BUS Test 2 Practice

the sense of urgency regarding entrepreneurship tends to fall when fear of failure is low. This is most likely happens in countries where:

a person is given financial support if he or she gets fired

signing a franchise agreement exempts the franchisee from making any form of payments to to use a franchisor's products

false

the FASB's responsibility for enforcing accounting standards extends only to the United States and does not include working with other nations

false

the current ratio is calculated by dividing a firm's current liabilities by its total assets

false

the financial managers at the Swictek Corporation want to ensure that the company has binding commitment from their bank for a guaranteed amount of money over the next year. They can achieve this result by arranging a line of credit with their banker

false

the members of the FASB are appointed by the Securities and Exchange Commission

false

sally meadows works for swifter industries. her primary responsibilities include management of the firm's working capital and the analysis of long-term investment opportunities for Swictek. Sally is a part of the firms _________

financial management

suresh quits his nine-to-five job at a multinational company and starts his own event management company. In his new company, he does not practice a nine-to-five regime. Instead, he organizes meetings with clients by making appointments that favor his schedule. Which of the following advantages of entrepreneurship is highlighted in the given scenario?

flexibility

Jack's firm manufactures a cleaning product that has been quite successful in the market, but they just can't manufacture them fast enough to keep up with the demand. Therefore, Jack needs to find. way to ramp up production - and fast- or his firm will lose to competitors. Which of the following is the best advice for Jack to profitably increase production capacity?

fund the purchase of increased production capacity by taking on debt, allowing the firm to have a lower net income through tax deductions and hold on to more cash

The financial accounting standards board established the ______ used in the practice of financial accounting

generally accepted accounting practices

since sole proprietorships are extensions of their owners, they:

have the ability to pool financial resources

financial managers who have a good understanding of the risk-return tradeoff know that sources of funds that offer:

higher rates of return are riskier than those that offer lower rates of return.

___________ ratios measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year

liquidity

_____________ measure the ability of an organization to convert assets into the cash It needs to pay off liabilities that come due in the following yer

liquidity ratios

Maude Shade, a fashion apparel manufacturing company, wants to invest in research before finalizing the production of its proposed product. In order to do so, it approaches Ruemen Bank and takes a loan of $80,000 in the form of bonds. Which of the following financing options is being used by Maude Shade in the given scenario?

long-term debt

__________________ work within an organization, prepare reports, and analyze financial information such as budgets and cost management

management accountants'

Historically, the most widely accepted goal of financial management is to:

maximize the value of the firm to its owners

in the context of nonverbal communication, fidgeting during a conversation is likely to be considered a sign of:

nervousness

Timber Grand Inc. applied to United Bank for a business loan. In order to best assess the loan case, loan officer Salvatore decides to look at Timber Grand's net income figure. The net income is found in the company's __________?

profit and loss statement (income statement)

return on equity and earnings per share are both classified as ______ ratios

profitability

which of the following is a disadvantage associated with sole proprietorships?

raising money to finance growth can be tough for business owners

if you encounter a hostile questioner while giving a presentation, you should avoid:

reestablishing eye contact once you have answered the question

Projects with a negative net present value should be:

rejected since the expected future cash flows from the project are less than the cost of the investment

Firms that would benefit from a factoring service are firms that:

rely heavily on credit sales and want to speed up their receipt of cash

in the context of debt financing, if a firm invests the borrowed funds profitability, the use of debt can improve the __________ to the shareholders by not diluting existing shares of stock

return on equity

At a local convenience store, an increase in the inventory turnover ration would indicate that it is:

selling out of its merchandise quickly

the small business administration (SBA) supports the _________, which provides free, comprehensive counseling for small businesses from qualified volunteers.

service corps of retired executives

To preserve independence and impartiality, the Financial Accounting Standards Board (FASB) members are required to:

sever all ties with any firms or institutions they served prior to joining the board

the ___________ identifies a firm's sources and uses of money in a given accounting period based on the firm's operating, investing, and financing activities

statement of cash flows

the ___________ of a company is a simple statement that shows how the accumulated revenues that have been reinvested in the company have changed from one accounting period to the next

statement of retained earnings

which of the following communication channels helps your audience benefit from hearing your tone and how it changes through chat?

