41. A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as a(n) _____.
A. promissory note
B. article of incorporation
C. business plan
D. business agreement
E. article of partnership

42. Which of the following statements is true of a business plan?
A. Small businesses do not need a business plan.
B. It does not have to be revised periodically.
C. Every business needs to mandatorily maintain a business plan as per government regulations.
D. It should establish a strategy for acquiring sufficient funds to keep a business going.
E. It is created to limit a business’s flexibility and decision-making ability.

43. A good business plan should:
A. limit a business’s flexibility.
B. act as a guide or a reference document.
C. never be revised.
D. avoid including estimates of income and expenses.
E. limit a firm’s decision making ability.

44. Arnold approached a bank to get a loan for a business he planned to launch later that year. He explained his business idea and its capital requirements to the bank manager. The manager asked Arnold to provide a formal document that included a rationale for the business, an explanation of how it will achieve its goals, an analysis of the competition, and estimates of income and expenses, among other information. Which of the following documents does the bank expect from Arnold in this scenario?
A. A business plan
B. A cash flow statement
C. A promissory note
D. A balance sheet
E. A marketing plan

45. In the process of starting a business, the step that immediately succeeds the development of a business plan involves:
A. organizing resources like labor and supplies.
B. developing some general business ideas.
C. deciding an appropriate legal form of business ownership.
D. promoting the business to the customers.
E. filing for tax returns for the business with the Internal Revenue Service.

46. To make profits from a small business, the owner must first provide or obtain _____ to start the business and keep it running smoothly.
A. products
B. employees
C. profits
D. supplies
E. capital

47. The most important source of funds for any new business is:
A. the owner.
B. the government.
C. a financial institution.
D. the Small Business Administration.
E. a venture capitalist.

48. The act of financing one’s business by using real personal assets is known as:
A. debt financing.
B. factoring.
C. franchising.
D. equity financing.
E. bootlegging.

49. Which of the following is a source of equity financing?
A. Securing government loans
B. Selling personal assets to raise funds
C. Borrowing money from friends
D. Securing short-term loans from a family member
E. Receiving trade credit from suppliers

50. Walter sold a piece of land he inherited from his grandparents and started a business with the proceeds. Which of the following sources has Walter used to raise funds for his business?
A. Equity financing
B. Debt financing
C. Venture capital
D. Initial public offering
E. Angel investment