BUSINESS DYNAMICS COMPREHENSIVE EXAM
During the production era, managers focused mostly on customer satisfaction and not on production efficiency.
False
Data mining allows organizations to:
analyze vast amounts of data to identify useful information that had been hidden.
In the context of opportunities and threats, overhead costs for small businesses:
are often lower than big companies.
Financial managers evaluate a firm's current strengths and weaknesses by computing ratios that compare values of key accounts listed on their firm's:
balance sheet and income statement.
The three kinds of basic financial statements that are prepared in financial accounting are:!
balance sheet, income statement, and statement of cash flows
The overstating of needs or setting low budget goals by managers in a budgeting process can result in ____
budgetary slack
A-n-Y dominates its market section by offering a wide range of toys that includes soft toys, plastic construction toys, electronic toys, and board games to the public. It is evident that A-n-Y is a _____.
category killer
In the context of legal and ethical dimensions of business conducts, it is illegal but ethical to:
collaborate with other medical clinics to guarantee low prices in low-income counties.
Costs are deducted from revenue in several stages to show how net income is determined. The first step in this process is to deduct:
costs of goods sold.
The tangible and intangible features of a product are sometimes called the _____.
costumer benefit package
Effectiveness means producing products that:
create value.
The Federal Reserve System was:
created to serve as the central bank in the United States.
In the context of open market operations, when inflation is a concern, the Fed sells securities to buyers who write checks to the Fed to pay for securities they bought, and the Fed withdraws these funds from banks. With fewer funds, _____.
credit becomes tighter
When a business brings in less money than it needs to cover expenses, it incurs a__________.
loss
Which of the following is a difference between a C corporation and an S corporation?
A C corporation is double taxed, whereas an S corporation is taxed as a partnership.
_____ is similar to a virus, except that it is an independent program that can spread across computer networks without being attached to other files.
A worm
Which of the following statements is true of ethics?
Actions that are completely legal can still be unethical.
In the context of international trade, which of the following companies is facing the barrier of legal differences?
An Asian company that can only import a limited amount of crude oil from an Arab country because of international trade restrictions
Which of the following countries most likely has a comparative advantage?
An Asian country that produces quality automobiles with little opportunity cost compared to other countries
_____ is a deep-seated sense that forces other than the individual are responsible for what happens in his or her life.
An external locus of control
__________are structured training programs that mandate that each beginner serve as an assistant to a fully trained worker before gaining full credentials to work in the field.
Apprenticeship programs
__________service customers who are too small to merit in-person sales calls from wholesaler reps.!
Cash and carry wholesalers
Which of the following are the elements of distribution strategy?
Channels of distribution and physical distribution
__________is a widely accepted social movement that supports a buyer's right to be informed, to be safe, to choose, and to be heard.
Consumerism
_____ refers to planning for unexpected events, usually involving a range of scenarios and assumptions that differ from the assumptions behind the core plans.!
Contingency planning
The _____ requires senders of unwanted commercial email to label their messages as ads and to tell the recipient how to decline further messages.!
Controlling the Assault of Non-Solicited Pornography and Marketing Act
__________is a form of unemployment that involves layoffs during recessions.
Cyclical
Which of the following statements is true of human resources departments?
Effective HR people remain open to exceptions even as they enforce broad company policies.
In operations management, _____ means using resources to create value by providing customers with goods and services that offer a better relationship between price and perceived benefits.
Effectiveness
In the context of monitoring ethics and social responsibility, which of the following is the starting point of a social audit?!
Establishing goals
__________refers to selling products in foreign nations that have been produced or grown domestically.
Exporting
Consumerism is a widely accepted social movement. Which of the following can be considered a consumer's right?
Expressing legitimate complaints easily
The__________established a minimum wage and overtime pay for employees working more than 40 hours a week.
Fair Labor Standards Act of 1938
A supermarket sells a complete selection of food and general merchandise at a steep discount in a single enormous location.!