telephone conversation

which of the following practices should ideally be followed when giving a business presentation?

telling the audience the key points before launching into the body of the presentation

which of the following is an appealing benefit that entrepreneurs enjoy?

the ability to set their own hours

Financial managers measure the benefits and cost of long-term investment proposals in terms of:

the cash flows they will generate

the Minton corporation has submitted its accounting information to Tamara. She will make sure that their reports are filed as per the Securities and Exchange Commission reporting requirements. In this case, Tamara works for ____________

the government

Which of the following is an advantage of debt financing?

the interest payments a firm makes on debt are up to 30% tax-deductible

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk You to pay the total purchase amount within a period of six months. Which of the following short-term financing options is being used by Duk You in the given scenario?

trade credit

Albert is the owner of a car service center. As a sole proprietor, any profit that he earns is :

treated as Albert's personal income

Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days

true

If you receive unwanted questions in the middle of your presentation, you should remind the questioner that there will be time for questions at the end

true

Pro forma financial statements provide a framework for analyzing the impact of the firm's plans on the financing needs of the company

true

Public accountants provide services such as tax preparation, external auditing, or management consulting to clients on a fee basis

true

a limited liability company (LLC) can elect to be taxed as a corporation

true

activity-based costing involves two stages. the first stage is to identify specific activities that create indirect costs and determine the driving factors of those activities

true

common stock is a key owners' equity account for corporations

true

common stock represents the basic ownership interest in a corporation

true

management accountants work within a business organization, preparing reports and analyzing financial information for the company that employs them

true

one of the disadvantages of general partnerships is the lack of continuity

true

retained earnings are the profits a firm reinvests and are often a major source of long-term funds

true

studies cited in the wall street journal suggest that during face-to-face communication, the Body language of the speaker conveys maximum meaning to the listener

true

the accounting department at Cathy's cupcakes has been asked to determine the company's direct costs. In this scenario, the accountants will look at what the company spent on baking supplies, muffin pans, and counter assistance

true

the net income of a company is calculated by subtracting expenses from revenue

true

To strike the right tone while writing a business message, it is suggested that an individual:

uses the active voice to facilitate concise communication

the current liabilities of a company are reflected in the :

wages owed to the workers for work that they have already completed

corporations are by far the most common type of business organization in the United States

false

explicit costs are not easy to measure since they do not involve monetary payments

false

The accounting equation is ___________

Assets = Liabilities + Owner's Equity

who among the following individuals uses nonverbal communication

Herbert, who maintains eye contact w his employees while talking to them

George's car repair shop buys parts from a local parts distributor. The distributor delivers the parts promptly under terms stated on the invoice: 3/15 net 30. George has always paid the bill within 30 days and has never really worried about these invoice terms. Which of the following statements is true of this scenario?

If he pays the bill within 15 days after the receipt of the parts, then he will receive a 3 percent discount. If he does a lot of business with this firm, he will yield sizable savings in the long run

What explains the time value of money?

It's best to have money today, so it can be put to work sooner to make even more money

Which of the following characteristic of a firm that is highly leveraged?

Its financial return to stockholders will decrease during recession

Sally McGregor sells lawn and garden products in bulk to various companies. She extends credit to her customers for 60 days, but she is worried about cash flow problems. This is a highly competitive business and most of her competitors also offer credit—some of them for up to 90 days. Sally is also concerned about collecting money from customers who make it a habit of paying late. She is willing to forego a small amount of the money, as long as she gets the rest of the amount immediately. Which of the following statements represents the most useful advice to Sally?

