Chapter 5,6

BUS 402 WK 4 Quiz 3 Chapter 5,6

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1) When buying an existing business, the potential buyer should remember that:

A) it is a long process and the buyer should be patient.

B) existing businesses often do not continue to be successful after a change in ownership.

C) it is often more difficult to find capital for an existing business than it is for a start-up.

D) he/she will likely have to make significant changes in the work force.

2) One advantage of buying an existing business is:

A) you always get the best location.

B) the opportunity to participate in a national advertising campaign.

C) equipment is installed and production capacity is known.

D) easy implementation of innovations and changes from past policies.

3) When it comes to buying an existing business, it is not uncommon to find it:

A) overpriced.

B) difficult to finance.

C) with accounts receivable worth more than face value.

D) bargain priced.

4) When buying an existing business, one should remember that:

A) it is generally not important to independently evaluate the inventory.

B) you are always buying goodwill with the tangible assets of the business.

C) it is as easy to make change in an existing business as it is in a start-up.

D) the real reason for selling is seldom stated honestly.

5) The inventory in an existing business:

A) is always current and salable.

B) usually appreciate over time, making the business a bargain.

C) needs to be checked for age and salability.

D) is usually stated honestly and does not need independent auditing.

6) Accounts receivable in an existing business:

A) are rarely worth their face value.

B) unlike inventory, are often worth their face value.

C) appreciate over time due to interest and penalties.

D) are not a significant consideration when buying an existing business....