BusinessReviewLab
In a production possibilities frontier graph, the cost of producing more units of a good is measured by the A) dollar value of the resources used to produce the good. B) amount of the other good or service that must be forgone. C) dollar value of the additional output. D) area in the arc between the PPF and a straight line drawn between the starting point and the ending point. E) None of the above .
B) amount of the other good or service that must be forgone.
The benefit of a one-unit increase in an activity A) is measured by what you must give up. B) decreases as you do more of it. C) is called rational-choice benefit. D) is always greater than the opportunity cost of that activity. E) is called marginal cost.
B) decreases as you do more of it.
In a company in which an effective vision has been provided: A) goals and objectives are no longer needed. B) employees are likely to have a sense of purpose and a common set of values. C) there is no need for tactical planning. D) the economic and competitive environments tend to be much more predictable.
B) employees are likely to have a sense of purpose and a common set of values.
When a firm makes use of SWOT analysis, one of its objectives is to: A) set specific short-term performance standards for each department. B) identify the things it does well as an organization and the things it needs to improve. C) identify the best employees to fill each position within the organization. D) evaluate the desirability of issuing stocks or bonds in the current financial climate.
B) identify the things it does well as an organization and the things it needs to improve.
Depreciation expense: A) decreases current assets, net income, and operating cash flows. B) reduces both taxes and net income. C) is a noncash item that increases net income. D) increases net fixed assets as shown on the balance sheet.
B) reduces both taxes and net income.
The most popular yardstick of financial performance among investors and senior managers is the: A) profit margin. B) return on equity. C) return on assets. D) times-burden-covered ratio. E) earnings yield.
B) return on equity.
Market equilibrium occurs when A) everyone who wants the good gets the quantity he or she wants. B) the quantity demanded equals the quantity supplied. C) other things remain the same. D) buyers get the lowest possible price. E) the market is changing rapidly.
B) the quantity demanded equals the quantity supplied.
A __________ is an overall explanation of why an organization exists and where it is trying to head. A) corporate charter B) vision C) prime directive D) tactical plan
B) vision
Which of the following increases the supply of a good and shifts its supply curve rightward? A) an increase in the cost of the resources used to produce the good B) a technological advance in how the good is produced C) a higher wage paid to workers in the industry D) an increase in the price of the good E) a smaller number of producers
B) a technological advance in how the good is produced
In the circular flow model, which of the following flows in the opposite direction from the flow of factors of production? A) interests payments of Federal, state, and local governments B) finished goods and services C) the goods market D) firm's profit incentives E) wages, rent, interest, and profit
E) wages, rent, interest, and profit
The important characteristic of normative statements is that they A) explain what normally happens in the real world. B) do not use the ceteris paribus assumption. C) are based on somebody's values and cannot be tested. D) explain what really exists. E) help guide us to what will normally occur if some economic variable changes its value.
C) are based on somebody's values and cannot be tested
Which one of the following ratios identifies the amount of sales a firm generates for every $1 in assets? A) current ratio B) debt-to-equity C) asset turnover D) retention E) return on assets
C) asset turnover
The process of rating an organization's practices, processes, and products against the best of the world is known as: A) outsourcing. B) webworking. C) benchmarking. D) core competencies.
C) benchmarking.
One of the four primary functions of management is: A) marketing. B) designing. C) controlling. D) financing.
C) controlling.
The first step in the rational decision-making model is to: A) develop alternative responses. B) recruit team members to work on the problem. C) define the situation. D) gather data.
C) define the situation.
Tactical planning is concerned with: A) determining the best way to cope with an emergency situation. B) setting long-run goals that will govern the general course of the organization for years. C) developing detailed strategies about what is to be done, who is to do it, and how it is to be done. D) devising temporary courses of action to be used if the primary plans do not achieve the desired results.
C) developing detailed strategies about what is to be done, who is to do it, and how it is to be done.
In the circular flow model, consumption goods are bought and sold in the A) factor markets. B) monetary flows. C) goods market. D) financial market. E) government market.
C) goods market.
The question "Should we produce houses using bricks or wood?" is an example of a ________ question. A) why B) where C) how D) what E) the actions of individual businesses.
