Fundamentals of Business Final Exam 2023

Since sole proprietorships are extensions of their owners, they: a. lack tax advantage. b. lack permanence. c. offer limited liability. d. have the ability to pool financial resources.

lack permanence.

The ______ was an $825 billion economic stimulus package, passed by Congress, designed to turn the economy by cutting taxes, building infrastructure, and investing in green energy. a. American Recovery and Reinvestment Act b. Clayton Antitrust Act c. Troubled Assets Relief Program d. NCUA Corporate Stabilization Program

American Recovery and Reinvestment Act

Jim, the CEO of a management firm, needs to deliver a presentation on work ethics to his employees. He has a thorough knowledge of his employees' educational backgrounds. He uses this knowledge to create a presentation that would convey the message to his employees. In the given scenario, which of the following communication guidelines is Jim following? a. Analyze your audience b. Avoid bias c. Be concise d. Avoid the use of slang

Analyze your audience

In the context of new product adoption, the process of a new product spreading throughout a market after it is introduced is called ____. a. Promulgation b. Diffusion c. Integration d. advection

Diffusion

Merith Qin, a textile company, relies on self-funding in order to sustain the promotion of its new product in the market. The company sold its newly issued stock and was able to amass a sizable amount of money to invest. Which of the following sources of long-term funds is being used by Merith Qin in the given scenario? a. Long-term debt b. Term loans c. Corporate bonds d. Direct investments from owners

Direct investments from owners

_______ refers to the unrestricted movement of goods and services across international borders. a. Protectionism b.Countertrade c. Direct investment d. Free trade

Free trade

Nelson, the CEO of a company, holds a meeting with the board of directors that includes both male and female members. While addressing them, Nelson is careful to use phrases such as "Welcome board members" and "Dear stockholders" instead of solely using "he" or "she." In this scenario, which of the following biases is Nelson avoiding? a. Age bias b. Race bias c. Ethnicity bias d. Gender bias

Gender bias

Love Your Feet Inc., a shoe manufacturing company, tries to acquire a certification from the International Organization for Standardization. It ensures the authorities that it continually improves its environmental performance and implements a systematic approach to setting environmental targets and achieving those targets. In this scenario, which of the following certifications is Love Your Feet Inc. trying to acquire? a. ISO 14001 b. ISO 22000 c. ISO 9000 d. ISO 13485

ISO 14001

_______ means buying products domestically that have been produced or grown in foreign nations. a. Importing b. Franchising c. Licensing d. Outsourcing

Importing

Which of the following is one of the core purposes of the Fed? a. Influencing the size of the money supply b. Providing short-term jobs c. Regulating taxes d. Investing in critical public assets

Influencing the size of the money supply

______ is a benefit given to employees that involves working remotely and connecting to the office via phone lines, fax machines, or broadband networks. a. Hot desking b. Telecommuting c. Job sharing d. Flextime scheduling

Telecommuting

When trying to ascertain the best approach to organize processes to produce a product, which of the following should be a consideration? a. The intangible features associated with the customer benefit package b. The advertising strategy associated with the product c. The inventory management process used in the organization d. The degree of standardization of the product

The degree of standardization of the product

In the context of balance sheets, assets such as machinery, buildings, and equipment have a limited useful life, so accountants subtract from the original value of these assets, to reflect the fact that these assets are being used up over time. a. deferred income b. bequest value c. accumulated depreciation d. Laid-down cost

accumulated depreciation

Breto Lupix, a graphic design company, installed a new software in its computers that enabled them to design three-dimensional logos, brochures, and banners. In this scenario, Breto Lupix has installed _______ in its computers. a. system software b. copylefted software c. applications software d. antivirus software

applications software

Sigborne Corp., a food and beverage company, commences its budgeting process by requesting the middle managers of the company to collect data from their respective departments and submit a consolidated report stating the needs of their departments. Harold, the manager of the packaging department, overstates the needs of his department. In this scenario, Harold is guilty of ____. a. outwrestling b. Extortion c. budget maximization d. budgetary slack

budgetary slack

Ziffcorp, a laptop manufacturing company, is working on a strategy to deliver its laptops to the students of a university before their new term begins. It is evident that Ziffcorp is working on a. pricing strategy b. distribution strategy c. product strategy d. advertisement strategy

