Bus 101: Practice Exam #2

True or False: A limited liability company (LLC) can elect to be taxed as a corporation.

True

True or False: Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days.

True

True or False: Common Stock Represents the basic ownership interest in a corporation.

True

True or False: Common stock is a key owners' equity account for corporations.

True

True or False: 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

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

True

True or False: Studies cited in the Wall Street Journal's Career Journal suggest that during face-to-face communication, the body language of the speaker conveys maximum meaning to the listener.

True

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

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

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.

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

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

True or False: One of the disadvantages of general partnerships is the lack of continuity.

True

True or False: The net income of a company is calculated by subtracting expenses from revenue

True

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 work 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

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

nervousness

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.

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

telephone conversation

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

the ability to set their own hours

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 Yu 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 Yu 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

_____ 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

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 Small Business Administration (SBA) supports the _____, which provides free, comprehensive counseling for small businesses from qualified volunteers.

Service Corps of Retired Executives

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

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

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

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

The primary reason people choose to become entrepreneurs is to:

earn more money

Rahul owns a guitar store that is famous for customizing guitars. From choosing the wood for the body to the type of pickups, everything can be selected by the customer. This feature attracts beginners and professionals alike to Rahul's store. The specific nature of the business makes it unique and results in fewer competitors. This allows Rahul to choose the prices for his services. The opportunity of _____ is highlighted in the given scenario.

exploiting market niches

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

it is a safe way to earn some interest.

Since sole proprietorships are extensions of their owners, they:

lack permanence

According to the Global Entrepreneurship Monitor (GEM), the most effective way to evaluate entrepreneurship levels is by phase. A country's total early-phase entrepreneurship rate includes the:

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

Mercy Eston, a start-up company, has a small office space. Its employees often complain about the lack of personal space because of a congested seating arrangement and lack of a proper ventilation system. In this scenario, the employees of Mercy Eston are most likely facing _____ to communication.

physical barriers

Newot Texin, a pharmaceutical company, introduces a new pain relieving drug in the market. It borrows $1 million from Esterotia, 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 Newot Texin in the given scenario?

A term loan

True or 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

True or False: Corporations are by far the most common type of business organization in the United States

False

True or False: 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 no fault of his. Dominic's perceptions suggests that he has an internal locus of control.

False

True or False: In top-down budgeting, top management prepares the budget with the involvement of the middle and supervisory managers.

False

True or False: Signing a franchise agreement exempts the franchisee from making any form of payments to use a franchisor's products

False

True or False: The current ratio calculated by dividing a firm's current liabilities by its total assets.

False

Who among the following individuals uses nonverbal communication?

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

_____ measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the following year.

Liquidity ratios

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

Pride of ownership

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

Raising money to finance growth can be tough for business owners.

Which of the following is an advantage of debt financing?

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

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?

Too little money

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

reestablishing eye contact once you have answered the question.

In the context of debt financing, if a firm invests the borrowed funds profitably, the use of debt can improve the _____ to the shareholders by not diluting existing shares of stock.

return on equity

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 earning