C) how
Which one of the following is a source of cash? A) increase in accounts receivable B) decrease in notes payable C) increase in accounts payable D) increase in inventory E) decrease in common stock
C) increase in accounts payable
The book value of a firm is: A) more of a financial than an accounting valuation. B) adjusted to the market value whenever the market value exceeds the stated book value. C) equivalent to the firm's market value provided that the firm has some fixed assets. D) based on historical cost. E) generally greater than the market value when fixed assets are included.
D) based on historical cost.
Which of the following goals best describes today's view of the organizing function? Organizing today focuses on: A) achieving unified opinions from a diversified workforce. B) developing the most efficient strategic plans for the firm. C) simplifying the process of measuring outcomes related to performance standards. D) designing the organization around the customer.
D) designing the organization around the customer.
Organizing a business begins with: A) choosing the best qualified employees. B) acquiring the necessary resources. C) developing an efficient plan of action. D) determining the work to be done.
D) determining the work to be done.
Beause economic and competitive environments frequently change, organizations should: A) eliminate any long-term strategic plans, but devise short-term tactical plans and update them once a year. B) set a long-term plan and stick to it. C) save time and money by cutting back on planning. D) develop contingency plans.
D) develop contingency plans.
The concept of ____________ suggests that as a firm produces more, the average cost of goods produced goes down. A) natural growth B) survival of the fittest C) cost enhancement D) economies of scale
D) economies of scale
The national debt is the total amount the ________ government has borrowed to make expenditures that ________ tax revenue. A) state and local; are less than B) federal; are less than C) state and local; exceed D) federal; exceed E) federal; are equal to
D) federal; exceed
In the circular flow model with the government sector, transfers A) to firms flow in the same direction as do rent, wages, interest, and profits. B) flow only through the goods market. C) flow in the same direction as do taxes. D) flow in the opposite direction as do taxes. E) to households flow in the same direction as do expenditures on goods and services.
D) flow in the opposite direction as do taxes.
Customers who visit any Good As New Appliance Repair Center see a framed statement prominently displayed near the front door. The plaque describes the company's fundamental purposes. In part, it states that "All Good As New Centers operate under the belief that every customer deserves good quality parts, fast and dependable service, and a fair price." The words on this plaque reflect the ____________ of Good As New. A) strategic plan B) corporate charter C) corporate agenda D) mission statement
D) mission statement
"Other things remaining the same, if the price of a good rises, the quantity supplied of that good increases." This sentence describes a A) movement along the price curve. B) shift of the price curve. C) shift of a supply curve. D) movement along a supply curve. E) movement along the quantity curve.
D) movement along a supply curve.
Macroeconomics is the study of A) the actions of individual consumers. B) the government. C) how ceteris paribus affects causation. D) national or global economies. E) the actions of individual businesses.
D) national or global economies.
A(n) ________________ is a visual device which shows relationships among people and divides the organization's work. A) corporate tree B) Venn diagram C) Gantt chart D) organization chart
D) organization chart
Which of the following is the best definition of economic growth? A) the opportunity cost of consumption B) the opportunity cost of capital C) increased development of land and entrepreneurship D) the sustained expansion of production possibilities E) the investment in capital and consumption goods by an economy
D) the sustained expansion of production possibilities
When reporting financial performance for tax purposes, U.S. companies prefer to use accelerated depreciation methods over the straight-line method. A) True B) False
A) True
Which one of the following is the financial statement that shows a financial snapshot, taken at a point in time, of all the assets the company owns and all the claims against those assets? A) cash flow statement B) creditor's statement C) sources and uses statement D) balance sheet E) income statement
D) balance sheet
___________ skills involve a manager's ability to picture the organization as a whole and the relationships among its various parts. A) Conceptual B) Technical C) Autonomic D) Creative
A) Conceptual
Which of the following is not a. True about the return on sales ratio? A) It measures the profitability and liquidity of the firm. B) All things being equal, the higher the return on sales ratio the more profitable the company. C) A company can increase its return on sales by decreasing its expenses and increasing its sales in the same time period. D) It is measured with the following formula: Net Income / Total Sales
A) It measures the profitability and liquidity of the firm.