distribution strategy

Clareese Trends, a clothing manufacturer, identifies twelve potential franchisees who would introduce the brand's outlets across eight major cities in the United States. Clareese Trends, however, has retained the production rights with itself, giving its franchisees only the right to sell the products they receive from the company at their various outlets. This scenario exemplifies a ______. a. spin-off b. distributorship c. conglomerate merger d. divestiture

distributorship

Clarence, the business development manager at Repotull, an e-commerce site, was offered a job with better pay in one of Repotull's rival companies. He decided to accept the job offer because of the increase in pay. In the context of human resource planning, this scenario is best illustrated at Repotull. a. negative leniency b. employee separation c. halo effect d. employee selection

employee separation

Firms create ______ by offering limited access to certain areas of their private network to a selected group of stakeholders. a. open systems b. expert systems c. firewalls d. extranets

extranets

The chairman of a welfare organization asks an employee to head a fundraising activity. The employee, however, embezzles $250,000 from the funds raised from the activity and falsifies financial records. In this scenario, the behavior of the employee is ______ a. illegal but ethical b. illegal and unethical c. legal but unethical d. legal and ethical

illegal and unethical

Richard has been following information about a firm on a financial website. He has noticed that the firm's price-to-earnings ratio (P/E) has been steadily rising. Richard can conclude from this result that the company. a. has recently increased its dividend. b. is in serious financial trouble. c. may have a growth in future earnings. d. has just issued more shares of common stock.

may have a growth in future earnings

For a corporation, direct investment from owners occurs when: a. If issues commercial paper. b. Its earnings are used for debt financing. c. it pays dividends to its debenture holders. d. sells newly issued stock.

sells newly issued stock.

Lara is the owner of an event management company. For every project, Lara makes a chart to keep track of multiple tasks that need to be accomplished simultaneously. From her chart, she finds the sequence of activities that will take the longest to complete. This helps her keep an eye on the project and address any issues that may delay the project. In this scenario, it can be inferred that Lara most likely used to execute her projects on time. a. the critical path method b. an expert system c. rule-based machine learning d. a business rule engine

the critical path method

Ryron Bank, a private bank, introduced Internet banking facilities for its customers after the government demonetized hundred-dollar bills. Customers who were reluctant to use credit cards for their daily purchases were enthusiastic about this new option. In this context, which dimension of the business environment is affected the most? a. The technological environment b. The social environment c. The global environment d. The political environment

The technological environment

Which of the following is a characteristic of limited liability companies (LLCs)? a. They are required to produce a larger amount of paperwork than corporations. b. They do not allow foreign investors to serve as owners. c. They are made to pay an annual franchise tax in many states. d. They are subject to double taxation.

They are made to pay an annual franchise tax in many states.

Identify an advantage of telecommuting for employees. a. Fewer office politics and other distractions b. Stronger connection to the company culture c. More influence within the organization d. More fast-track career potential

Fewer office politics and other distractions

Which of the following strategies for reaching global markets allows firms to expand into foreign markets with little or no investment? a. Foreign outsourcing b. Importing c. Foreign licensing d. Insourcing

Foreign licensing

Which of the following statements is true of implementing strategies in an organization? a. Implementation should avoid the involvement of first-line managers. b. Implementation should be handled solely by top managers. c. Implementation should precede the creation of a mission statement. d. Implementation should happen largely through tactical planning.

Implementation should happen largely through tactical planning.

Preston, a luthier, used to own a workshop in the 1750s where he produced handmade musical instruments of high quality. However, due to technological advances, musical instruments started being mass-produced in factories, and Preston's business began to decline. Given this information, it can be assumed that Preston belonged to the _______. a. digital revolution era b. relationship era c. Industrial Revolution era d. Production era

Industrial Revolution era

Futures Life Insurance is an insurance company in South Africa. The insurance company uses its large pool of financial capital, which it accumulates by collecting premiums from its policyholders, to purchase corporate stocks of different multinational companies. In this scenario, Futures Life Insurance is a(n) _______. a. Thrift institution b. Private equity firm c. Credit union d. Institutional investor

Institutional investor

Identify a true statement about the Federal Reserve. a. It operates under immense political pressure. b. It manages the monetary policy of the United States. c. It is restricted from performing banking services for commercial banks. d. It is headed by a 15-member Board of Governors.

It manages the monetary policy of the United States.