False
Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.
False
If an invoice lists the terms of trade credit as 2/10 net 30, it means that the supplier is offering a 10 percent cash discount off the invoice price if the buyer pays within 2 days.!
False
In the context of accounting for the time value of money, discount rate remains constant in a specified number of time periods.!
False
In the context of federal debt, if spending is lower than revenue, the government incurs a budget deficit
False
In the context of making a career choice, following one's passion guarantees a fat paycheck.
False
Reserve requirement is a rule of the Fed which requires that all of its member banks hold funds which are more than the stated percentage of the deposits held by their customers.!
False
Return-on-equity indicates how much net income a firm earned per share of common stock outstanding.!
False
Speed-to-market is the rate at which a company's competitors copy its product innovations.
False
Supply chain management is a subset of logistics that focuses more on tactics than on strategy.!
False
The financial assistance offered by the World Bank usually comes in the form of high-interest loans.
False
The _____ required firms with 50 or more employees to provide up to 12 weeks of job-secure, unpaid leave on the birth or adoption of a child or the serious illness of a spouse, child, or parent.
Family and Medical Leave Act of 1993
Which of the following is a difference between managerial accounting and financial accounting?
Financial accounting is governed by a set of generally accepted accounting principles, whereas managerial accounting uses procedures developed internally that are not required to follow generally accepted accounting principles.
_____ remain constant regardless of how many products are sold.
Fixed costs
Which of the following strategies for reaching global markets is a specialized type of licensing?
Foreign franchising
_____ refers to the physical components used to collect, input, store, and process data, and to display and distribute information.
Hardware
Alfred, a human resource manager at an IT firm, reasons, "Although everyone should be given an equal opportunity, but for once it is fine to give my friend the first shot at the opening in my company because I know he really needs the job." In this context, which of the following statements is most likely true of Alfred?Correct!
He views ethics as relative.
Who among the following individuals uses nonverbal communication?
Herbert, who maintains eye contact with his employees while talking to them
Which of the following is an intimidating obstacle that small businesses face?
High health insurance costs
Which of the following is a drawback of buying a franchise?
If the national brand suffers, so does the business.
Which of the following statements is true of the wage gap between CEO pay and worker pay?
In 2011, CEO pay was correlated to how well companies fared in the stock market.
Which of the following is a true statement about personal investing?!
In general, riskier investment strategies offer the potential for higher returns.
Which of the following is a difference between limited partnerships and limited liability partnerships?
In limited liability partnerships, all the partners actively participate in the management of the company, whereas in limited partnerships, only the general partners actively manage the company.
Which of the following communication channels should ideally be used when you need to reach a large audience with an important message?
In-person presentation
Which of the following is a negative factor that affects socialist economic systems?
Inefficiencies and corruption
Which of the following is a difference between inflation and deflation?
Inflation is a period of rising average prices across the economy, whereas deflation is a period of falling average prices across the economy.
_____ involves placing a producer's products in as many stores as possible.
Intensive distribution
The basic mission of the _____ is to promote global economic cooperation and stable growth.
International Monetary Fund
In the context of the strategies for reaching global markets, which of the following is a key risk of foreign outsourcing?
Involvement of social responsibility
In the context of an organization dedicated to promoting corporate social responsibility, which of the following statements is true of measuring a company's success by evaluating a double bottom line?
It accounts for traditional financial indicators, such as earnings.
Which of the following statements is true of ownership utility?
It adds value by making it easier for customers to possess the goods that they purchase.
Which of the following is true of cloud computing?
It allows lower costs and excess capacity to its users.
Which of the following is an advantage of a broadband Internet connection?
It allows users to quickly download large files such as music, games, and movies.
In the context of budget preparation, which of the following is a disadvantage of participatory budgeting?!
It can lead to budgetary slack.
Which of the following statements is true of cost-based pricing?