Which one of the following statements does NOT describe a problem with using ROE as a performance measure? A) ROE is a forward-looking, one-period measure, while business decisions span the past and present. B) All of these describe problems with ROE. C) None of these describe problems with ROE. D) ROE measures only return, while financial decisions involve balancing risk against return. E) ROE measures return on accounting book value, and this problem is not solved by using market value.
A) ROE is a forward-looking, one-period measure, while business decisions span the past and present
What is the purpose of the statement of cash flows? A) This financial statement is designed to show the cash inflows and cash outflows for the period of time covered by the income statement. B) This financial statement is designed to show the changes that occurred in owners' equity during the period of time covered by the income statement. C) This financial statement is designed to show the ending amounts of the company's assets, liabilities, and owners' equity. D) This financial statement is designed to show the net income of the company for a period of time.
A) This financial statement is designed to show the cash inflows and cash outflows for the period of time covered by the income statement
What is the purpose of the income statement? A) This financial statement is designed to show the net income of the company for a period of time. B) This financial statement is designed to show the changes that occurred in owners' equity during the period of time covered by the income statement. C) This financial statement is designed to show the cash inflows and cash outflows for the period of time covered by the income statement. D) This financial statement is designed to show the ending amounts of the company's assets, liabilities, and owners' equity.
A) This financial statement is designed to show the net income of the company for a period of time.
Current liabilities are defined as liabilities with a maturity of less than a year. A) True B) False
A) True
Return on assets can be calculated as profit margin times asset turnover. A) True B) False
A) True
The accounting "book" from the video reveals what a company has and where it came from (owner or lender). A) True B) False
A) True
The analogy is a representation of the accounting equation Assets = Liabilities + Owner's Equity. A) True B) False
A) True
The times-interest-earned ratio always equals or exceeds the times-burden-covered ratio. A) True B) False
A) True
Which of the following statements explains the unity of command principle of management? A) Workers can become frustrated and confused if they have more than one boss. B) All workers must share the same goal. C) All authority should rest with top management, since only top managers carry the responsibility of bad decisions. D) Every firm has one strong leader, and everyone should support that individual.
A) Workers can become frustrated and confused if they have more than one boss.
Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios. A) asset turnover and control B) financial leverage C) coverage D) profitability E) None of the above.
A) asset turnover and control
Because this type of business is considered a separate legal entity, it rather than its owners are taxed. A) corporation B) sole proprietorship C) partnership D) manufacturer
A) corporation
The circular flow model shows the A) flow of expenditure and incomes that arise from the households', firms', and governments' decisions. B) distribution of income to the different factors of production. C) flow of natural resources from firms to the private market to government and back to firms. D) distribution of income and consumption goods across income levels. E) combinations of the factors of production needed to produce goods and services.
A) flow of expenditure and incomes that arise from the households', firms', and governments' decisions
Scarcity exists because A) human wants exceed the resources available to satisfy them. B) people take too much leisure time. C) the costs of production are high. D) some people make bad economic decisions. E) some individuals have low income.
A) human wants exceed the resources available to satisfy them.
Job specialization is known to: A) improve job performance. B) minimize delegated authority and responsibility. C) establish procedures. D) create work teams and improve resource allocation.
A) improve job performance.
Strategic planning looks at the organization as a whole, while ________ planning focuses on daily tasks and decisions. A) operational B) strategic C) mission D) tactical
A) operational
Henri Fayol and Max Weber are best known for their contributions to: A) organization theory. B) marketing theory. C) production theory. D) finance theory.
A) organization theory.
Managers who listen to their subordinates and allow them to participate in decision making are using the ____________ style of leadership. A) participative B) bureaucratic C) free-rein D) autocratic
A) participative
The level of management that is directly responsible for assigning specific jobs to workers and evaluating their daily performance is called: A) supervisory management. B) primary management. C) secondary management. D) middle management.
A) supervisory management.
Consider the market for bread. If the price of wheat rises, then the A) demand curve for bread shifts leftward. B) equilibrium quantity of bread increases. C) demand curve for bread shifts rightward. D) price of bread falls. E) supply curve of bread shifts leftward.
E) supply curve of bread shifts leftward.