In the context of fundamental principles of a free market system, which of the following statements is true of a demand curve? a. It shows the relationship between price and quantity from a customer standpoint. b. For most goods and services, it forms a sinusoidal curve. c. It shows the relationship between price and quantity from a producer standpoint. d. For most goods and services, it curves upward as it moves to the right.

It shows the relationship between price and quantity from a customer standpoint.

In the context of the marketing mix, which of the following statements is true of a distribution strategy? a. Its key decisions include shipping, warehousing, and selling outlets. b. Its key factors include competition, regulation, and public opinion. c. It includes all of the ways that marketers communicate about their products. d. It aims to deliver customer value relative to the benefits of a product.

Its key decisions include shipping, warehousing, and selling outlets.

______ 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. a. Online retailing b. Vending c. Direct response retailing d. Multilevel marketing

Multilevel marketing

In the context of codes of ethics, the Johnson & Johnson Credo refrains from: a. encouraging pluralism. b. overcommunicating the importance of ethics. c. allowing whistle-blowing. d. Overpromising financial rewards.

Overpromising financial rewards.

Which of the following utilities satisfies wants by smoothly transferring proprietorship of goods and services from seller to buyer? a. Form utility b. Ownership utility c. Time utility d. Place utility

Ownership utility

Which of the following performance pay options reward employees with a portion of their company's financial gains above and beyond predetermined a. Commissions b. Stock options c. Profit-sharing plans d. Pay-for-knowledge plans

Profit-sharing plans

Rudy, a food truck owner, has sizable followers on his website where he personally interacts with them and thanks them for their support. He also lets his followers on his location and the menu for a day in advance. The opportunity of ____ is highlighted in the given scenario. a. Providing personal customer service b. using technology c. having lower overhead costs d. exploiting market niches

Providing personal customer service

Which of the following is an example of a natural monopoly? a. Public utilities b. The automobile industry c. Network television d. Agriculture

Public utilities

Which of the following is an advantage associated with a sole proprietorship? a. Ease of transfer of ownership b. Retention of control c. Unlimited liability d. Permanence

Retention of control

In the context of open market operations, when inflation is a concern, the Federal Reserve _______ government. a. Borrows b. Sells c. Withholds d. buys

Sells

In the context of owners' equity, which of the following is true of retained earnings? a. They are a firm's earnings that are kept aside for crisis management situations. b. They are accumulated earnings reinvested in a company rather than being paid to the owners. c. They refer to salaries that are withheld in case an employee is involved in fraudulent activities. d. They refer to a firm's additional profits that are used for paying executive salary.

They are accumulated earnings reinvested in a company rather than being paid to the owners.

Which of the following statements is true of people with an external locus of control? a. They validate their own efforts. b. They are extremely self-reliant. c. They feel buffeted by the actions of others. d. They take complete control of their lives.

They feel buffeted by the actions of others.

In the context of limited-service merchant wholesalers, which of the following statements is true of cash and carry wholesalers? a. They require customers to make the trip to the wholesaler themselves and cart their own products back to their stores. b. They simply organize and facilitate product shipments directly from the producer to their customers. c. They do not take legal title of the merchandise they distribute, but they can physically process it. d. They provide a complete array of services to the retailers or business users who typically purchase their goods

They require customers to make the trip to the wholesaler themselves and cart their own products back to their stores.

In the context of the relationship era, leading-edge firms believe that: a. a satisfied customer can promote their business with more speed than promotional campaigns. b. closely focusing on each immediate transaction with a customer is more likely to be profitable than building long-term relationships. c. seeking new customers is more profitable than cultivating current customers. d. using digital resources to gather customer data can hinder their quality of service.

a satisfied customer can promote their business with more speed than promotional campaigns