It determines the price by adding a fixed margin to the per-unit cost of a product.
In the context of global trade, which of the following statements is true of balance of payments?
It includes foreign borrowing and lending.
Which of the following statements is true of telecommuting?
It increases annual cost savings for employers.
Which of the following statements is true of sexual harassment?
It involves discrimination against a person based on his or her gender.
Which of the following statements is true of equity theory?
It is based on perceptions, which are not always on the mark.
Which of the following statements is true of job enrichment?
It is the creation of jobs with more meaningful content, under the assumption that creative work will motivate employees.
Which of the following statements is true of profit in a business?
It is the financial reward that comes from starting and running a business.
Which of the following statements best defines a channel of distribution?e
It is the network of organizations and processes that links producers to consumers.
Which of the following statements is true of the Dodd-Frank Act?!
It required large firms in the financial sector to hold more equity and less debt in their capital structures.
Which of the following statements is true of a specialty store?
It sells a wide selection of merchandise within a narrow category.
In the context of bringing the code of ethics of a company to life, which of the following statements is true when experts try to advocate a forceful, integrated approach to ethics?
It should be ensured that the company's ethics code is both local and global in scope.
__________is the examination of specific tasks that are assigned to each position, independent of who might be holding the job at any specific time.
Job analysis
Who among the following is most likely to benefit in a case where there is a weak dollar against a euro
John is an American who exports goods to Europe.
In the context of factors of production, which of the following is a natural resource?
Land
_____ is an approach to manufacturing that emphasizes the elimination of waste in all aspects of manufacturing processes.
Lean production
Which of the following communication channels should ideally be used when you must communicate lengthy or detailed uncontroversial information?
Memos
In the context of budget preparation, which of the following is an advantage of using bottom-up budgeting?
Middle managers are likely to be highly motivated to achieve budgetary goals.
_____ involves hiring independent contractors to sell products to their personal network of friends and colleagues and to recruit new salespeople in return for a percentage of their commissions.
Multilevel marketing
_____ are market structures with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones.
Natural monopolies
__________is the profit or loss a firm earns in the time period covered by the income statement.
Net income
The _____ tracks the stock prices of some of the largest and most actively traded companies listed on the Tokyo Stock Exchange.
Nikkei 225
__________is a form of communication that does not involve the use words.
Nonverbal communication
__________is the first step in the training and development process, designed to introduce employees to the company culture and provide key administrative information.
Orientation
In the context of employee compensation, which of the following statements is true of the various performance pay options?
Pay for knowledge involves awarding bonuses and pay increases in exchange for increases in knowledge.
__________is a scam in which official-looking emails are sent to individuals in an attempt to get them to divulge private information such as passwords, usernames, and account numbers.
Phishing
In the context of employee selection, which of the following statements is true of employment testing?
Physical exams are highly regulated by state and federal law.
Which of the following factors is most likely to be covered by the social environment dimension of a business?
Population size
Which of the following is a disadvantage of online retailing?
Product delivery takes at least a couple of days.
Which of the following is a disadvantage of online retailing?!
Product delivery takes at least a couple of days.
Which of the following is an internal recruitment method?
Promotions
_____ is a technology that stores information on a microchip and transmits it to a reader when it is within range.!
Radio frequency identification
Which of the following is a benefit of holding large inventories?
Reduced ordering costs
Which of the following scenarios exemplifies a nonverbal communication that is most likely to have a negative impact on the outcome of a conversation?
Rudolph fidgets frequently when he delivers a PowerPoint presentation to his sales team.
_____ refer to the pay that employees receive over a fixed period, most often weekly or monthly.
Salaries
The _____ limits conflict-of-interest issues by restricting the consulting services that accounting firms can provide for the companies they audit.
Sarbanes-Oxley Act
Which of the following is the last step of a complete human resource (HR) plan?