A company's return on assets will always equal or exceed its profit margin. A) True B) False
B) False
All else equal, an increase in a company's asset turnover will decrease its ROE. A) True B) False
B) False
Based on the analogy, it is important to know how many coconuts (assets) the island (business) has in order to determine latitude and longitude of the island. A) True B) False
B) False
The box in the video which tracks the transactions (assets, liabilities, and owner's equity) states that the two sides of the box should not match (should not be equal). A) True B) False
B) False
Think back to the Accounting Equation video from the first Learning Activity for these questions. The video details the elements of the accounting equation and transactions through coconuts. A) True B) False
B) False
You can construct a sources and uses statement for 2014 if you have a company's year-end balance sheets for 2014 and 2015. A) True B) False
B) False
Which of the following is an advantage of a matrix organization structure? A) The project teams are permanent. B) It provides for efficient use of organizational resources. C) It is a complex organization structure. D) It is much cheaper to staff than other organization models.
B) It provides for efficient use of organizational resources.
A company purchases a new $10 million building, financed half with cash and half with a bank loan. How would this transaction affect the company's balance sheet? A) Net plant and equipment rises $5 million; cash falls $5 million; bank debt rises $5 million. B) Net plant and equipment rises $10 million; cash falls $5 million; bank debt rises $5 million. C) Net plant and equipment rises $5 million; cash falls $10 million; bank debt rises $5 million. D) Net plant and equipment rises $10 million; cash falls $10 million; bank debt rises $5 million.
B) Net plant and equipment rises $10 million; cash falls $5 million; bank debt rises $5 million.
A company that only prepares financial statements when it is convenient for the management of the firm is violating which of the following accounting concepts. A) Going concern concept B) Periodicity concept C) Business entity concept D) Monetary unit concept
B) Periodicity concept
What is the purpose of the balance sheet? A) This financial statement is designed to show the cash inflows and cash outflows for the period of time covered by the income statement. B) This financial statement is designed to show the ending amounts of the company's assets, liabilities, and owners' equity. C) This financial statement is designed to show the changes that occurred in owners' equity during the period of time covered by the income statement. D) This financial statement is designed to show the net income of the company for a period of time.
B) This financial statement is designed to show the ending amounts of the company's assets, liabilities, and owners' equity.
Which term describes a company being so open to other companies working with it that electronic information is shared as if the companies were one? A) E-connected B) Transparency C) Web-based corporations D) Webworking
B) Transparency
The law of supply states that other things remaining the same, a decrease in the price of a kayak leads to A) a decrease in the supply of kayaks. B) an increase in the supply of kayaks and a decrease in the quantity of kayaks supplied. C) a decrease in the quantity of kayaks supplied. D) an increase in the quantity of kayaks supplied. E) an increase in the supply of kayaks.
C) a decrease in the quantity of kayaks supplied.
Which of the following should form the foundation of a firm's control system? A) Computing and production B) Human resources and finance C) Accounting and finance D) Marketing and production
C) Accounting and finance
What are the four concepts crucial to accounting? A) Net Income, Corporations, Business Entity, and Finance B) Income Statement, Balance Sheet, Sole Proprietorship, and Human Resources C) Business Entity, Going Concern, Periodicity, and Monetary Unit Concepts D) Periodicity, Sole Proprietorship, Regulations, and Financial Statements
C) Business Entity, Going Concern, Periodicity, and Monetary Unit Concepts
Which of the following describes a group of employees from different departments working together on a long-term basis? A) Focus group B) Intrapraneurial teams C) Cross-functional self-managed teams D) Mixed function group
C) Cross-functional self-managed teams
Generally accepted accounting principles (GAAP) are authoritative pronouncements that define what constitutes acceptable accounting practice for financial reporting. GAAP today is set by: A) SEC - the Securities and Exchange Commission B) AICPA - the American Institute of Certified Public Accountants C) FASB - Financial Accounting Standards Board, a private standard setting organizations. D) FASB - Federal Accounting Standards Board, an agency of the federal government.
C) FASB - Financial Accounting Standards Board, a private standard setting organizations.