Milora, a clothing company, purchases 50 sewing machines from a company called Quick Sew on credit. Milora is supposed to pay an amount of $76,000 to Quick Sew. This amount is due within a year of the date on the balance sheet. In this scenario, the amount of credit that Milora owes Quick Sew is referred to as Milora's _______. a. current liability b. borrowing base c. intangible asset d. charge-off

charge-off

In the late 1970s, LarceCo, a tea manufacturing company, entered the market of a developing country called Fantesnia. As there was a lack of hard currency in Fantesnia, LarceCo was involved in a barter system. It exchanged its tea-based products for the local vodka of Fantesnia. This scenario illustrates that LarceCo had engaged in a. Franchising b. foreign outsourcing c. direct investment d. countertrade

countertrade

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, a. credit becomes tighter b. banks increase the number of loans they make c. the inflationary pressures in the economy heat up d. banks offer subprime mortgage loans

credit becomes tighter

David works in a small manufacturing firm that makes customized office furniture. He feels it is important to work directly with customers to design high-quality furniture that meets their needs. He believes that doing so would create more value for customers and provide a better relationship between the price of the product and its benefits. In the context of operations management, David most likely focuses on _______. a. undifferentiated marketing b. efficiency c. effectiveness d. mass production

effectiveness

Rubicon Inc., an American guitar manufacturing company, signed a contract with a supplier in Umreia, an Asian country, to manufacture guitars. Rubicon then imported these products and sold them in its markets under its own brand name. Rubicon did this because of the availability of cheap labor in Umreia that substantially cut down Rubicon's cost of production. In this scenario, the Rubicon is most likely involved in ________. a. foreign outsourcing b. foreign direct investment c. foreign licensing d. foreign franchising

foreign outsourcing

CityProtect Corp., a medium-sized financial services company, has a departmentalization structure where the employees are grouped together based on their area of expertise. Thus, the firm has separate teams that handle loans, stockbroker services, accounting services, insurance plans, etc. This is an example of _______ departmentalization. a. process b. functional c. territorial d. customer

functional

Joshua and Hubert are the co-owners of a shoe manufacturing company. They have a disagreement over company policies and business methods. Following the discord, Joshua withdraws from the company and comes under the obligation to pay a sum of $10,000-the debts of the firm that are due at the time of his withdrawal. In the given scenario, Joshua and Hubert most likely _______ a. own an S corporation b. have a limited liability partnership c. have a general partnership d. own a statutory close corporation

have a general partnership

When entrepreneurs of small firms start serving a variety of roles, from CEO to customer service rep, such firms: a. have lower overhead costs. b. are able to evade compliance with federal regulations. c. are able to offer health coverage to their employees at a lower cost than large firms. d. have a large span of control.

have lower overhead costs.

Similar to a corporation, all owners of a limited liability company (LLC): a. are exempted from federal and state income taxes. b. are called stockholders. c. have the right to establish the company's mission. d. have restricted debts.

have restricted debts

A famous musician sells the copyright of one of his songs to a record company for $2 million. In this scenario, the sale of the copyright of the song exemplifies the sale of a(n) a. tangible asset b. current liability c. intangible asset d. operating liability

intangible asset

Betty's job entails detecting problems such as embezzlement, waste, mismanagement, and employee theft at her organization. In this case, Betty is a(n) a. certified public accountant b. internal auditor c. forensic auditor d. government accountant

internal auditor

Grengard Corp., a public relations firm, pays a hefty rent for its office space as it is set up in one of the best commercial areas of London. In the given scenario, the rent paid by the firm for its office space is an example of _____ a. out-of-pocket costs b. incremental costs c. Opportunity costs d. indirect costs

out-of-pocket costs

Eula, a company that manufactures soda, offers its latest products at very low prices. Eula's strategy is based on the assumption that more customers will be willing to buy its products if they are offered at lower prices. Eula has adopted this strategy to attract a larger customer base and increase its sales volume even though it will only gain a small profit on each individual sale. In this scenario, Eula has implemented the _______strategy. a. high/low pricing b. skimming pricing c. penetration pricing d. loss-leader pricing

penetration pricing

Abigail and Pamela both have stocks in the Rondante Group. However, if in the future the company goes out of business, Pamela will have a claim on the assets of the company before Abigail. Also, she is given higher priority when the company pays the dividends to all its stockholders. Unlike Abigail, Pamela is a ______. a. preferred stockholder b. common stockholder c. value stockholder d. growth stockholder

preferred stockholder

At Nanclet, a market research firm, whenever a particular team needs to hire people, the human resource (HR) department conducts the external recruitment processes for them. The HR department also furnishes the recruiters of the recruiting team with a list of questions they are expected to ask all the job applicants, irrespective of the applicant's work experience. In the context of employee selection, this scenario best illustrates _______. a. job analysis b. structured interviews c. positive leniency d. appraisal interviews

structured interviews