Separation
In the context of a SWOT (strengths, weaknesses, opportunities, and threats) analysis, which of the following exemplifies an external threat to a company?!
Significant changes in the taxation policies implemented by the government
_____ is an approach to quality improvement characterized by very ambitious quality goals, extensive training of employees, and a long-term commitment to working on quality-related issues.
Six Sigma
__________are local offices—affiliated with the U.S Small Business Administration—that provide comprehensive management assistance to current and prospective small business owners.!
Small Business Development Centers
_____ includes all organizations, processes, and activities involved in the flow of goods from the raw materials to the final consumer.
Supply chain
_____ includes all organizations, processes, and activities involved in the flow of goods from the raw materials to the final consumer.!
Supply chain
_____ refers to specific, short-term planning that applies strategic plans to specific functional areas.
Tactical planning
Which of the following communication channels should ideally be used when the content is uncontroversial and a quick response regarding relatively simple issues is required?
Texting
A public accounting firm takes up a contract to perform an external audit for an oil manufacturing company. The firm, however, is already in a consulting contract with the oil company. Because of its prior association with the oil company and the hefty fee the oil company pays the firm, the firm manipulates the audit report. Which of the following laws is violated in this scenario?
The Landrum-Griffin Act
In the context of the history of American business, which of the following statements is true of the production era?!
The assembly line became standard across major manufacturing industries.
In the context of the history of American business, which of the following statements is true of the marketing era?
The balance of power shifted away from producers and toward consumers.
__________consists of the sequence of activities in a project that is expected to take the longest to complete.
The critical path
Which of the following is a disadvantage of franchising for a franchisee?
The negative halo effect
__________involves determining how a product will flow through a channel from the producer to the consumer.!
The physical distribution strategy
Which of the following statements is true of necessity entrepreneurship in high-income countries?
The rate of necessity entrepreneurship is low.
Which of the following is true of contingency planning?
The senior manager spearheads this process but with input from the other levels of management.
Which of the following dimensions of a business environment embodies the values, attitudes, customs, and beliefs shared by groups of people?
The social environment
Which of the following statements is true of online retailing?!
There is a lack of security on the Web.
Which of the following is true of securities brokers?!
They act as agents for investors who want to buy or sell financial securities.
Which of the following statements is true of distributors in a channel of distribution?
They add value in a number of different ways to products.
In the context of strategic planning, which of the following is true of mission statements?!
They provide a clear, long-term focus for an organization.
Which of the following is a characteristic of entrepreneurs?
They risk their time, money, and other resources to start and manage their business.
In the context of a company's responsibility to the environment, which of the following is the idea behind sustainable development?
To meet the needs of the current generation without harming the ability of future generations to meet their needs
A drawback of communism, which was adopted by some countries in the 1900s, was the inability of people to make basic choices such as where to work or what to buy.
True
A firm that contracts with foreign producers has an obligation to ensure that those factories adhere to ethical standards.
True
Deflation refers to a period of falling average prices across an economy, which is a sign of economic trouble that goes hand-in-hand with very high unemployment.
True
Socialist economies tend to have high taxes, which are designed to distribute wealth more evenly through society.
True
The extent to which retained earnings are used as a source of long-term capital for a firm, depends on the state of the economy.!
True
Value is the relationship between the price of a good or a service and the benefits that it offers its customers.
True
In the context of funding options for small businesses, the__________assists entrepreneurs by partially guaranteeing loans from local commercial lenders.
U.S. Small Business Administration
Which of the following is a difference between total quality management (TQM) and Six Sigma?
Unlike TQM, Six Sigma aims to reduce defects of any process to a level of no more than 3.4 per million opportunities.
__________has a high channel richness, and especially with state-of-the-art equipment, it conveys much of the richness of actually being there.
Videoconferencing
Which of the following is a powerful contribution made by small businesses to the U.S. economy?
Vitalizing inner cities
Websites that incorporate interactive and collaborative features to create a richer, more interesting, and more useful experience for their users are known as _____.