_____________ involves creating a vision for others to follow, establishing corporate values and ethics, and transforming the way an organization does business so that it is more effective and efficient. A) Production management B) Tactical planning C) Leadership D) Organizing
C) Leadership
Mutual agency and unlimited liability is the characteristic of which of the following business entity? A) Sole proprietorship B) Merchandise C) Partnership D) Corporation
C) Partnership
Which one of the following statements is correct? A) If the debt-to-assets ratio is greater than 0.50, then the debt-to-equity ratio must be less than 1.0. B) Long-term creditors would prefer the times-interest-earned ratio be 1.4 rather than 1.5. C) The assets-to-equity ratio can be computed as 1 plus the debt-to-equity ratio. D) To realize the best risk and reward profile, financial leverage should be maximized.
C) The assets-to-equity ratio can be computed as 1 plus the debt-to-equity ratio.
Which of the following is not a. True about the relationships between the financial statements? A) The cash reported on the Balance Sheet is reported on the Statement of Cash Flows. B) The net income reported on the Income Statement is also found on the Statement of Cash Flows. C) The cash inflows identified on the Statement of Cash Flows are reported on the Income Statement. D) The ending balances of the retained earnings found in the Statement of Changes in Stockholders' Equity are found on the Balance Sheet.
C) The cash inflows identified on the Statement of Cash Flows are reported on the Income Statement.
Ptarmigan Travelers had sales of $420,000 in 2013 and $480,000 in 2014. The firm's current asset accounts remained constant. Given this information, which one of the following statements must be TRUE? A) The fixed asset turnover decreased. B) The inventory turnover rate increased. C) The collection period decreased. D) The days' sales in receivables increased. E) The total asset turnover rate increase
C) The collection period decreased.
Which of the following determines the degree of decentralization of a firm? A) The degree of product standardization desired by the marketplace. B) The geographical area served by the firm's operations. C) The degree to which lower-level management is empowered to make decisions. D) The chain of command used to follow the flow of authority from top of the hierarchy to the lowest levels.
C) The degree to which lower-level management is empowered to make decisions.
Which of the following activities would be a part of the leading function of management? A) Recruiting qualified workers to join the organization and assigning them to their proper position B) Devising a new strategic plan to enter a new foreign market currently dominated by a competing firm C) Training and coaching workers to help them understand their job and perform it effectively D) Examining a financial report to see whether the firm's profits are improving and taking corrective action if they are not
C) Training and coaching workers to help them understand their job and perform it effectively
Breakers Bay Inc. has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. All else held constant, how will this accomplishment be reflected in the firm's financial ratios? A) decrease in the financial leverage ratio B) increase in the days' sales in inventory C) increase in the inventory turnover rate D) decrease in the fixed asset turnover rate E) decrease in the total asset turnover rate
C) increase in the inventory turnover rate
The two biggest items of the U.S. federal government revenue that together account for over approximately 80 percent of total federal government revenue are A) personal income taxes and corporate income taxes. B) corporate income taxes and property taxes. C) personal income taxes and Social Security taxes. D) personal income taxes and sales taxes. E) corporate income taxes and Social Security taxes.
C) personal income taxes and Social Security taxes.
In the United States, A) the President initializes changes in monetary policy and the Fed approves the changes. B) the Federal Reserve sets monetary and fiscal policies. C) the Federal Reserve sets monetary policy. D) Congress initializes changes in monetary policy and the Fed approves the changes. E) Congress must approve monetary policy changes.
C) the Federal Reserve sets monetary policy.
A country exports a good if A) it cannot import the good. B) the world price of the good is below the country's no-trade equilibrium price. C) the world price of the good is above the country's no-trade equilibrium price. D) the quantity demanded of the good in the country is greater than the quantity supplied at the world price. E) it has a high opportunity cost of production.
C) the world price of the good is above the country's no-trade equilibrium price.
Which of the following statements about the use of accounting information by the marketing function is a. True? A) Consumer preference is used in place of accounting information when making product-selection decisions. B) People in the marketing function use market rather than accounting information to set selling prices. C) The marketing function would let the accounting function make pricing decision for a product when the product cost was involved in making the pricing decision. D) Accounting information would be needed to select the best alternative for getting the firm's product to its customers.
D) Accounting information would be needed to select the best alternative for getting the firm's product to its customers.
A demand curve A) has an upward slope. B) has a downward slope. C) is a graph of the relationship between quantity demanded of a good and its price. D) Both answers B and C are correct. E) Both answers A and C are correct.