Sally should consider selling her receivables to a factor

small firms tend to be effective innovators for a number of reasons. Most importantly, their very reason for being often ties to :

a brand-new idea

Yvonne's job as an accountant entails detecting accounting malpractice, such as embezzlement, for her clients. In this case, Yvonne is ______

a certified fraud examiner

When George, an American, went to represent his company in a global conference held in Germany, he was unaware of the social practices of the host country. While talking to a German representative, he used the 'ok' gesture, which is considered inappropriate in Germany. This created tension and uneasiness between him and the German representative. which of the following communication barriers did George most likely face in the given scenario?

a cultural barrier

Which of the following best describes a highly leveraged firm?

a firm that relies heavily on debt

in top-down budgeting, top management prepares the budget with the involvement of the middle and supervisory managers

false

__________ is a guaranteed line of credit in which a bank makes a binding commitment to provide a business with funds up to a specified credit limit at any time during the term of the agreement

a revolving credit agreement

newt Texan, a pharmaceutical company, introduces a new pain relieving drug in the market. It borrows $1 million from Esterorita, a private bank, to market the drug. In return, Esterotia allows Newot Texin to return the full amount with interest in fixed amounts of $200,000 every six months. Which of the following sources of long-term funds is being used by Newt Texin in the given scenario?

a term loan

the __________ measures how effectively a firm uses its assets to generate net income

activity ratio

______ are valuable things owned by the firm

assets

Maverk, a Human Resources manager at a multinational company, has to explain the ethical policies of the company to a batch of new employees. To convey that the company has a low power distance, he says, "the manager who loses his temper must apologize". From the given statement, it can be inferred that Maverk does not follow the business communication guideline of ______

avoiding bias

financial managers should focus solely on meeting the financial needs of their firms in the short run, leaving the long-term financial issues to the top management

false

prenora inc. , a newly established company, is set to prepare its first budget. The top management of the company decides to use a budgeting approach that will seek active participation from the middle and supervisory managers of the company. In the given scenario, Prenora Inc. will most likely use the _______ to budgeting.

bottom-up approach

"accounts receivable" is categorized as a _________

current asset

Which of the following decisions can help a CEO increase shareholder value by committing to social responsibilities?

deciding not to outsource an activity, as it would lead to the unemployment of 200 employees

in financial management, risk is referred to as :

degree of uncertainty about the actual outcome of a decision

the primary reason people choose to become entrepreneurs is to:

earn more money

which of the following represents assets on a balance sheet with a limited useful life that are subject to subtraction of accumulation depreciation from the original value?

equipment

annual reports include _______ that disclose additional information and special circumstances that clarify and supplement the numbers reported on the financial statements

explanatory notes

Dominic feels that an incredible string of bad luck has affected his personal life. He also feels that his boss is subjecting him to unfair treatment at work for not fault of his. Dominic's perceptions suggest that he has an internal locus of control

false

a budgeted income statement is a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets

false

a certificate of deposit is different from a savings account in that a certificate of deposit seldom requires the funds to remain on deposit for a fixed term

false

an out-of-pocket cost is an implicit cost

false

As key users of accounting information, employees typically evaluate their company's financial statements to:

identify possible layoffs, shutdowns or pay raises

Managerial accounting primarily serves the needs of a firm's

internal stakeholders

Jasmine started a small business two years ago. Her business has now made some profit, and Jasmine notes that she has savings of a few thousand dollars I her bank account. She wants to invest this amount, but it doubtful because of the uncertainty of cash flows in her new business. Jasmine is concerned that she may need access to these funds on fairly short notice in the future. If she wants to get into the market for highly liquid securities, she should :

invest her excess cash into money market mutual funds (it's like having a checking account but pays low value of interest)

firms buy commercial paper as a part of their portfolio of cash equivalents because:

it is a safe way to earn some interest

in the context of franchising, which of the following statements is true of a business format franchise?

it is an agreement in which franchisor grants the franchisee the right to both make and sell its good or service

The debt-to-asset ratio is classified under ______ ratios

leverage

Timothy wanted to start a coffeehouse. However, he could not buy a space to start his business because of lack of funds. Which of the following threats is highlighted in the given scenario?

percentage of adults who have been running their own business from three months to 3.5 years

Which of the following is one of the reasons why many people prefer a sole proprietorship?

pride of ownership