Web 2.0 sites
In the context of ethics and social responsibility in the global arena, which of the following statements is true of a business's responsibility to workers abroad?
When deciding living wages, companies must bring together their own values with the laws of both the United States and their host countries.
Autocratic leadership tends to be the best option when:
a quick decision is paramount.
In the context of e-commerce, most websites transmit online payment information using _____ to ensure safe transactions.
a secure socket layer protocol
A sole proprietorship is a form of business ownership in which
a single owner actively manages the company.
When writing high-impact messages, a _____ is an invaluable tool that you can use to engage your reader's attention whenever you have more than one of anything in your writing.
bulleted list
A__________is a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives.
business plan
The various ways in which a message can be sent, ranging from one-on-one in-person meetings to Internet message boards, are called__________.
communication channels
Enterprise resource planning (ERP) systems are:
complex.
A(n)__________is a combination of two firms that are in unrelated industries.
conglomerate merger
Brenda owns a store in a small town. The store sells a small range of everyday and impulse products, such as chocolates, magazines, novelties, and snacks. The store remains open seven days a week from 08:00 a.m. to 12:30 a.m. Brenda's store can be categorized as a(n) _____.
convenience store
The _____ is a project-management tool that illustrates the relationships among all the activities involved in completing a project and identifies the sequence of activities likely to take the longest to complete.
critical path method
During a period of inflation in the United States, the Federal Reserve sells treasury bonds. Buyers of these bonds write checks to the Fed, and the Fed cashes these checks from banks. Given this information, the banks will most likely:
cut back on the loans they make.
In _____, marketers determine prices based on what consumers are willing to pay and then subtract their desired margins to yield target costs.!
demand-based pricing
A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.
distributorship
The primary reason people choose to become entrepreneurs is to:
earn more money.
An advantage of franchising is:
easier access to funding.
A(n) _____ is a structure for allocating limited resources.
economic system
When properly implemented, intranets enhance communication and collaboration among:
employees.
Odd pricing refers to the practice of:
ending prices in numbers below even dollars and cents.
According to small business experts, while raising start-up funds from friends and relatives, it is:
essential to keep the relationship as professional as possible.
Firms create _____ by offering limited access to certain areas of their private network to a selected group of stakeholders.
extranets
In the context of universal ethical standards, being open-minded and not taking advantage of others exemplifies the core value of _____.
fairness
People with an external locus of control:!
feel buffeted by forces such as random luck.
To give the company's stockholders, creditors, and other external stakeholders an accurate idea of the company's overall performance, Rowensport Corporation, a multinational company, releases statements that contain details of the company's profits and losses over the past five years. In this scenario, the company is most likely involved in _____.
financial accounting
Financial managers use__________to assess the financial strengths and weaknesses of their firm.
financial ratio analysis
A _____ is used for goods that must be produced at a specific site or that are so large and bulky that it isn't feasible to move them from station to station.
fixed position layout
When organizations employ different types of departmentalization at different levels of the organization, their approach is called _____.
hybrid departmentalization
A(n) _____ is the first time a company issues stock that may be bought by the general public.
initial public offering
A benefit that cloud computing provides to individual users is that:
it allows them to store large files without taking up valuable space on their computers' hard drive.
The time value of money reflects the fact that:
it is best to have money today, so it can be put to work sooner to make even more money.
A(n) _____ is a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatment.
limited liability company
Technological tools such as the Internet and email have:
made it easy for small business owners to manage their firms on the go.