D) Both answers B and C are correct.
Which of the following is NOT a typical reason for differences between profits and cash flow? A) Changes in accounts receivable B) Depreciation expense C) Accrual accounting practices D) Goodwill
D) Goodwill
Which of the following is not a basic financial statement? A) Income Statement B) Balance Sheet C) Statement of Cash Flows D) Merchandising Statement
D) Merchandising Statement
__________ involves setting the organization's vision, goals, and objectives. A) Directing B) Controlling C) Organizing D) Planning
D) Planning
A __________ analysis is used to help companies evaluate their internal strengths and weaknesses, and develop an awareness of external threats and opportunities. A) ASSET B) SWAMP C) WISH D) SWOT
D) SWOT
Which of the following is not an example of a liability? A) Agreeing to a long-term payment plan to pay for equipment purchased by the business. B) Received 1 years rent in advance from a tenant. C) An amount that must be paid to a supplier that sold the firm supplies. D) The claims of the owners on the firm's net assets.
D) The claims of the owners on the firm's net assets.
The Report of the Independent Auditor is the opinion of the CPA firm that examined the financial statements of a company and states which of the following? A) The financial statements are fairly presented. B) The financial statements are free from fraud and correct. C) The company is a good long-term investment. D) The financial statements are presented fairly in accordance with GAAP.
D) The financial statements are presented fairly in accordance with GAAP.
Line-and-staff organizations work well in organizations with: A) stiff competition. B) operations in high-growth industries. C) short product life cycles. D) a relatively unchanging environment.
D) a relatively unchanging environment.
The law of demand implies that, other things remaining the same, A) as income increases, the quantity of cheeseburgers demanded increases. B) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded increases. C) as more people demand cheeseburgers, the quantity demanded increases. D) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases. E) as the demand for cheeseburgers increases, the price of a cheeseburger falls.
D) as the price of a cheeseburger rises, the quantity of cheeseburgers demanded decreases
The production possibilities frontier is the boundary between the A) goods and services that the economy can produce. B) affordable and unaffordable combinations of production. C) wanted and unwanted combinations of goods and services. D) attainable and unattainable combinations of goods and services. E) rational and irrational choices facing a society.
D) attainable and unattainable combinations of goods and services
One of the following is not one of the financial statements required for external reporting today. A) Income Statement B) Statement of Financial Position C) Statement of Cash Flows D) Statement of Changes in Stockholders' Equity E) All of the above are required financial statements
E) All of the above are required financial statements
The ________ of something is the gain or pleasure that it brings. A) marginal cost B) opportunity cost C) rational margin D) rational choice E) benefit
E) benefit
Which of the following is NOT a function of the federal government? A) making transfers to state and local governments B) making social security and welfare payments C) providing public goods and services D) imposing a personal income tax E) collecting property taxes
E) collecting property taxes
Goods and services that the United States sells to other nations are called A) bartered goods. B) world goods. C) exchanges. D) imports. E) exports.
E) exports.
Gross Domestic Product is the market value of all ________ produced within a country in a given period of time. A) final goods B) intermediate services C) intermediate goods D) final services E) final goods and services
E) final goods and service
In the circular flow model, which of the following owns the factors of production? A) both firms and households B) only federal, state, and local governments C) firms, households, and all levels of government D) only firms E) only households
E) only households
The Consumer Price Index (CPI) measures the changes of the A) quantities of a fixed market basket of goods produced by businesses. B) prices paid by consumers and businesses for a fixed market basket of goods and services. C) prices paid by all businesses for a fixed market basket of production resources. D) lowest prices paid by consumers for a fixed market basket of consumer goods and services. E) prices paid by consumers for a fixed market basket of consumer goods and services.
E) prices paid by consumers for a fixed market basket of consumer goods and services.
Potential GDP is the level of A) real GDP that the economy would produce if there was no unemployment. B) real GDP that the economy would produce if there was no inflation. C) nominal GDP that the economy would produce if it was at full employment. D) nominal GDP that the economy would produce if there was no inflation. E) real GDP that the economy would produce if it was at full employment.
E) real GDP that the economy would produce if it was at full employment.