Merc Enterprise is an independent distributor that distributes coffee machines and water purifiers to firms on a large scale. In addition to taking legal possession of the goods it distributes, the company also provides a complete array of services that includes warehousing, shipping, product repairs, and credit to its business buyers. In this scenario, it can be said that Merc Enterprises is a(n) _____.
merchant wholesaler
TrinkCan is a soda manufacturing company. People can buy the company's soda from grocery stores, restaurants, vending machines, and online. In this scenario, it is evident that TrinkCan has adopted _____.
multichannel retailing
In low-income countries, a high percentage of entrepreneurs are considered__________.
necessity entrepreneurs
The price at which shares of an open-end mutual fund are issued and redeemed is based on the fund's _____.
net asset value per share
In the context of financial statements of a company, cash flow statements commonly begin with _____.
net income
In the context of challenges to effective communication, the term _____ refers to any interference that causes the message you send to be different from the message your audience understands
noise
In the context of active listening, one of the dos for better listening is the use of _____.
nonverbal communication
__________refers to moving production or support processes to foreign countries.
offshoring
In the context of management planning,__________refers to very specific, short-term planning that applies tactical plans to daily, weekly, and monthly functions.
operational planning
A corporation is a separate entity from its owners where the:
owners are not personally responsible for the obligations of the company.
A(n)__________is a voluntary agreement under which two or more people act as co-owners of a business for profit.
partnership
An assumption of Theory Y is that:!
people can accept and even seek responsibility.
A(n)_____ is a type of stock that gives its holder priority over common stockholders in terms of dividends and claims on assets.
preferred stock
A _____ is a set of related activities that transform inputs into outputs, thus adding value.
process
A _____ doesn't require work to be performed in a specific sequence; instead, the product can be moved from one type of machinery to another in whatever sequence is necessary.
process layout
Trade restrictions were created to:
protect national security interests.
In the context of international trade restrictions, _____ are limitations on the amount of specific products that may be imported from certain countries during a given time period.
quotas
Allied Bakeries sells processed food and beverages manufactured by Winston Corp. to the public. In this scenario, Allied Bakeries is a _____.
retailer
In the context of equal employment opportunities, affirmative action:
seeks to make up for the systematic discrimination of the past by creating more opportunities in the present.
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 span of control is also called the _____.!
span of management
In the context of social responsibility,__________include employees and investors who have a personal interest in the performance and actions of an organization.
stakeholders
A(n) _____ is a corporation that has limited number of owners that operates under simpler, less formal rules than a C corporation
statutory close corporation
David is the chief executive officer of Grand Rocks Mining Company. He has convinced the company's board of directors to implement a change in the mining procedure. According to the new procedure suggested by David, less resources will be exhausted. This will ensure that the ability of future generations to meet their needs is not harmed because of shortage of natural resources. By agreeing to David's suggestion, Grand Rocks has embraced the idea of _____.
sustainable development
Merchant wholesalers can develop their own marketing strategies, including pricing strategies, because they:
take legal title to the goods they distribute.
In the context of an acquisition, the firm that is purchased by another firm is called the _____.
target firm
In the context of management skills, front-line managers must have a high degree of _____, which help them hire, train, and evaluate employees; avoid mistakes; and ensure high-quality production.!
technical skills
In the context of a business environment, computers, telecommunications, and other digital tools are considered to be part of the _____.
technological environment
An advantage of a centralized organization is that it:
tends to have a uniform customer approach across the front lines.
The extent to which decision-making power is held by a small number of people at the top of the organization is known as _____.
the degree of centralization
During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create:Correct!
the fiscal cliff.
Macroeconomics involves the study of:
the gross domestic product of a country.
Buying an established business is a better plan than starting your business from scratch because:!
the organizational structure is in place.
In the context of monetary policy, if the Fed decreases the reserve requirement, _____.
there will be more loans available
If an auditor doesn't find any problems with the way a firm's financial statements were prepared and presented, the report will offer a(n) _____ opinion.
unqualified
To strike the right tone while writing a business message, it is suggested that an individual:
uses the active voice to facilitate concise communication.
A large film production company merges with a popular sound processing studio, resulting in the formation of a new company out of the two previously independent firms. This is most likely an example of a _____.
vertical merger
